nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2023‒09‒11
thirty-two papers chosen by

  1. Absolute blockchain strength? Evidence from the ABS market in China By Jing Liu; Ilhyock Shim; Yanfeng Zheng
  2. Bitcoin Gold, Litecoin Silver: An Introduction to Cryptocurrency’s Valuation and Trading Strategy By Yu, Haoyang; Sun, Yutong; Liu, Yulin; Zhang, Luyao
  3. The behavioral finance of MSMEs in the advancement of financial inclusion and financial technology (fintech) By Risman, Asep; Ali, Anees Janee; Soelton, Mochamad; Siswanti, Indra
  4. What Makes Cryptocurrencies Different? By Anders Brownworth; Jon Durfee; Michael Junho Lee; Antoine Martin
  5. Expected Macroeconomic Effects of Issuing a Retail CBDC By Constanza Martínez-Ventura; Julián A. Parra-Polania; Tatiana Mora-Arbeláez; Angélica Lizarazo-Cuéllar
  6. Mobile money innovations, income inequality and gender inclusion in sub-Saharan Africa By Simplice A. Asongu; Peter Agyemang-Mintah; Joseph Nnanna; Yolande E. Ngoungou
  7. Factors influencing the deployment of local platform crowdfunding in Sub Saharan Africa: Evidence from West and Central Africa Countries By Pepin Ilonga Nkupo
  8. FTX's downfall and Binance's consolidation: the fragility of centralised digital finance By Vidal-Tomás, David; Briola, Antonio; Aste, Tomaso
  9. The role of mobile money innovations in the effect of inequality on poverty and severity of poverty in Sub-Saharan Africa By Simplice A. Asongu; Sara le Roux
  10. Impact of Cryptocurrency Market on the Performance of Stock Market- An Empirical Study By Shaturaev, Jakhongir
  11. Know your (holding) limits: CBDC, financial stability and central bank reliance By Meller, Barbara; Soons, Oscar
  12. Flagship Entry in Online Marketplaces By Ginger Zhe Jin; Zhentong Lu; Xiaolu Zhou; Lu Fang
  13. Generic and Universal Local Cryptocurrency: LCoin By Frédéric A Hayek; Pascal Lafourcade; Ariane Tichit
  14. FinTech Lending with LowTech Pricing By Johnson, Mark J.; Ben-David, Itzhak; Lee, Jason; Yao, Vincent
  15. Scientific knowledge production of blockchain: A bibliometric and lexicometric review By Wilfrid Azan; Yuan Li
  16. Understanding DeFi Through the Lens of a Production-Network Model By Jonathan Chiu; Thorsten Koeppl; Hanna Yu; Shengxing Zhang
  17. Bayesian framework for characterizing cryptocurrency market dynamics, structural dependency, and volatility using potential field By Anoop C V; Neeraj Negi; Anup Aprem
  18. Credit Card Markets Head Back to Normal after Pandemic Pause By Andrew F. Haughwout; Donghoon Lee; Daniel Mangrum; Joelle Scally; Wilbert Van der Klaauw
  19. Trading and wealth evolution in the Proof of Stake protocol By Wenpin Tang
  20. Cash for Transactions or Store-of-Value? A comparative study on Sweden and peer countries By Claussen, Carl Andreas; Segendorff, Björn; Seitz, Franz
  21. A Ruse by Any Other Name: Comparing Loot Boxes and Collectible Card Games Using Magic Arena By Mattinen, Topias; Macey, Joseph; Hamari, Juho
  22. How a mobile app can become a catalyst for sustainable social business: The case of Too Good To Go By Tan Vo-Thanh; Mustafeed Zaman; Rajibul Hasan; Raouf Ahmad Rather; Rosa Lombardi; Giustina Secundo
  23. Simulating the Adoption of a Retail CBDC By Leon Rincon, Carlos; Moreno, Jose; Soramaki, Kimmo
  24. Monetary, financial and fiscal fragility in 2020s By Makram El-Shagi; Camélia Turcu
  25. Macro Dimensions of Financial Inclusion Index and its Status in Developing Countries By Shah, Shahid Manzoor; Ali, Amjad
  26. Who switches and why? A diagnostic survey of retail financial services in Ireland By McGowan, Féidhlim; Papadopoulos, Alexandros; Lunn, Pete
  27. USING GOOGLE TRENDS FOR FORECASTING: OVERVIEW AND APPLICATION FOR RETAIL SALES FORECASTING By Zubarev, Andrey (Зубарев, Андрей); Golovanova, Elizaveta (Голованова, Елизавета)
  28. Drivers of PES effectiveness: Some evidence from a quantitative meta-analysis By Legrand D.F. Saint-Cyr; Lionel Védrine; Sophie Legras; Julie Le Gallo; Valentin Bellassen
  29. Can you spot a scam? Measuring and improving scam identification ability By Lisa Spantig; Elif Kubilay; Jana Cahlíková; Lucy Kaaria; Eva Raiber
  30. An Impact Evaluation of Digital Cash Transfers Scheme on Income Poverty in Nigeria By Nwaobi, Godwin
  31. The effects of two-way lending between financial conglomerates in bilateral repo markets By Carlos Cañón; Jorge Florez-Acosta; Karoll Gómez
  32. Hackers in science fiction, between heroic resistance and criminality By Thomas Michaud

  1. By: Jing Liu; Ilhyock Shim; Yanfeng Zheng
    Abstract: Blockchain, a type of distributed ledger technology, has become a buzzword in the past decade. Its potential to challenge current business practices such as financial transactions has been touted or criticised by numerous researchers and practitioners. Nonetheless, academic literature thus far has provided little empirical evidence on how financial services benefit from such new technology. We exploit the emerging asset-backed security (ABS) market in China and its rapid adoption of blockchain technology. We examine whether blockchain-based ABS products enjoy better pricing than those not based on blockchain after controlling potential endogeneity with coarsened exact matching. Analysing approximately 5, 000 ABS products issued between 2015 and 2020, we show that the adoption of blockchain technology indeed reduces the yield spread by approximately 25 basis points and that this benefit is heterogeneous across the different underlying asset classes and institutional arrangements. Interestingly, we find that social factors such as familiarity among key ABS parties may increase or decrease the benefit of adopting blockchain in ABS products depending on the asset classes and regulatory environments. Our study makes a timely contribution to the debate surrounding blockchain technology and its implication for the financial sector.
