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on Payment Systems and Financial Technology |
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Issue of 2024‒01‒15
twenty papers chosen by |
| By: | Alan Gelb (Center for Global Development); Anit Mukherjee (Center for Global Development); Brian Webster (Center for Global Development) |
| Abstract: | Bangladesh’s Primary Education Stipend Program (PESP) provides stipends for 13 million primary schoolchildren to 10 million mothers. In 2017 the method of payment changed from cash to mobile money. This study considers the experience of the mothers with the shift to mobile money, and to the change in payments service provider that took place in 2019, through a survey of recipients and a control group. We explore the experience and perception of beneficiaries vis-a-vis the receipt of digital transfers, convenience of transactions and ability to use digital payment systems. We also consider spillovers onto financial inclusion and use, and whether the stipend and the method of payment, has increased women’s economic empowerment. Our analysis indicates that PESP beneficiaries overwhelmingly support the transition to digital payments. While a modest number think that cash-out points are too far away, they are in general, satisfied with the convenience of making withdrawals. We find positive perception of women in terms of their degree of control over the use of the funds following the shift to digital payment, particularly for those who have their own phone. Taking account of the views of the beneficiaries themselves, our survey provides support to the proposition that digital G2P payments have contributed to an improvement in women’s sense of empowerment and their ability to make independent decisions on matters relating to household finances and specifically, for their children. The study also finds positive spillover effects onto financial competition and inclusion more generally, with the rapid growth of the new payment service provider for PESP stipends. Finally, digital transfer of stipends through mobile phone wallets can provide a “nudge” towards the use of digital transactions for other purposes, but this is conditional on personal attributes of beneficiaries. For many mothers, limited digital literacy and capacity to read and write SMS presents a serious barrier to greater uptake of digital financial services, an issue that needs to be addressed by policymakers in Bangladesh as well as globally. |
| Date: | 2023–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:ppaper:284&r=pay |
| By: | Mr. Serhan Cevik |
| Abstract: | Rapid advances in digital technology are revolutionizing the financial landscape. The rise of fintech has the potential to make financial systems more efficient and competitive and broaden financial inclusion. With greater technological complexity, however, fintech also poses potential systemic risks. In this paper, I use a novel dataset to trace the development of fintech (excluding cryptocurrencies) and empirically assess its impact on financial stability in a panel of 198 countries over the period 2012–2020. The analysis provides interesting insights into how fintech correlates with financial stability: (i) the impact magnitude and statistical significance of fintech depend on the type of instrument (digital lending vs. digital capital raising); (ii) the overall effect of all fintech instruments together turns out to be negative because of the overwhelming share of digital lending in total, albeit statistically insignificant; and (iii) while digital capital raising is estimated to have a positive effect on financial stability in advanced economies, its effect is negative in developing countries. Fintech is still small compared to traditional institutions, but rapidly expanding in riskier segments of the financial sector and creating new challenges for policymakers. |
| Keywords: | Fintech; financial innovation; financial stability |
| Date: | 2023–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/253&r=pay |
| By: | Alan Gelb (Center for Global Development); Anit Mukherjee (Center for Global Development); Brian Webster (Center for Global Development) |
| Abstract: | Kenya moved towards electronic payments of social benefits in 2013. In 2018 the payments system for its premier social protection program, Inua Jamii, was restructured to offer most, but not all, beneficiaries a choice between several payment service providers (PSPs), all commercial banks. This study surveys the payment system from the perspective of recipients, including their views on convenience and the benefits from competition. It also considers whether these digital G2P payments programs have increased financial inclusion more generally – recognizing that this was already high in Kenya due to the market penetration of M-Pesa digital wallets. It finds strong support for making payments through financial accounts. The overwhelming majority of respondents consider this to be a good system, with some favoring the commercial bank channel and others expressing a preference for direct payments through wallets. There is strong support for offering choice where this is feasible, but we find that the single payer G2P model can also be effective depending on local conditions. While social transfers may have enabled poor people to afford cell phones and mobile money accounts, the system can be developed further to enhance financial services access. |
