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on Payment Systems and Financial Technology |
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Issue of 2024‒04‒15
23 papers chosen by |
| By: | Westermeier, Carola |
| Abstract: | The European Central Bank (ECB) has entered the preparation phase for the potential issuance of a digital euro. The digital euro under consideration represents a retail Central Bank Digital Currency (CBDC), a digital representation of central bank money that is intended for use by the general public. This article foregrounds the digital euro as an infrastructure that furthers European security ambitions. It argues that the development of the digital euro is a materialization of European (in)security rationales that aim to secure pan-European financial transactions amid growing geopolitical tensions. It focuses on the development of the technology and analyses how central bankers’ scenarios of the future manifest in the anticipated design and prototypes. While the provision of a financial infrastructure is the most decisive security-related implication of the digital euro, the introduction of a new form of public money is the decisive financial feature with potentially wide-ranging implications for banks. Although the ECB seeks to balance the interests of banks and other financial actors in the development of the digital euro, its plans are still met with criticism. Finally, the paper argues that the European Central Bank exerts itself more explicitly than before as geopolitical actors in its own regard. |
| Date: | 2024–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:x45eg&r=pay |
| By: | Cristina Demma (Bank of Italy); Giovanni Ferri (Lumsa); Andrea Orame (Bank of Italy); Valerio Pesic (Universita' La Sapienza); Valerio Vacca (Bank of Italy) |
| Abstract: | Using the unanticipated and exogenous Covid-19 shock as a unique laboratory, we address the topic of business continuity at banks, where limitations to social mobility hindered the provision of branch-executed services. Namely, we conjecture that business resilience was higher if a bank had previously invested heavily in IT to increase its degree of digitalization, shifting more customers from branch- to online-executed services. In particular, we speculate that such investments should unfold greater readiness in migrating retail customers towards online payments during the pandemic, confirming that IT investments contribute to operational resilience. Exploiting thinly disaggregated supervisory data, our empirical analyses provide robust support to our hypothesis. Hence, digitalization seems to breed resilience at banks against unforeseen natural events; this corroborates the usefulness of technological investments also as an insurance against unpredictable risks and indirectly confirms the complementarity of the twin Green-Digital transition. |
| Keywords: | innovation, Fintech, banks, bank credit transfers, payment habits, Covid-19 pandemic |
| JEL: | E41 E42 D12 G21 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_833_24&r=pay |
| By: | Simone Auer (Bank of Italy); Nicola Branzoli (Bank of Italy); Giuseppe Ferrero (Bank of Italy); Antonio Ilari (Bank of Italy); Francesco Palazzo (Bank of Italy); Edoardo Rainone (Bank of Italy) |
| Abstract: | This paper describes the role of central bank and commercial bank money in a modern monetary system and the possible implications of the introduction of a central bank digital currency (CBDC) for the banking system and the economy as a whole. The analysis shows that the impact of a CBDC depends on a number of design choices and on how credit institutions re-optimize their balance sheets in response to the outflow of deposits caused by the substitution of private money with public digital money. We provide a set of illustrative simulations on the impact of a CBDC on the funding structure and profitability of credit institutions using data on Italian banks between June 2021 and March 2023. The analysis suggests that the overall impact on banks' funding could be manageable in the presence of individual holding limits and in an environment characterized by ample liquidity and stable funding for credit institutions. The cost of covering the reduction of deposits would be relatively higher for intermediaries with low excess reserves and for those that may need to issue long-term liabilities to maintain stable funding levels above regulatory requirements. |
| Keywords: | central bank digital currency, monetary policy, financial stability, banks, money |
| JEL: | E41 E42 E43 E44 E51 E58 G21 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_829_24&r=pay |
| By: | Eric K Clemons (University of Pennsylvania); Maximilian Schreieck (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université, TUM - Technische Universität Munchen - Technical University Munich - Université Technique de Munich); Sebastian Hermes (TUM - Technische Universität Munchen - Technical University Munich - Université Technique de Munich); Frantz Rowe (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université, SKEMA Business School); Helmut Krcmar (TUM - Technische Universität Munchen - Technical University Munich - Université Technique de Munich) |