    Keywords: asset-backed security, blockchain, financial technology, social embeddedness, technology adoption
    JEL: G30 G32 M40 O33
    Date: 2023–08
  2. By: Yu, Haoyang; Sun, Yutong; Liu, Yulin; Zhang, Luyao
    Abstract: Historically, gold and silver have played distinct roles in tra- ditional monetary systems. While gold has primarily been revered as a superior store of value, prompting individuals to hoard it, silver has com- monly been used as a medium of exchange. As the financial world evolves, the emergence of cryptocurrencies has introduced a new paradigm of value and exchange. However, the store-of-value characteristic of these digital assets remains largely uncharted. Charlie Lee, the founder of Lite- coin, once likened Bitcoin to gold and Litecoin to silver. To validate this analogy, our study employs several metrics, including unspent transac- tion outputs (UTXO), spent transaction outputs (STXO), Weighted Average Lifespan (WAL), CoinDaysDestroyed (CDD), and public on-chain transaction data. Furthermore, we’ve devised trading strategies centered around the Price-to-Utility (PU) ratio, offering a fresh perspective on crypto-asset valuation beyond traditional utilities. Our back-testing re- sults not only display trading indicators for both Bitcoin and Litecoin but also substantiate Lee’s metaphor, underscoring Bitcoin’s superior store-of-value proposition relative to Litecoin. We anticipate that our findings will drive further exploration into the valuation of crypto assets. For enhanced transparency and to promote future research, we’ve made our datasets available on Harvard Dataverse and shared our Python code on GitHub as open source.
    Date: 2023–07–31
  3. By: Risman, Asep; Ali, Anees Janee; Soelton, Mochamad; Siswanti, Indra
    Abstract: This study aims to determine empirical evidence of the effect of financial inclusion and financial technology (fintech) on the behavioral finance of MSMEs. This study uses a quantitative method with a positivist paradigm approach. The population of this study is all MSMEs in Indonesia. The sample used in this study is 205 respondents (MSME owners) from all over Indonesia. Sampling is carried out using a random technique. Data collection is carried out by distributing questionnaires, both manually and online using Google Forms, and is measured using a 5-point Likert scale. The data processing is carried out using Partial Least Square (PLS) software with a Structural Equation Modeling (SEM) model. The results of this study show that financial inclusion and financial technology (fintech) have a direct positive effect on the behavioral finance of MSMEs. Financial technology (fintech) can mediate and increase the effect of financial inclusion on the behavioral finance of MSMEs.
    Keywords: Financial Inclusion, Financial Technology, Behavioral Finance of MSMEs
    JEL: G02
    Date: 2022–08–28
  4. By: Anders Brownworth; Jon Durfee; Michael Junho Lee; Antoine Martin
    Abstract: Permissionless blockchains, which support the most popular cryptocurrency networks like Bitcoin and Ethereum, have shown that it is possible to transfer value without relying on centralized trusted third parties, something that is new and remarkable (although perhaps most clearly useful for less developed financial markets). What makes permissionless blockchains able to transfer value without relying on a small number of trusted third parties is the combination of several components that all need to work together. The components themselves are not particularly new, but the combination of these components is more than the sum of its parts. In this post, we provide a high-level overview of these components and how they interact, taking Bitcoin as an example.
