|
on Payment Systems and Financial Technology |
|
Issue of 2024‒03‒25
23 papers chosen by |
| By: | Colombo, Jéfferson Augusto; Yarovaya, Larisa |
| Abstract: | Cryptocurrencies and blockchain have become a global phenomenon, transforming people’s relationships with technology and offering innovative tools for businesses and individuals to strive in a digital age. However, little is still known about the main drivers of cryptocurrency ownership, especially in emerging markets. Based on a representative online survey among 573 Brazilian digital platform investors, we find that crypto investors tend to be young, male, more tolerant to risk, less optimistic in their economic views, and consider themselves as ‘better’ investors compared to non-crypto online traders. While crypto and non-crypto investors have similar educational backgrounds, our results show that cryptocurrency literacy positively and strongly relates to cryptocurrency ownership and intentions to invest in cryptocurrency. A gender gap among cryptocurrency investors has been confirmed. The findings further suggest that sophisticated investors are more likely to hedge pessimistic economic expectations using cryptocurrency than their unsophisticated peers. We also find significant heterogeneity among cryptocurrency investors (e.g., early x late adopters) on attitudes and beliefs. The insights into digital investors’ intentions to invest in cryptocurrency can be valuable for policymakers in designing strategies for the broader adoption of digital assets in the era of a decentralized economy, considering the planned adoption of CBDC in Brazil. |
| Date: | 2024–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:eesptd:568&r=pay |
| By: | Kankanhalli, Shreya (Cornell U); Anderson, Stephen J. (Texas A&M U); Iacovone, Leonardo (World Bank and Hertie School); Narayanan, Sridhar (Stanford U) |
| Abstract: | Across emerging economies, physical cash is the ubiquitous means of transaction for retailers and their consumers. Despite the widespread availability, affordability and benefits of Fintech solutions for digital payments in these regions, there is an observed failure by the vast majority of retail firms to accept digital payments. Our paper examines this puzzle to uncover causes and solutions for such two-sided platform adoption failure in offline retail contexts. Using evidence from a random audit of a nationwide "Fintech-drop" public program in Mexico, we propose that two critical frictions constrain the adoption (i.e., initial take-up and usage) of two-sided Fintech platforms: (i) on the supply-side, platform onboarding is highly complex; and (ii) on the demand-side, retailers do not perceive enough consumer demand to justify adoption. We design two novel interventions in the business-to-business (B2B) and business-to-consumer (B2C) channels targeting the respective frictions and test their efficacy through a randomized controlled field experiment with 479 retailers in Guadalajara, Mexico. The B2B intervention increases successful Fintech solution adoption by 21.4 percentage points versus the control group, while the B2C intervention has an additional positive impact in increasing adoption rates by 13.4 percentage points versus the B2B group. The B2B intervention effect is driven by overcoming critical onboarding challenges to promote initial take-up of Fintech, while the B2C intervention effect is driven by growing local consumer demand to use digital payments when shopping. These results have implications for managers and policymakers promoting two-sided platform adoption and driving payment digitization in emerging economies. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4159&r=pay |
| By: | Jeffrey Allen; Hamzah Daud; Jochen Demuth; Daniel Little; Megan Rodden; Amber Seira; Cy Watsky |
| Abstract: | Stablecoins are increasingly important in decentralized finance (DeFi) and crypto asset markets, and their prominence has led to greater scrutiny of their unique role as expressions of the U.S. dollar running on blockchain networks. Stablecoins attempt to perform a mechanically complex function – to remain pegged to the dollar, even during periods of market volatility. |
| Date: | 2024–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfn:2024-02-23-3&r=pay |
| By: | Tao Yan; Shengnan Li; Benjamin Kraner; Luyao Zhang; Claudio J. Tessone |