| Date: | 2023–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:cgd:ppaper:282&r=pay |
| By: | Agostino Capponi; Garud Iyengar; Jay Sethuraman |
| Abstract: | Financial markets are undergoing an unprecedented transformation. Technological advances have brought major improvements to the operations of financial services. While these advances promote improved accessibility and convenience, traditional finance shortcomings like lack of transparency and moral hazard frictions continue to plague centralized platforms, imposing societal costs. In this paper, we argue how these shortcomings and frictions are being mitigated by the decentralized finance (DeFi) ecosystem. We delve into the workings of smart contracts, the backbone of DeFi transactions, with an emphasis on those underpinning token exchange and lending services. We highlight the pros and cons of the novel form of decentralized governance introduced via the ownership of governance tokens. Despite its potential, the current DeFi infrastructure introduces operational risks to users, which we segment into five primary categories: consensus mechanisms, protocol, oracle, frontrunning, and systemic risks. We conclude by emphasizing the need for future research to focus on the scalability of existing blockchains, the improved design and interoperability of DeFi protocols, and the rigorous auditing of smart contracts. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.01018&r=pay |
| By: | Dalton, Patricio (Tilburg University, School of Economics and Management); van Soest, Daan (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management) |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:a85169a4-253e-40a5-b46a-78a59cece42d&r=pay |
| By: | Yutong Quan; Xintong Wu; Wanlin Deng; Luyao Zhang |
| Abstract: | Blockchain technology is leading a revolutionary transformation across diverse industries, with effective governance standing as a critical determinant for the success and sustainability of blockchain projects. Community forums, pivotal in engaging decentralized autonomous organizations (DAOs), wield a substantial impact on blockchain governance decisions. Concurrently, Natural Language Processing (NLP), particularly sentiment analysis, provides powerful insights from textual data. While prior research has explored the potential of NLP tools in social media sentiment analysis, a gap persists in understanding the sentiment landscape of blockchain governance communities. The evolving discourse and sentiment dynamics on the forums of top DAOs remain largely unknown. This paper delves deep into the evolving discourse and sentiment dynamics on the public forums of leading DeFi projects -- Aave, Uniswap, Curve Dao, Aragon, Yearn.finance, Merit Circle, and Balancer -- placing a primary focus on discussions related to governance issues. Despite differing activity patterns, participants across these decentralized communities consistently express positive sentiments in their Discord discussions, indicating optimism towards governance decisions. Additionally, our research suggests a potential interplay between discussion intensity and sentiment dynamics, indicating that higher discussion volumes may contribute to more stable and positive emotions. The insights gained from this study are valuable for decision-makers in blockchain governance, underscoring the pivotal role of sentiment analysis in interpreting community emotions and its evolving impact on the landscape of blockchain governance. This research significantly contributes to the interdisciplinary exploration of the intersection of blockchain and society, with a specific emphasis on the decentralized blockchain governance ecosystem. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.14676&r=pay |
| By: | Pierpaolo Benigno |
| Abstract: | This paper provides insights into the historical inefficiencies and instabilities of the international monetary system. These inefficiencies are primarily linked to the limited supply of international liquidity and wedges in various money-market rates. The instabilities encompass both macroeconomic and financial aspects, particularly focusing on the challenges of stabilizing inflation and economic activity. Innovations stemming from the competition of cryptocurrencies and the associated blockchain technology hold the potential for improving these outcomes. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp2313&r=pay |
| By: | Sebastian Infante; Kyungmin Kim; Anna Orlik; André F. Silva; Robert J. Tetlow |