    Keywords: cryptocurrencies; Crypto; digital currencies; Bitcoin; blockchains; permissionless; trust
    JEL: G1
    Date: 2023–08–16
  5. By: Constanza Martínez-Ventura; Julián A. Parra-Polania; Tatiana Mora-Arbeláez; Angélica Lizarazo-Cuéllar
    Abstract: This document reviews the potential macroeconomic effects of issuing a central bank digital currency (CBDC) for the use of individuals and businesses. A careful selection of the architecture, and the economic and technological design aspects of this digital form of central bank money that best suit the needs of Colombian economy is made to frame the analytical approach used to study these issues. The most salient results of the related literature are reviewed to establish the consequences of undertaking this initiative. For the set of selected assumptions, we find that the expected macroeconomic consequences are negligible. ******RESUMEN: Este documento revisa los potenciales efectos macroeconómicos de emitir una moneda digital de banco central (CBDC) para uso de las personas y negocios. Se realiza una selección cuidadosa de la arquitectura, y de los aspectos de diseño económico y tecnológico de esta forma de dinero digital que mejor se ajustarían a las necesidades de la economía colombiana, para enmarcar la aproximación analítica que se usa para estudiar estos temas. Se revisan los resultados más destacados de la literatura relacionada para establecer las consecuencias esperadas de adelantar esta iniciativa. Para el conjunto de supuestos seleccionados, encontramos que los efectos macroeconómicos esperados son muy pequeños.
    Keywords: CBDC, macroeconomic effects, digital money, financial intermediation, efectos macroeconómicos, dinero digital, intermediación financiera
    JEL: E42 E51 E44 E52 E41 G21
    Date: 2023–08
  6. By: Simplice A. Asongu (Yaoundé, Cameroon); Peter Agyemang-Mintah (Zayed University, Abu Dhabi, UAE); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria); Yolande E. Ngoungou (Yaoundé, Cameroon)
    Abstract: The study assesses the role of mobile money innovations on income inequality and gender inclusion in 42 Sub-Saharan African countries for the period 1980 to 2019 using interactive quantile regressions. The following findings are established. First, income inequality unconditionally reduces the involvement of women in business and politics. Second, mobile money innovations interact with income inequality to have a positive impact on women in business and politics. Third, net effects from the role of mobile money innovations in income inequality for gender inclusion are consistently negative. Fourth, given that the positive conditional or interactive effects and negative net effects are consistent across the conditional distribution of gender inclusion, thresholds at which mobile money innovations can completely dampen the negative effect of income inequality on gender inclusion are provided. Among others, policy makers should work towards improving conditions for mobile money innovations. They should also be aware that reducing both income inequality and enhancing mobile money innovations simultaneously leads to more inclusive outcomes in terms of gender inclusion.
    Keywords: Financial inclusion; inequality; mobile phones; sub-Saharan Africa; women
    JEL: G20 O40 I10 I20 I32
    Date: 2023–01
  7. By: Pepin Ilonga Nkupo (University of Mons)
    Abstract: The purpose of this study is to show why African countries, in West and Central Africa (WCA) particularly, are not able to exploit the potential of crowdfunding and maintain the activities of local platforms. I use the hypothetico-deductive methodology, and faced with panel data, this study uses logistic regression models (fixed effect, random effect, and mixed effect), covering the period 2010–2019 for 20 WCA countries (West and Central Africa). To my knowledge, this study is among the first to explore the factors upstream of the deployment of local crowdfunding platforms, based on basic infrastructure, technological and communication innovation, education, the legal framework, and financial system. This research contributes to the current debate on the development of crowdfunding in sub-Saharan Africa as well as to the future models to be adopted so that this activity is sustainable at the local level. The study points out that the infrastructure of information and communication technologies, based on the penetration of the Internet and mobile telephony, significantly influences the deployment of the national platform. Nevertheless, the basic infrastructure such as electricity and urbanization variables, a legal framework based on the business creation score, education, and the weakness of the financial development system constitute an obstacle to claiming development in long-term and sustainable local crowdfunding activities. Following these striking results, the study highlights a series of levers on which legislators in WCA countries can act to meet the crowdfunding challenges of tomorrow. By proposing three research levels, this study should promote and support the development of crowdfunding from a pedagogical point of view by emphasizing entrepreneurship and emerging technologies in education at the level of professional or university training, from the infrastructure, access to physical and digital infrastructure by emphasizing the importance of regional partnerships, creating partnerships with traditional African banks, to prevent risks, build trust, and ensure the security of investments, decision makers must establish the law on alternative finance activities (crowdfunding, cryptocurrency).
    Date: 2023–08–11
  8. By: Vidal-Tomás, David; Briola, Antonio; Aste, Tomaso
    Abstract: This paper investigates the causes and the consequences of the FTX digital currency exchange's failure in November 2022. Analysing on-chain data, we report that FTX heavily relied on leveraging and misusing its native token, FTT, and we show how this behaviour exacerbated the company's fragile financial situation. To gain further insights into the downfall, we employ state-of-the-art network science instruments to model the evolutionary dependency structures of 199 cryptocurrencies on an hourly basis, and we investigate tick-by-tick public trades at the time of the events. We identify the collapse of the Terra-Luna ecosystem as the pivotal event that triggered a significant decrease in the exchange's liquidity. Results suggest that the crash was actively accelerated by Binance tweets causing a systemic reaction in the cryptocurrency market. Finally, identifying the actors who mostly benefited from the FTX's collapse and highlighting a generalised trend toward centralisation in the crypto space, we emphasise the importance of genuinely decentralised finance for a transparent, future digital economy.