| Abstract: | Ethereum 2.0, as the preeminent smart contract blockchain platform, guarantees the precise execution of applications without third-party intervention. At its core, this system leverages the Proof-of-Stake (PoS) consensus mechanism, which utilizes a stochastic process to select validators for block proposal and validation, consequently rewarding them for their contributions. However, the implementation of blockchain technology often diverges from its central tenet of decentralized consensus, presenting significant analytical challenges. Our study collects consensus reward data from the Ethereum Beacon chain and conducts a comprehensive analysis of reward distribution and evolution, categorizing them into attestation, proposer and sync committee rewards. To evaluate the degree of decentralization in PoS Ethereum, we apply several inequality indices, including the Shannon entropy, the Gini Index, the Nakamoto Coefficient, and the Herfindahl-Hirschman Index (HHI). Our comprehensive dataset is publicly available on Harvard Dataverse, and our analytical methodologies are accessible via GitHub, promoting open-access research. Additionally, we provide insights on utilizing our data for future investigations focused on assessing, augmenting, and refining the decentralization, security, and efficiency of blockchain systems. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.11170&r=pay |
| By: | Yan, Tao; Li, Shengnan; Kraner, Benjamin; Zhang, Luyao; Tessone, Claudio J. |
| Abstract: | Ethereum 2.0, as the preeminent smart contract blockchain platform, guarantees the precise execution of applications without third-party intervention. At its core, this system leverages the Proof-of-Stake (PoS) consensus mechanism, which utilizes a stochastic process to select validators for block proposal and validation, consequently rewarding them for their contributions. However, the implementation of blockchain technology often diverges from its central tenet of decentralized consensus, presenting significant analytical challenges. Our study collects consensus reward data from the Ethereum Beacon chain and conducts a comprehensive analysis of reward distribution and evolution, categorizing them into attestation, proposer, and sync committee rewards. To evaluate the degree of decentralization in PoS Ethereum, we apply several inequality indices, including the Shannon entropy, the Gini Index, the Nakamoto Coefficient, and the Herfindahl-Hirschman Index (HHI). Our comprehensive dataset is publicly available on Harvard Dataverse, and our analytical methodologies are accessible via GitHub, promoting open-access research. Additionally, we provide insights on utilizing our data for future investigations focused on assessing, augmenting, and refining the decentralization, security, and efficiency of blockchain systems. |
| Date: | 2024–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:6ceuz&r=pay |
| By: | Guy Aridor; Rafael Jiménez-Durán; Ro'ee Levy; Lena Song |
| Abstract: | We review the burgeoning literature on the economics of social media, which has become ubiquitous in the modern economy and fundamentally changed how people interact. We first define social media platforms and isolate the features that distinguish them from traditional media and other digital platforms. We then synthesize the main lessons from the empirical economics literature and organize them around the three stages of the life cycle of user-generated content: (1) production, (2) distribution, and (3) consumption. Under production, we discuss how incentives affect content produced on and off social media and how harmful content is moderated. Under distribution, we discuss the social network structure, algorithms, and targeted advertisements. Under consumption, we discuss how social media affects individuals who consume its content and society at large, and discuss consumer substitution patterns across platforms. Throughout the review, we delve into case studies examining the deterrence of misinformation, segregation, political advertisements, and the effects of social media on political outcomes. We conclude with a brief discussion on the future of social media. |
| Keywords: | social media, media economics, user-generated content |
| JEL: | L82 L96 P00 D60 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10934&r=pay |
| By: | Hall, Andrew B. (Stanford U); Oak, Eliza R. (Yale U) |
| Abstract: | How can we democratically govern the AI, social media, and online platforms of the future? Today, low participation is a major barrier to community governance online. We leverage a digital quasi-experiment that allows us to study the links between incentives and political participation at a scale and granularity not previously possible. We focus on a web3 startup called Optimism that distributed digital tokens worth roughly $28 million USD to more than 300, 000 active participants in its governance system as part of a sequence of rewards meant to encourage long-run engagement. Studying 1.2 million unique wallet addresses, we find that the reward scheme induces new users to participate in Optimism's governance, has larger effects for smaller token holders, and leads voters to spread their votes across delegates more widely. Together, the results suggest that reward schemes that give people a durable stake in the community and promise a sequence of future rewards are able to broaden participation in online democracy noticeably, at least in the short run under the proper conditions. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4130&r=pay |
| By: | Wajeeha Ahmad; Ananya Sen; Chuck Eesley; Erik Brynjolfsson |