| Abstract: | This paper reviews the literature examining how the introduction of a retail CBDC would affect the banking sector and financial stability. A CBDC has the potential to improve welfare by reducing financial frictions, countering market power in deposit markets and enhancing the payment system. However, a CBDC also entails noteworthy risks, including the possibility of bank disintermediation and associated contraction in bank credit, as well as potential adverse effects on financial stability. The recycling of the new CBDC liability through asset purchases or lending by the central bank plays an important role in determining the economic consequences of the introduction of a CBDC. A CBDC also raises important questions regarding the footprint of central banks in the financial system. Ultimately, the effects of a CBDC depend critically on its design features, of which remuneration is the one discussed most often in the literature. |
| Keywords: | Central bank digital currency; Bank disintermediation; Financial stability; Central bank balance sheet; Payment system |
| JEL: | E40 G20 E50 |
| Date: | 2023–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2023-72&r=pay |
| By: | Guillaume Dumont (EM - emlyon business school); Stefano de Marco; Ellen Heslper |
| Abstract: | "How do people experience the platform-mediated job search process? We explore this question based on a sample of in-depth interviews (n = 20) with low-qualified, unemployed Spanish job seekers. Our main finding shows that the ways they use Information and Communication Technologies negatively impact their engagement in online job search activities. Based on our findings, we develop a framework of online job search discouragement revolving around crafting online profiles, applying for jobs, reviewing application statuses and integrating the tensions these activities carry for the experience and the outcome of the platform-mediated job search." |
| Keywords: | Online job search, Employment platforms, Job discouragement, Low-skilled job seekers |
| Date: | 2023–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04325753&r=pay |
| By: | Lydia Ottlewski; Joonas Rokka (EM - emlyon business school); John W. Schouten |
| Abstract: | "Research has recently highlighted processes of platformization through which consumer activities are shaped by socio-technical features of digital environments. Prior theorizations have focused on corporate-initiated platform dynamics and affordances, emphasizing either the managerial facets of platformization or how consumers use and interact with these platforms. Our interpretive research on Familyship.org offers a contrasting case and theorizes how ordinary consumers, thwarted by social and legal constraints in their desires to create families, leverage platformization for family creation and consumption. Our findings conceptualize consumer-initiated platforms and show how their key affordances—embeddedness, privacy, modularization, and scaling—shape one of the most sacred spheres of life, the institution of family. Our study contributes by theorizing how consumer-initiated platform affordances differ from dominant corporate-initiated ones and why the differences matter. We discuss how they can help consumers to find solutions to acute consumption problems and to reimagine dominant cultural institutions." |
| Keywords: | platforms, family, consumer culture |
| Date: | 2023–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04325754&r=pay |
| By: | Pujadas, Roser; Valderrama, Erika; Venters, Will |
| Keywords: | interface; web API; orchestration; governance; ecosystem; digital innovation; entrepreneurship; digitlal economy; online travel; decentralized interfaces |
| JEL: | J50 J1 |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:121118&r=pay |
| By: | Le Tung Bach |
| Abstract: | One of the main stages for achieving success is the adoption of new technology by its users. Several studies show that Property technology is advantageous for real estate stakeholders. Hence, the purpose of this paper is to investigate the users' engagement behavior to adopt Property technology in the Vietnamese real estate market. To that end, a purposive sample of 142 participants was recruited to complete an online quantitative approach based survey. The survey consisted of a modified and previously validated measure of acceptance based on the extended demographic version of the unified theory of acceptance and use of technology), as well as usage scale items. The empirical findings confirm that participants were generally accepting of Property technology in the Vietnamese real estate market. The highest mean values were associated with the subscales of effort expectancy and performance expectancy, while we can easily identify the lowest mean value in the social influence subscale. The usage of Property technology was slightly more concerned with the gathering of information on properties and markets than transactions or portfolio management. This study provides an in depth understanding of Property technology for firms' managers and marketers. Online social interactions might be either harmful or fruitful for firms depending on the type of interaction and engagement behavior. This is especially true of property portals and social media forums that would help investors to connect, communicate and learn. Findings can help users to improve their strategies for digital marketing. By providing robust findings by addressing issues like omitted variables and endogeneity, the findings of this study are promising for developing new hypotheses and theoretical models in the context of the Vietnamese real estate market. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.06994&r=pay |