    Keywords: binance; cryptocurrency; FTX; network science; Terra-Luna; ES/K002309/1; EP/P031730/1; Horizon 2020; H2020-ICT-2018-2 825215
    JEL: C1 F3 G3
    Date: 2023–09–01
  9. By: Simplice A. Asongu (Oxford, UK); Sara le Roux (Oxford, UK)
    Abstract: This study investigates the role of mobile money innovations in the incidence of income inequality on poverty and severity of poverty in 42 sub-Saharan African countries over the period 1980 to 2019. Mobile money innovations are understood as the mobile used to send money and the mobile used to pay bills online while income inequality is measured with the Gini index. Poverty is measured as the poverty headcount ratio while the severity of poverty is generated as the squared of the poverty gap index. The empirical evidence is based on interactive Quantile regressions. The following main findings are established. (i) Income inequality unconditionally reduces poverty and the severity of poverty though the significance is not throughout the conditional distributions of poverty and the severity of poverty. (ii) Mobile money innovations significantly moderate the positive incidence of income inequality on poverty and the severity of poverty in some quantiles. (iii) Positive net effects are apparent exclusively in the poverty regressions. (iv) Given the negative conditional effects, policy thresholds or minimum mobile money innovation levels needed to completely nullify the positive incidence of income inequality on poverty are provided: 27.666 (% age 15+) and 24.000 (% age 15+) of the mobile used to send money in the 50th and 75th quantiles, respectively and 16.272 (% age 15+) and 13.666 (% age 15+) of the mobile used to pay bills online in the 10th and 50th quantiles, respectively. Policy implications are discussed with respect of SDG1 on poverty reduction and SDG10 on inequality mitigation.
    Keywords: Mobile phones; financial inclusion; poverty; inequality; Africa
    JEL: G20 O40 I10 I20 I32
    Date: 2023–01
  10. By: Shaturaev, Jakhongir
    Abstract: This paper intends to measure the effect of cryptocurrency market on the performance of stock market. It considers US S&P500 daily index as the dependent variable while daily price and volume of Bitcoin as independent variables and daily US volatility index and oil prices as controlled variables from 2017 to 2021. Applying simple regression model, this study observes significantly negative impact of cryptocurrency market on the performance of stock market while it notices an insignificant but positive impact on the same. Both US VIX and oil prices also negatively affect the performance. The recommendations of this study may benefit concerned parties to utilize the growing popularity of cryptocurrencies in favor of stock market performance and economic growth.
    Keywords: Bitcoin, Performance, Portfolio diversification, Regression model, Stock market
    JEL: G0 H0 M0 O1
    Date: 2023–04–05
  11. By: Meller, Barbara; Soons, Oscar
    Abstract: How do central bank digital currencies (CBDC) impact the balance sheets of banks and central banks? To tackle this question empirically, we built a constraint optimisation model that allows for individual banks to choose how to respond to outflows of deposits, based on cost considerations and subject to the availability of reserves and collateral, within the individual banks and system wide, and for a given level of liquidity risk tolerance. We simulate the impact of a fictitious digital euro introduction in the third quarter of 2021, using data from over 2, 000 euro area banks. That impact depends on i) the number of deposits withdrawn and the speed at which this occurs, ii) the liquidity available within the banking system at the time of the digital euro introduction, iii) the liquidity risk preferences of the markets and supervisors, iv) the bank’s business model, and v) the functioning of the interbank market. We find that a €3, 000 digital euro holding limit per person, as suggested by Bindseil (2020) and Bindseil and Panetta (2020), would have been successful in containing the impact on bank liquidity risks and funding structures and on the Eurosystem balance sheet, even in extremely pessimistic scenarios. JEL Classification: E52, E58, G21
    Keywords: digital currency, financial intermediation, financial stability, liquidity risk
    Date: 2023–08
  12. By: Ginger Zhe Jin; Zhentong Lu; Xiaolu Zhou; Lu Fang
    Abstract: In this paper, we empirically study how flagship entry in an online marketplace affects consumers, the platform, and various sellers on the platform. We find flagship entry may benefit consumers by expanding the choice set, by intensifying price competition within the entry brand, and by improving consumer perception for parts of the platform. In the meantime, flagship entry cannibalizes the sales of same-brand sellers, while other brands may gain as the buyer base expands on the platform. Counterfactual simulation suggests that flagship entry improves the gross merchandise value of the platform and overall consumer welfare in most cases.