| Abstract: | The financial motivation to earn advertising revenue by spreading misinformation has been widely conjectured to be among the main reasons misinformation continues to be prevalent online. Research aimed at reducing the spread of misinformation has so far focused on user-level interventions with little emphasis on how the supply of misinformation can itself be countered. In this work, we show how online misinformation is largely financially sustained via advertising, examine how financing misinformation affects the advertisers and ad platforms involved and outline ways of reducing the financing of misinformation. First, we find that advertising on misinformation outlets is pervasive for companies across several industries and is amplified by digital ad platforms that automatically distribute companies’ ads across the web. Using an information provision survey experiment, we show that people decrease their demand for a company’s products or services upon learning about its role in monetizing misinformation via online ads. To shed light on why misinformation continues to be monetized despite the potential backlash for the advertisers involved, we survey decision-makers at companies. We find that most decision-makers are unaware of their companies’ ads appearing on misinformation websites but have a strong preference to avoid appearing on such websites. Moreover, those uncertain and unaware about their role in financing misinformation increase their demand for a platform-based solution to reduce monetizing misinformation upon learning about how platforms amplify ad placement on misinformation websites. We identify low-cost, scalable information-based interventions that digital platforms could implement to reduce the financial incentive to misinform and counter the supply of misinformation online. |
| JEL: | D8 M30 O3 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32187&r=pay |
| By: | Julia M. Puaschunder (Columbia University, USA) |
| Abstract: | This article discusses the role of digitalization for diplomacy. In a currently-unfolding new type of evolution of lawmaking through digital media, digitalization has become a central component of the online creation of law. Classical traditional means of diplomacy have changed in light of social online media and digital content. This article introduces the role of online communication as a new diplomacy gateway that cuts traditional red tape. Digital diplomacy being more transparent than previous forms of traditional diplomacy, has made international affairs more visible to multiple stakeholders instantaneously. In this feature, digital diplomacy appears to be more openly accessible to everyone to witness and more likely to be influenced by multiple streams, also on a truly global stage. At the same time, digital diplomacy brings along crowd influences and manipulation threats. Given the diminishing role of traditional media and nation-states’ shrinking control over online information exchange as well as censorship, digital diplomacy can become a contested terrain of multiple rather uncontrollable forces at play concurrently. Clear downsides are the strategic manipulation of democratic processes possible in digitalized media. Internet vulnerabilities as well as digital inequality in terms of access to online information and technology skills are additional areas of improvement for digital diplomacy. The paper closes with a future prospect of the law and economics of digital diplomacy and a call for the need to address human rights online. |
| Keywords: | Censorship, Comparative Law, Democracy, Digitalization, Digital diplomacy, Diplomacy, Economics, Global governance, Human rights, International affairs, Internet, Leadership, Political E-marketing, Public Administration, Public Policy, Social Online Media |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:smo:raiswp:0274&r=pay |
| By: | Guy Aridor; Yeon-Koo Che |
| Abstract: | We use a novel dataset of online advertiser performance and product sales to quantify the medium-term economic effects of Apple’s App Tracking Transparency Policy (ATT). We find that ATT significantly degraded the ability by Facebook advertisers to target advertisements based on its off-platform data. A within-advertiser comparison reveals that conversion-optimized advertisements, for which such data is crucial for targeting, suffered a 37.1% reduction in click-through rates, compared with clicks-optimized advertisements that depend less on such data, indicating a significant fall in the relevance of the former ads as perceived by users. Although advertisers did appear to substitute away from Facebook for the Google ecosystem, those with higher baseline dependence on Facebook experienced difficulty in customer acquisition, receiving 26.2% fewer orders from new customers. |
| Keywords: | privacy, app tracking transparency, online advertising, privacy regulation, social media |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10928&r=pay |
| By: | Joerg Osterrieder; Stephen Chan; Jeffrey Chu; Yuanyuan Zhang; Branka Hadji Misheva; Codruta Mare |