| By: | Sean Ennis (UEA - University of East Anglia [Norwich]); Marc Ivaldi (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Vicente Lagos (IP Paris - Institut Polytechnique de Paris) |
| Abstract: | This paper examines the impact of most favored nation (MFN) clauses on retail prices, taking advantage of two natural experiments that changed vertical contracting between hotels and major digital platforms. The broad E.U. intervention narrowed the breadth of "price parity" obligations between hotels and major Online Travel Agencies (OTAs). Direct sales by hotels to customers subsequently became relatively cheaper. Comparisons with hotel pricing outside the E.U. confirm the reduction in prices for mid-level and luxury hotels. France and Germany went further and eliminated all price-parity agreements. This stronger intervention was associated solely with a significant additional price-reducing effect for mid-level hotels in Germany. Overall, wide MFNs are associated with higher retail prices. Regulating MFNs reduced prices with primary effects coming either from the narrow price-parity intervention or, perhaps, from direct sales becoming cheaper than OTAs in both E.U. and non-E.U. countries, and, interestingly, not from complete elimination of MFNs. |
| Keywords: | Price Parity Clause (PPC), Most favored nation (MFN), Most favored customer (MFC), Hotel Industry, Impact Evaluation, Online Travel Agency (OTA), digital platforms |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04315828&r=pay |
| By: | Anh Le; Alexander Copestake; Brandon Tan; Mr. Shanaka J Peiris; Umang Rawat |
| Abstract: | We develop a two-country New Keynesian model with endogenous currency substitution and financial frictions to examine the impact on a small developing economy of a stablecoin issued in a large foreign economy. The stablecoin provides households in the domestic economy with liquidity services and an additional hedge against domestic inflation. Its introduction amplifies currency substitution, reducing bank intermediation and weakening monetary policy transmission, worsening the impacts of recessionary shocks and increasing banking sector stress. Capital controls raise stablecoin adoption as a means of circumvention, increasing exposure to spillovers from foreign shocks. Unlike a domestic CBDC, a ban on stablecoin payments can alleviate these effects. |
| Keywords: | Cryptocurrency; Open Economy; Financial Frictions; Optimal Policy |
| Date: | 2023–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2023/249&r=pay |
| By: | Nir Chemaya; Lin William Cong; Emma Jorgensen; Dingyue Liu; Luyao Zhang |
| Abstract: | DeFi is transforming financial services by removing intermediaries and producing a wealth of open-source data. This transformation is propelled by Layer 2 (L2) solutions, aimed at boosting network efficiency and scalability beyond current Layer 1 (L1) capabilities. This study addresses the lack of detailed L2 impact analysis by examining over 50 million transactions from Uniswap. Our dataset, featuring transactions from L1 and L2 across networks like Ethereum and Polygon, provides daily indices revealing adoption, scalability, and decentralization within the DeFi space. These indices help to elucidate the complex relationship between DeFi and L2 technologies, advancing our understanding of the ecosystem. The dataset is enhanced by an open-source Python framework for computing decentralization indices, adaptable for various research needs. This positions the dataset as a vital resource for machine learning endeavors, particularly deep learning, contributing significantly to the development of Blockchain as Web3's infrastructure. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.02660&r=pay |
| By: | Ravi Kashyap |
| Abstract: | The primary innovation we pioneer -- focused on blockchain information security -- is called the Safe-House. The Safe-House is badly needed since there are many ongoing hacks and security concerns in the DeFi space right now. The Safe-House is a piece of engineering sophistication that utilizes existing blockchain principles to bring about greater security when customer assets are moved around. The Safe-House logic is easily implemented as smart contracts on any decentralized system. The amount of funds at risk from both internal and external parties -- and hence the maximum one time loss -- is guaranteed to stay within the specified limits based on cryptographic fundamentals. To improve the safety of the Safe-House even further, we adapt the one time password (OPT) concept to operate using blockchain technology. Well suited to blockchain cryptographic nuances, our