    Keywords: Market structure and pricing; Economic models
    JEL: D4 L1 L8
    Date: 2023–08
  13. By: Frédéric A Hayek (UCA - Université Clermont Auvergne, LIMOS - Laboratoire d'Informatique, de Modélisation et d'Optimisation des Systèmes - ENSM ST-ETIENNE - Ecole Nationale Supérieure des Mines de St Etienne - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne - INP Clermont Auvergne - Institut national polytechnique Clermont Auvergne - UCA - Université Clermont Auvergne); Pascal Lafourcade (UCA - Université Clermont Auvergne, LIMOS - Laboratoire d'Informatique, de Modélisation et d'Optimisation des Systèmes - ENSM ST-ETIENNE - Ecole Nationale Supérieure des Mines de St Etienne - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne - INP Clermont Auvergne - Institut national polytechnique Clermont Auvergne - UCA - Université Clermont Auvergne); Ariane Tichit (UCA - Université Clermont Auvergne, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: Blockchains are finding evermore applications. One underused application of blockchains is local currencies. Local currencies are currencies that float in a restricted area in purpose of growing the local economy by forcing local spending. We introduce the concept of geographical demurrage: money loses of its value the farther away it is spent. We construct four generic local cryptocurrencies: a regular one mimicking local paper money; a second that restricts spending to the dedicated geographical area; a third that utilizes geographical demurrage for maintaining the system, and a fourth that lifts the geographical restrictions and maintains geographical demurrage, thus creating a universal local cryptocurrency: a currency that loses value correspondingly to the distance between its point of reception and point of spending. So without the need to restrict spending to a given geographical sphere, the currency will always encourage local spending, no matter where it is spent; yielding a universal local cryptocurrency we name LCoin.
    Keywords: Blockchain, Cryptocurrency, Local Currency
    Date: 2023–10–11
  14. By: Johnson, Mark J. (Brigham Young U); Ben-David, Itzhak (Ohio State U); Lee, Jason (US Securities and Exchange Commission); Yao, Vincent (Georgia State U)
    Abstract: FinTech lending—known for using big data and advanced technologies—promised to break away from the traditional credit scoring and pricing models. Using a comprehensive dataset of FinTech personal loans, our study shows that loan rates continue to rely heavily on conventional credit scores, including 45% higher rates for nonprime borrowers. Other known default predictors are often neglected. Within each segment (prime/nonprime) loan rates are not very responsive to default risk, resulting in realized loan-level returns decreasing with risk. The pricing distortions result in substantial transfers from nonprime to prime borrowers and from low- to high-risk borrowers within segment.
    JEL: G21 G23 G50
    Date: 2023–04
  15. By: Wilfrid Azan (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne, BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique); Yuan Li (COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne)
    Abstract: While recent reviews of blockchain technology have focused on the latest developments in cryptocurrency and their derivative impacts, less attention has been given to analysing their knowledge paths and boundaries based on past research to guide their development. To address this gap, we conducted both a bibliometric study of 2525 articles and a lexicometric study of 123 articles. The bibliometric study provided holistic insights into the evolution and distribution of blockchain research, including influential researchers and countries, discipline composition, knowledge development trends, and emerging frontiers. The lexicometric study identified the boundary concept structure with a quantitative textual approach, extracting the strongest signifying epistemic communities. Our findings indicate that blockchain research draws from four major disciplines, making it a multidisciplinary field. With the increasing maturity and development of technological infrastructure, the application and management of blockchain become increasingly relevant issues. Our analysis suggests that blockchain can be considered more of a boundary object than a disruptive change from knowledge perspectives. Therefore, this paper proposes a comprehensive understanding of the development path and epistemic concepts of blockchain research.
    Keywords: Blockchain bibliometrics lexicometrics citation analysis epistemic communities, Blockchain, bibliometrics, lexicometrics, citation analysis, epistemic communities
    Date: 2023–08–10
  16. By: Jonathan Chiu; Thorsten Koeppl; Hanna Yu; Shengxing Zhang
    Abstract: Decentralized finance (DeFi) is composed of a variety of heterogeneous sectors that are interconnected through an input-output network of its tokens. We first use a panel data set to empirically document the evolution of the DeFi network across its different sectors. Instead of looking at the misleading measure of total value locked, we then employ a standard, theoretical production-network model to measure the value added and service outputs of the different DeFi sectors. Finally, based on a calibrated version of our model, we study which factors drive DeFi token prices and predict the equilibrium effects when network interconnectedness increases.
    Keywords: Digital currencies and fintech; Payment clearing and settlement systems
    JEL: G G2
    Date: 2023–08
  17. By: Anoop C V; Neeraj Negi; Anup Aprem
    Abstract: Identifying the structural dependence between the cryptocurrencies and predicting market trend are fundamental for effective portfolio management in cryptocurrency trading. In this paper, we present a unified Bayesian framework based on potential field theory and Gaussian Process to characterize the structural dependency of various cryptocurrencies, using historic price information. The following are our significant contributions: (i) Proposed a novel model for cryptocurrency price movements as a trajectory of a dynamical system governed by a time-varying non-linear potential field. (ii) Validated the existence of the non-linear potential function in cryptocurrency market through Lyapunov stability analysis. (iii) Developed a Bayesian framework for inferring the non-linear potential function from observed cryptocurrency prices. (iv) Proposed that attractors and repellers inferred from the potential field are reliable cryptocurrency market indicators, surpassing existing attributes, such as, mean, open price or close price of an observation window, in the literature. (v) Analysis of cryptocurrency market during various Bitcoin crash durations from April 2017 to November 2021, shows that attractors captured the market trend, volatility, and correlation. In addition, attractors aids explainability and visualization. (vi) The structural dependence inferred by the proposed approach was found to be consistent with results obtained using the popular wavelet coherence approach. (vii) The proposed market indicators (attractors and repellers) can be used to improve the prediction performance of state-of-art deep learning price prediction models. As, an example, we show improvement in Litecoin price prediction up to a horizon of 12 days.