| Abstract: | Blockchain technology, a foundational distributed ledger system, enables secure and transparent multi-party transactions. Despite its advantages, blockchain networks are susceptible to anomalies and frauds, posing significant risks to their integrity and security. This paper offers a detailed examination of blockchain's key definitions and properties, alongside a thorough analysis of the various anomalies and frauds that undermine these networks. It describes an array of detection and prevention strategies, encompassing statistical and machine learning methods, game-theoretic solutions, digital forensics, reputation-based systems, and comprehensive risk assessment techniques. Through case studies, we explore practical applications of anomaly and fraud detection in blockchain networks, extracting valuable insights and implications for both current practice and future research. Moreover, we spotlight emerging trends and challenges within the field, proposing directions for future investigation and technological development. Aimed at both practitioners and researchers, this paper seeks to provide a technical, in-depth overview of anomaly and fraud detection within blockchain networks, marking a significant step forward in the search for enhanced network security and reliability. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.11231&r=pay |
| By: | Jeroen Rombouts; Marie Ternes; Ines Wilms |
| Abstract: | Platform businesses operate on a digital core and their decision making requires high-dimensional accurate forecast streams at different levels of cross-sectional (e.g., geographical regions) and temporal aggregation (e.g., minutes to days). It also necessitates coherent forecasts across all levels of the hierarchy to ensure aligned decision making across different planning units such as pricing, product, controlling and strategy. Given that platform data streams feature complex characteristics and interdependencies, we introduce a non-linear hierarchical forecast reconciliation method that produces cross-temporal reconciled forecasts in a direct and automated way through the use of popular machine learning methods. The method is sufficiently fast to allow forecast-based high-frequency decision making that platforms require. We empirically test our framework on a unique, large-scale streaming dataset from a leading on-demand delivery platform in Europe. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.09033&r=pay |
| By: | Saleem Bahaj (UCL); Ricardo Reis (London School of Economics (LSE); Centre for Macroeconomics (CFM)) |
| Abstract: | China’s current account transactions use an offshore international currency, the CNH, that co-exists as a parallel currency with the mainland domestic currency, the CNY. The CNH is freely used, but by restricting its exchange for CNY, the authorities can enforce capital controls. Sustaining these controls requires tight management of the money supply and liquidity to keep the exchange rate between the dual currencies pegged. After describing how the central bank implements this system, we find a rare instance of identified, exogenous, transitory increases in the supply of money and estimate by how much they depreciate the exchange rate. Theory and evidence show that elastically supplying money in response to demand shocks can maintain a currency peg. Liquidity policies complement these monetary interventions to deal with the pressure on the peg from financial innovation. Finally, deviations from the CNH/CNY peg act as a pressure valve to manage the exchange rate between the yuan and the US dollar. |
| Keywords: | Chinese monetary policy, Gresham’s law, Goodhart’s law, Money markets, RMB |
| JEL: | F31 F33 E51 G15 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:2401&r=pay |
| By: | Gabriel, Stefan (University of Vienna, Department of Finance, Vienna, Austria); Kunst, Robert M. (Institute for Advanced Studies and University of Vienna, Vienna, Austria) |
| Abstract: | We examine two major topics in the field of cryptocurrencies. On the one hand, we investigate possible long-run equilibrium relationships among ten major cryptocurrencies by applying two different cointegration tests. This analysis aims at constructing cointegrated portfolios that enable statistical arbitrage. Moreover, we find evidence for a connection between market volatility and the spread used for trading. The results of the trading strategies suggest that cointegrated portfolios based on the Johansen procedure generate the highest abnormal log-returns, both in-sample and out-of-sample. Five out of six trading strategies generate a positive overall profit and outperform a passive investment approach out-of-sample. The second part of the econometric analysis explores Granger causality between volatility and the spread. For this analysis, we implement two types of forecasting models for Bitcoin volatility: the GARCH (generalized autoregressive conditional heteroskedasticity) family using daily price data and the HAR (Heterogeneous AutoRegressive) model family based on 5-min high-frequency data. In both categories, we also consider potential jumps in the price series, as we found that price jumps play an important role in Bitcoin volatility forecasts. The findings indicate that the realized GARCH model is the only GARCH model that can compete against the HAR-RV (Heterogeneous Autoregressive Realized Volatility) model in out-of-sample forecasting. |