secondary advancement can be termed the one time next time password (OTNTP) mechanism. The OTNTP is designed to complement the Safe-House making it even more safe. We provide a detailed threat assessment model -- discussing the risks faced by DeFi protocols and the specific risks that apply to blockchain fund management -- and give technical arguments regarding how these threats can be overcome in a robust manner. We discuss how the Safe-House can participate with other external yield generation protocols in a secure way. We provide reasons for why the Safe-House increases safety without sacrificing the efficiency of operation. We start with a high level intuitive description of the landscape, the corresponding problems and our solutions. We then supplement this overview with detailed discussions including the corresponding mathematical formulations and pointers for technological implementation. This approach ensures that the article is accessible to a broad audience. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2312.00033&r=pay |
| By: | Baganz, Emilie; McMahon, Tadgh; Khorana, Sukhmani; Magee, Liam; Culos, Ingrid |
| Abstract: | Globally we are living through a continuing transition into the ‘information age’, where information and communication technology has transformed almost every aspect of people’s lives. The COVID-19 pandemic arguably accelerated this change. For refugees, as with other people, digital inclusion is arguably critical to social inclusion. This article seeks to better understand the digital inclusion of refugees during the COVID-19 pandemic, using data from two phases of research conducted in 2020 and 2021 with refugees who had recently resettled in Australia. Digital inclusion was mapped against three domains – access, affordability, and literacy – used in the annual Australian Digital Inclusion Index. Our research makes three contributions: it examines levels of digital inclusion among recently arrived refugees; it explores the relation of these levels to social links and bonds; and discusses differences within the sample according to gender, age, language group and type of digital inclusion. |
| Date: | 2023–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:nqu8c&r=pay |
| By: | Martimort, David; Sand-Zantman, Wilfried |
| Abstract: | We analyze the effect of media mergers in a model that stresses, on the one hand, the fact that media are two-sided platforms willing to attract advertisers and viewers and, on the other hand, that strong competitors have emerged to challenge traditional media on both sides. We show that a merger has two conflicting effects on traditional media’s incentives to invest in quality programs and to exploit their market power. When competition is primarily between traditional media, a Business-Stealing Effect dominates, and the merger is detrimental to advertisers and viewers. When the competition is mainly between the traditional media and their new competitors, an Ecosystem Effect dominates, and the merger benefits advertisers and viewers. We extend this setting to discuss the role of financial constraints that might limit investments in the quality of programs and show that the same effects are at play. |
| Keywords: | Media; competition; merger |
| JEL: | L82 L22 G34 |
| Date: | 2023–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128764&r=pay |
| By: | Elisabeth Honka; Stephan Seiler; Raluca Ursu |
| Abstract: | Researchers are increasingly able to observe consumers’ behavior prior to a purchase, such as their navigation through a store or website and the products they consider. Such pre-purchase (or search) data can be valuable to researchers in a variety of ways: as an additional source of information to estimate consumer preferences, to understand how firms can influence the search process through marketing mix variables, and to analyze how limited information about products shapes market outcomes. We provide an overview of these three areas with a particular emphasis on online and offline retailing. |
| Keywords: | consumer search, limited information, consideration sets, retailing |
| JEL: | D43 D83 L13 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10786&r=pay |
| By: | Roberto A. Weber; Sili Zhang |
| Abstract: | We study consumers’ concerns for the ideological values of their market counterparts and the implications of such concerns for the public promotion of values. Using a survey and online and laboratory experiments, we find that consumers are willing to pay premiums to exchange with counterparts who demonstrate support for their values. When sellers anticipate the possibility of market exchange, they exhibit public support for consumers’ values. Our findings challenge notions that market exchange is impersonal, suggest that public value positions can provide a dimension of firm differentiation, and provide evidence that market exchange can influence public support for ideological values. |
| Keywords: | market exchange, ideology, values, experiment |
| JEL: | A13 C90 D12 D22 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10809&r=pay |