    Date: 2023–08
  18. By: Andrew F. Haughwout; Donghoon Lee; Daniel Mangrum; Joelle Scally; Wilbert Van der Klaauw
    Abstract: Total household debt balances increased by $16 billion in the second quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. This reflects a modest rise from the first quarter. Credit card balances saw the largest increase of all debt types—$45 billion—and now stand at $1.03 trillion, surpassing $1 trillion in nominal terms for the first time in the series history. After a sharp contraction in the first year of the pandemic, credit card balances have seen seven quarters of year-over-year growth. The second quarter of 2023 saw a brisk 16.2 percent increase from the previous year, continuing this strong trend. With credit card balances at historic highs, we consider how lending and repayment have evolved using the New York Fed’s Consumer Credit Panel (CCP), which is based on anonymized Equifax credit report data.
    Keywords: household finance; Consumer Credit Panel (CCP); credit cards
    JEL: D14
    Date: 2023–08–08
  19. By: Wenpin Tang
    Abstract: With the increasing adoption of the Proof of Stake (PoS) blockchain, it is timely to study the economy created by such blockchain. In this chapter, we will survey recent progress on the trading and wealth evolution in a cryptocurrency where the new coins are issued according to the PoS protocol. We first consider the wealth evolution in the PoS protocol assuming no trading, and focus on the problem of decentralisation. Next we consider each miner's trading incentive and strategy through the lens of optimal control, where the miner needs to trade off PoS mining and trading. Finally, we study the collective behavior of the miners in a PoS trading environment by a mean field model. We use both stochastic and analytic tools in our study. A list of open problems are also presented.
    Date: 2023–08
  20. By: Claussen, Carl Andreas (Monetary Policy Department, Central Bank of Sweden); Segendorff, Björn (BIS Innovation Hub); Seitz, Franz (Weiden Technical University of Applied Sciences, Germany)
    Abstract: We estimate the demand for transaction and non-transaction cash balances in Canada, Denmark, Iceland, Sweden and Norway over the last decades using the seasonal method. These countries share many features that are relevant for cash demand, but nevertheless show large differences in terms of aggregate cash balances. While Canada, Iceland and Denmark have seen increased aggregate cash balances, Norway and especially Sweden have seen a dramatic decline. We find that transaction balances have decreased somewhat in all of the countries and the differences in aggregated cash balances is due to differences in the development of non-transactional cash balances. We argue that different de facto legal tender status, crisis exposures, foreign demand and cash supply-side policies help explain these findings.
    Keywords: cash; banknotes; seasonal method; transactions; hoarding
    JEL: E41 E51 E58
    Date: 2023–07–01
  21. By: Mattinen, Topias (Tampere University); Macey, Joseph; Hamari, Juho
    Abstract: The convergence of gaming and gambling, known as "gamblification", has been a topic of increasing interest in recent years. Loot boxes, i.e., rewards offering randomized content in exchange for money or time, have been a particular focal point. Research has shown links between excessive loot box consumption and problematic consumption behaviors, leading to several attempts to regulate loot boxes. Arguments against regulation have been that loot boxes are conceptually and structurally akin to other unregulated game formats, such as collectible card games. However, this discourse is often without deeper analysis of the mechanics of different products at the center of convergence. Therefore, to add to this knowledge, this article examines the similarities and differences between booster packs in Magic Arena, their physical counterparts in Magic: The Gathering, and loot boxes included in digital games. Particular attention is paid to the ways in which these booster packs compare to loot boxes in terms of consumption patterns, visual appearance, contextual factors, and regulation. Analysis reveals that digital booster packs in Magic Arena differ from both loot boxes and physical card packs, both due to their direct impact on gameplay, and their unique features afforded by the digital environment in which they exist.
    Date: 2023–08–10
  22. By: Tan Vo-Thanh (Excelia Group | La Rochelle Business School, CeRIIM - Excelia Group | La Rochelle Business School, CEREGE - CEntre de REcherche en GEstion - EA 1722 - IAE Poitiers - Institut d'Administration des Entreprises (IAE) - Poitiers - Université de Poitiers - Université de Poitiers - ULR - La Rochelle Université); Mustafeed Zaman; Rajibul Hasan; Raouf Ahmad Rather; Rosa Lombardi; Giustina Secundo
    Date: 2021–10
  23. By: Leon Rincon, Carlos (Tilburg University, School of Economics and Management); Moreno, Jose; Soramaki, Kimmo
    Date: 2023
  24. By: Makram El-Shagi; Camélia Turcu (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - UT - Université de Tours)
    Date: 2021–10
  25. By: Shah, Shahid Manzoor; Ali, Amjad
    Abstract: Promoting financial inclusion is the priority of every country’s policymaker and financial experts. So that, every individual as well as business can get equal and affordable financial services. Because financial inclusion deals with providing affordable as well as equal access to financial products and services to the masses of the country, especially to the financially deprived entrepreneur as well as businesses. The importance of financial inclusion is widely recognized but the literature lacks the efficient, comprehensive, and updated measurement of financial inclusion which can be used to judge the accurate level of financial inclusion. This study tries to fulfill this gap by constructing an updated and comprehensive index of financial inclusion for developing countries by using the updated data from 2005 to 2020. This updated data is collected from the world bank, the central banks of every country, and the finance divisions of every country. Furthermore, this study constructs a macro-level multidimensional index of financial inclusion by using socio-economic and financial dimensions. The value of the constructed index lies between 0 to 1. This study divides the score of financial inclusion into three categories 0 to 0.30 for low financial inclusion, 0.31 to 0.50 for medium financial inclusion, and 0.51 to 1 for high financial inclusion. The present index reveals that all developing countries have a medium and lower level of financial inclusion. Estonia is the only country that achieve higher financial inclusion in 2009-10. This proposed index gives the updated measurement of financial inclusion which is easy to compare among economies.