| Keywords: | cryptocurrencies, bitcoin volatility, realized variance, jump variation, cointegrated portfolios, statistical arbitrage |
| JEL: | C22 C52 C53 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihswps:52&r=pay |
| By: | Huang, Justin (U of Michigan); Kaul, Rupali (INSEAD); Narayanan, Sridhar (Stanford U) |
| Abstract: | Social networks utilize award recognition and front pages to motivate user content creation, facilitate consumer discovery of content, and provide attention and recognition to the best content. Past research shows that such attention and recognition increase the volume of content shared on the networks. But how do these affect the nature of content shared on platforms? Do they cause creators to share content similar to that which received attention and recognition? Or do creators take risks and create different content? We investigate these questions in the context of a digital art-sharing social network. We implement a randomized controlled experiment to induce exogenous variation in attention and recognition provided to users' content. Using a transfer learning machine learning algorithm, we convert complex images into lower-level features to analyze changes in content novelty. We find that awarded creators produce more novel content, relative to both the awarded content and their past work. This result is robust to a variety of ways in which we classify image content. Our results illustrate the importance of tools that induce attention and recognition to the creation and development of diverse content by social media creators and give insights into factors that motivate content creation. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4040&r=pay |
| By: | Tristan Bester; Benjamin Rosman |
| Abstract: | Financial inclusion ensures that individuals have access to financial products and services that meet their needs. As a key contributing factor to economic growth and investment opportunity, financial inclusion increases consumer spending and consequently business development. It has been shown that institutions are more profitable when they provide marginalised social groups access to financial services. Customer segmentation based on consumer transaction data is a well-known strategy used to promote financial inclusion. While the required data is available to modern institutions, the challenge remains that segment annotations are usually difficult and/or expensive to obtain. This prevents the usage of time series classification models for customer segmentation based on domain expert knowledge. As a result, clustering is an attractive alternative to partition customers into homogeneous groups based on the spending behaviour encoded within their transaction data. In this paper, we present a solution to one of the key challenges preventing modern financial institutions from providing financially inclusive credit, savings and insurance products: the inability to understand consumer financial behaviour, and hence risk, without the introduction of restrictive conventional credit scoring techniques. We present a novel time series clustering algorithm that allows institutions to understand the financial behaviour of their customers. This enables unique product offerings to be provided based on the needs of the customer, without reliance on restrictive credit practices. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.11066&r=pay |
| By: | Erel, Isil (Ohio State U and ECGI); Liebersohn, Jack (U of California, Irvine); Yannelis, Constantine (U of Chicago); Earnest, Samuel (U of Chicago) |
| Abstract: | Financial technology has reshaped commercial banking. It has the potential to radically alter the transmission of monetary policy by lowering search costs and expanding banking markets. This paper studies the reaction of online banks to changes in the federal funds rate. We find that these banks increase rates that they offer on deposits significantly more than traditional banks do. A 100 basis points increase in the federal funds rate leads to a 30 basis points larger increase in the rates of online banks relative to traditional banks. Consistent with the rate movements, online bank deposits experience inflows, while traditional banks experience outflows during monetary tightening in 2022. Results are similar across banking markets of different competitiveness and demographics, but they vary with the stickiness of banking relationships. Our findings shed new light on the role of online banks in interest rate passthrough and the deposit channel of monetary policy. |
| JEL: | E52 E58 G21 G23 G28 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ohidic:2023-15&r=pay |