    Keywords: Financial Inclusion, Macro Dimension, Socio-Economic, Financial inclusion index
    JEL: G2 O1
    Date: 2023–01
  26. By: McGowan, Féidhlim; Papadopoulos, Alexandros; Lunn, Pete
    Date: 2023
  27. By: Zubarev, Andrey (Зубарев, Андрей) (The Russian Presidential Academy of National Economy and Public Administration); Golovanova, Elizaveta (Голованова, Елизавета) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: Due to the growing popularity of the Internet, many purchases are made in online stores. The Google Trends service collects data based on user requests and breaks them down into categories. In this paper, we review the existing forecasting methods using this service, and make an attempt to predict the dynamics of retail sales using macroeconomic variables and categories in Google Trends corresponding to various commodity groups of food and non-food products. For each type of retail, we build the best predictive models from macroeconomic variables and try to improve them by adding trends.
    Date: 2021–12–14
  28. By: Legrand D.F. Saint-Cyr (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Lionel Védrine (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement, Territoires - Territoires - AgroParisTech - VAS - VetAgro Sup - Institut national d'enseignement supérieur et de recherche en alimentation, santé animale, sciences agronomiques et de l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UCA - Université Clermont Auvergne); Sophie Legras (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Julie Le Gallo (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Valentin Bellassen (CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)
    Abstract: Payments for Environmental or Ecosystem Services (PES) schemes have become a popular tool to address environmental degradation and to promote sustainable management of ecosystem services. We use metaregression analysis on a sample of 110 individual studies to investigate the determinants of the environmental effectiveness, defined as the probability to increase environmental services (ES) provision, of about 149 PESschemes implemented worldwide. We find that increased effectiveness of PES schemes is strongly associated with periodical third-party monitoring, generic reference design and to a lesser extent results-based payments. We further study the determinants of PES additionality, defined as direct changes in ES provision induced by the PES scheme, compared to a baseline without PES, on a smaller sample of 41 studies from which we could obtain the necessary data. The results confirm the role of certain design variables, such as monitoring type, and raise a potential trade-off between enrolment and additionality in the assessment of PES effectiveness.
    Keywords: Payment for Environmental Services PES, effectiveness, additionality
    Date: 2023–08
  29. By: Lisa Spantig (RWTH Aachen); Elif Kubilay (University of Essex); Jana Cahlíková (University of Bonn); Lucy Kaaria (University of Nairobi); Eva Raiber (Center for Economic Policy Research and Aix Marseille Université Économiques)
    Abstract: The recent expansion of digital financial products leads to severe consumer protection issues such as fraud and scams. As these potentially decrease trust in digital services, especially in developing countries, avoiding victimization has become an important policy objective. In an online experiment, we first investigate how well individuals in Kenya identify phone scams using a novel measure of scam identification ability. We then test the effectiveness of scam education, a commonly used approach by banks and institutions for fraud and scam prevention. We find that common tips on how to spot scams do not significantly improve individuals' scam identification ability, for example, the distinction of scams from genuine messages. This null effect is driven by an increase in correctly identified scams and a decrease in correctly identified genuine messages. We interpret this as an increase in caution. In addition, we find suggestive evidence that genuine messages that contain scamlike features are more likely to be misclassified, highlighting the importance of a careful design of official communication.
    Date: 2023–08–11
  30. By: Nwaobi, Godwin
    Abstract: Just as the African economy is confronting its sharpest reversal in a generation; Nigeria is currently faced with perhaps the most challenging economic downturn (amidst fuel subsidy removal) in its history. Thus, social protection programmes in the form of social cash transfers to vulnerable households and individuals have been adopted at an unprecedented scale across these economies. Specifically, this sector is emerging in Nigeria as the government recognizes the need to address not only deficits in the supply of services but also demand – side issues. In fact, despite positive economic growth, alarming number of Nigeria’s population lives in poverty. Although income inequality is just one dimension of poverty in Nigeria; poverty and vulnerability are highly influenced by social and other related factors. Here, patterns of poverty vary particularly by geographic location and maybe influenced by socio-cultural and religious norms as well as the prevalence of conflict and instability. Consequently, the ability to deliver and implement cash transfers is a key determinant as to whether they are an achievable social protection instrument in the country. While there is significant evidence on the impact of such programs on improving specific outcomes, there is limited evidence on their cost effectiveness as compared with other types of interventions. Thus, understanding the costs and benefits of implementing these programs is critically important in Nigeria where distributing cash involves significant logistical, operational and security costs. Therefore, this raises the fundamental question as to what extent payment digitization truly benefits the recipients of social cash transfers. Using randomized control trial (RCT) models on selected states from the six geo–political zones of Nigeria; this research paper shall provide workable evidence for policy decisions.