| By: | Claudine Bonneau (UQAM - Université du Québec à Montréal = University of Québec in Montréal); Jeremy Aroles (USN LLD - Université Sorbonne Nouvelle - Paris 3 - UFR Littérature, Linguistique, Didactique - Université Sorbonne Nouvelle - Paris 3); Claire Estagnasié (UQAM - Université du Québec à Montréal = University of Québec in Montréal, UCA - Université Côte d'Azur, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, LabCMO - Laboratoire de communication médiatisée par ordinateur - UQAM - Université du Québec à Montréal = University of Québec in Montréal, CIRST - Centre interuniversitaire de recherche sur la science et la technologie - UdeM - Université de Montréal - UQAM - Université du Québec à Montréal = University of Québec in Montréal, RECOR - Groupe de recherche sur la Communication Organisante) |
| Abstract: | Some occupations are subject to more complex identity work processes than others. This rings true for those professional endeavours that are relatively poorly known and that cannot rely on institutions as a reference for identification, such as digital nomadism. Digital nomads can broadly be defined as professionals who embrace extreme forms of mobile work to combine their interest in travel with the possibility to work remotely. Building on a two-stage data collection process, this paper proposes a typology that characterises four archetypes of digital nomad lifestyle promoters' narratives found online and show how these online narratives play a role in the process of identity work of other digital nomads. Our contributions are two-fold. First, we show that while the archetypes act as an important online identity regulatory force, they do so through dis-identification. Second, we explain how identity work for digital nomads involves evaluating discursively available subjectivities and propose a three-step reflexive process that entails (i) interpreting, (ii) dis-identifying and (iii) contextualising. We contend that our findings extend beyond the specific case of digital nomads and shed light onto the intricacies of work identity for ‘new' occupations that are romanticised and monetised through social media and beyond. |
| Keywords: | Control, digital nomads, identity work, narratives, online identities, social media, technologies |
| Date: | 2022–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04450909&r=pay |
| By: | Guangye Cao |
| Abstract: | Why would a blockchain-based startup and its venture capital investors choose to finance by issuing tokens instead of equity? What would be their rates of return for each asset? This paper focuses on the liquidity difference between the two fundraising methods. I build a three-period model of an entrepreneur, two types of investors, and users. Some investors have unforeseen liquidity needs in the middle period that can only be met with tokens. The entrepreneur obtains higher payoff by issuing tokens instead of equity, and the payoff difference increases with investors risk-aversion and need for liquidity in the middle period, as well as the depth of the token market. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.04662&r=pay |
| By: | Yaoyue Tang; Karina Arias-Calluari; Michael S. Harr\'e; Fernando Alonso-Marroquin |
| Abstract: | This paper analyses the high-frequency intraday Bitcoin dataset from 2019 to 2022. During this time frame, the Bitcoin market index exhibited two distinct periods characterized by abrupt changes in volatility. The Bitcoin price returns for both periods can be described by an anomalous diffusion process, transitioning from subdiffusion for short intervals to weak superdiffusion over longer time intervals. The characteristic features related to this anomalous behavior studied in the present paper include heavy tails, which can be described using a $q$-Gaussian distribution and correlations. When we sample the autocorrelation of absolute returns, we observe a power-law relationship, indicating time dependency in both periods initially. The ensemble autocorrelation of returns decays rapidly and exhibits periodicity. We fitted the autocorrelation with a power law and a cosine function to capture both the decay and the fluctuation and found that the two periods have distinctive periodicity. Further study involves the analysis of endogenous effects within the Bitcoin time series, which are examined through detrending analysis. We found that both periods are multifractal and present self-similarity in the detrended probability density function (PDF). The Hurst exponent over short time intervals shifts from less than 0.5 ($\sim$ 0.42) in Period 1 to be closer to 0.5 in Period 2 ($\sim$ 0.49), indicating the market is more efficient at short time scales. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.11930&r=pay |
| By: | He, Zhiguo (U of Chicago); Jiang, Sheila (U of Florida); Xu, Douglas (U of Florida); Yin, Xiao (U College London) |
| Abstract: | Banks' lending technology hinges on their handling of soft and hard information in dealing with different types of credit demand. Through assembling a novel dataset on banks' investment in information technologies (IT), this paper provides concrete empirical evidence on how banks adapt their lending technologies. We find invest ment in communication IT is associated with improving banks' ability to produce and transmit soft information, while investment in software IT helps enhance banks' hard information processing capacity. We exploit policies that affect geographic regions differentially to show causally that banks respond to an increased demand for small business credit (mortgage refinance) by increasing their spending on communication (software) IT spending. We also find that the entry of fintech induces commercial banks to increase their investment in IT--more so in the software IT category. |
| JEL: | G21 G51 O12 O32 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:4132&r=pay |
| By: | K. Ravirajan (Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India)); K. R. Shanmugam (Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai) |
| Abstract: | This study empirically analyses the effect of technology on the financial performance of 50 Indian banks during 2011-12 to 2019-20. It considers three technology indicators – average amount of debit card transaction at ATM, average amount of debit card transaction at POS and average amount of NEFT transactions and three performance indicators – return on assets, return on equity and net interest margins of banks and uses them to construct the composite technology index and the composite performance index respectively. It regresses the performance indicators individually and also the composite performance index on technology indicators/technology index along with other explanatory variables and estimates these equations using the standard panel data methodology. As these regression results provide the average effect of technology indicators and technology index on banking performance, it also allows the technology index to interact with bank dummies to observe bank specific effects of technology in the alternative specification of equations. The estimation results indicate that the NEFT has a negative and significant effect on the performance index, but it has a positive and significant effect on both return on assets and return on equity. Surprisingly, both average amounts of debit card transactions at ATM and POS do not influence all performance indicators and the performance index. Thus, the technology impact is mixed based on the performance indicator and the NEFT is the dominant technology indicator in determining the profitability of banks. Results from the estimation of an alternative specification of the model indicate that the technology index has a significant negative effect on the performance index of 42 banks. However, it has a significant positive effect on both return on assets and return on equity in almost all banks, but it does not play a role in determining the net interest margin of banks. We hope that these results are useful to policymakers and other researchers to take appropriate strategies to improve the performance of the banking industry in India. |
| Keywords: | Technology Index, The Performance Index of Banks, Panel Data Methods, Indian Commercial Banks. |
| JEL: | G21 G28 L25 L86 O31 O33 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:mad:wpaper:2023-252&r=pay |
| By: | Ghislain Deleplace (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis) |
| Abstract: | The aim of my contribution is at analysing the impact of a large-scale war of long duration on the monetary system and monetary thought. The case is that of England during and in the aftermath of the Revolutionary and Napoleonic wars with France (1793-1815). These wars provoked a major shock in the English monetary system: the Bank of England note was made inconvertible during more than twenty years and in 1813 the pound sterling had depreciated by one-third in terms of gold. After Waterloo, it took the pound four years to regain its value in gold, in the midst of a severe economic depression. However, the pre-war monetary system was resumed in 1821: the quarter-of-a-century parenthesis was simply closed. This return to "money as usual" was not for want of intense debates: it was the time of the "Bullionist Controversy" featuring among others Henry Thornton and David Ricardo. This case thus leads to a rather pessimistic conclusion: even a major shock like a long-lasting war seems to have no significant impact on either the monetary system or monetary thought. My contribution intends to account for this paradox. Publication: Deleplace, G. (2024 a), "Storm in a Teacup? The Impact of War on the English Monetary System and Thought (1797-1821), " in Marcuzzo, M. C. and Rosselli, A. (eds.), Money in Times of Crisis. Pre-Classical, Classical and Contemporary Theories, Roma: Accademia Nazionale dei Lincei Proceedings, à paraître. |
| Keywords: | Napoleonic wars, English monetary system, Ricardo, Thornton |
| Date: | 2022–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04429477&r=pay |