    Keywords: Poverty, Nigeria, RCT, Models, Impact evaluation, Propensity marching, Double difference, Income, Households, Inequality, Surveys, Anova, Cash transfers, Digital money, eNaira, Central bank, Programme impact, Nigeria states, Social protection, Vulnerability
    JEL: C80 C81 C83 C87 C9 C91 C92 C93 D1 D10 D19 D3 D60 E26 H30 H5 H53 H55 I30 I31 I32 I38 I39 O15
    Date: 2023–07–31
  31. By: Carlos Cañón; Jorge Florez-Acosta; Karoll Gómez
    Abstract: we examine how market structure, market power, and systemic risk respond to close and intense lending relationships between financial conglomerates (FCs) in non-centrally cleared bilateral repo. Using transaction-level data from Mexico, we document persistent and stable funding relationships between FC-affiliated banks and funds with two distinctive features: first, funding transactions are two-way, that is, a given pair of rival FCs provide lending to one another on the same day; second, two-way transactions are executed at lower average rates than one-way transactions. We show that two-way lending between FCs favours both market concentration and market power of FC-affiliated funds, and worsens the terms of trade of independent banks’ and funds’ lending. Furthermore, we find that the bank-level contribution to systemic risk increases with two-way lending. ******RESUMEN: Examinamos cómo la estructura del mercado, el poder de mercado y el riesgo sistémico re sponden a relaciones de financiamiento estrechas e intensas entre conglomerados financieros (CF) en mercados de repos bilaterales descentralizados. Usando datos a nivel transaccional de México, documentamos relaciones de financiamiento persistentes y estables entre bancos y fondos afiliados a CF con dos características distintivas: primero, las transacciones de financiamiento son bidirec cionales, es decir, un par dado de CF rivales proporciona financiamiento mutuo en el mismo día; segundo, las transacciones bidireccionales se ejecutan a tasas promedio más bajas en comparación con las transacciones unidireccionales. Mostramos que los préstamos bidireccionales entre los CF favorecen la concentración del mercado, aumentan el poder de mercado de los fondos afiliados a los CF y empeoran los términos de intercambio de las transacciones de crédito de bancos y fondos independientes. Además, encontramos que la contribución individual a nivel de banco al riesgo sistémico aumenta con los préstamos bidireccionales.
    Keywords: Repo market, Financial conglomerates, Relationship lending, two-way lending, Competition, Concentration, Market power, Financial stability, mercado repo, conglomerados financieros, relación de financiamiento, financiamiento bidireccional, competencia, concentración, poder de mercado, estabilidad financiera
    JEL: G1 G23 G28 L4 L22
    Date: 2023–08
  32. By: Thomas Michaud (ISI - Centre de recherche sur l’Innovation et les Stratégies Industrielles - ULCO - Université du Littoral Côte d'Opale)
    Abstract: Imaginary representations of hackers in science fiction have evolved since the 1960s. Cyberpunks have helped popularize the image of a rebellious, often anarchical, individual, who wields considerable technological power. In this article, a panorama of the most famous works featuring hackers is drawn up. Neuromancer, Snow Crash, Sword Art Online, The Matrix or Salvation are the most notable. The hacker character can either be a hero defending libertarian values, or a dangerous terrorist harmful to the human race. These representations have, in turn, had an influence on representations of cybercrime. They have influenced vocations among future computer scientists, as well as inspired the research of cybersecurity specialists. At the economic level, hackerspaces are based on a philosophy inspired by the digital anarchism of cyberpunks.
    Abstract: Les représentations imaginaires des hackers dans la science-fiction ont évolué depuis les années 1960. Les cyberpunks ont contribué à populariser l'image d'un individu révolté, souvent anarchiste, détenteur d'un pouvoir technologique considérable. Un panorama des oeuvres les plus connues mettant en scène des hackers est dressé. Neuromancien, Le Samourai Virtuel, Sword Art Online, Matrix ou Salvation sont les plus marquantes. Le hacker peut notamment être un héros défendant des valeurs libertariennes, ou un dangereux terroriste nuisible au genre humain. Ces fictions ont eu une influence sur les représentations de la cybercriminalité. Elles ont suscité des vocations chez les futurs informaticiens, et inspiré les recherches de spécialistes de cybersécurité. Au niveau économique, les hackerspaces s'appuient sur une philosophie inspirée par l'anarchisme numérique des cyberpunks.
    Keywords: Cybercriminality, Anarchism, Science-fiction, Hackers, Science fiction, Cybercriminalité, Anarchisme, Cyberpunk
    Date: 2023–01

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.