| Abstract: | Dominant American online platforms like Amazon Alexa or Google Assistant have become Life Control Interfaces (LCIs), which facilitate consumers' online interactions and influence what consumers do and do not see and buy. These platforms operate outside of EU regulation, and create significant costs for traditional European firms in a wide range of industries. These platforms can reduce firms' access to customers, can charge for enabling access to customers, or can charge for access to essential data on firms' customers. Since these platforms enjoy monopoly power there is little restraint on their charges, which indirectly increase consumers' prices. We propose that regulators encourage the formation of a consortium to offer a single integrated EU-based Life Control Interface (EuLCI). This consortium would increase the number of EuLCIs from zero to one, and thus would actually increase consumer choice. We call cooperation that enhances rather than limits choice The Cooperation Paradox. |
| Keywords: | Life control interfaces, Online competition, Online cooperation and consortia, Online gateways, Online monopoly regulation, Online platform regulation JEL classification D40 |
| Date: | 2022–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04473840&r=pay |
| By: | van Buggenum, Hugo; Gersbach, Hans; Zelzner, Sebastian |
| Abstract: | Can competing stablecoins produce efficient and stable outcomes? We study competition among stablecoins pegged to a stable currency. They are backed by interest-bearing safe assets and can be redeemed with the issuer or traded in a secondary market. If an issuer sticks to an appropriate investment and redemption rule, its stablecoin is invulnerable to runs. Since an issuer must pay interest on its stablecoin if other issuers also pay interest, competing interest-bearing stablecoins, however, are contagious and can render the economy inefficient and unstable. The efficient allocation is uniquely implemented when regulation prevents interest payments on stablecoins. |
| Keywords: | Stablecoins, currency competition, free banking, private money, digital money |
| JEL: | E4 E5 G1 G2 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cfswop:285365&r=pay |
| By: | Mnacho Echenim (LIG - Laboratoire d'Informatique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, CAPP - Calculs algorithmes programmes et preuves - LIG - Laboratoire d'Informatique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Emmanuel Gobet (CMAP - Centre de Mathématiques Appliquées - Ecole Polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique); Anne-Claire Maurice |
| Abstract: | We design a novel calibration procedure that is designed to handle the specific characteristics of options on cryptocurrency markets, namely large bid-ask spreads and the possibility of missing or incoherent prices in the considered data sets. We show that this calibration procedure is significantly more robust and accurate than the standard one based on trade and mid-prices. |
| Keywords: | implied volatility, calibration, bid-ask spread, missing data, data augmentation |
| Date: | 2023–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03715921&r=pay |
| By: | Haim Shalit (BGU) |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:2401&r=pay |
| By: | Arvidsson, Niklas (KTH Royal Institute of Technology); Harahap, Fumi; Urban, Frauke; Nurdiawati, Anissa |
| Abstract: | Money and payments are central to modern economies and societies, yet there is increasing concern over the environmental impacts of various payment services, particularly from a climate perspective. This report examines the climate impact of retail payments in Sweden in 2021, including cash, card, Giro payments, Swish payments, and payment apps. The aim is to develop a method for measuring the climate impact of existing retail payment services in the Swedish market and to evaluate their individual and aggregate climate impact. The study identifies areas that can be targeted to reduce the overall impact and provide valuable information for sustainable decision-making related to payment services. |
| Keywords: | Climate Impact; Retail Payment; LCA |
| JEL: | E42 O44 Q54 |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0431&r=pay |
| By: | Jeremy Samer Srouji (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur, Erasmus University Rotterdam) |
| Abstract: | The evolution of the international monetary system towards a more multipolar configuration is not only reflective of fundamentals but of increasing fragilities and uncertainty. In this paper, we map the trajectories of the big four (EUR, GBP, JPY, USD) and secondary currencies (AUD, CAD, CHF, CNY) in the past decade and argue that the system is increasingly illadapted to thereconfiguration of the globaleconomy, bringing to theforefront the need, in particular, for a reliable alternative international reserve asset. |
| Keywords: | currency internationalization, functions of money, international monetary system, international reserves, payments |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04459960&r=pay |
| By: | João A. Bastos; Maria Inês Bernardes |
| Abstract: | Customer profiling in e-commerce is a powerful tool that enables organizations to create personalized offers through direct marketing. One crucial objective of customer profiling is to predict whether a website visitor will make a purchase, thereby generating revenue. Machine learning models are the most accurate means to achieve this objective. However, the opaque nature of these models may deter companies from adopting them. Instead, they may prefer simpler models that allow for a clear understanding of the customer attributes that contribute to a purchase. In this study, we show that companies need not compromise on prediction accuracy to understand their online customers. By leveraging website data from a multinational communications service provider, we establish that the most pertinent customer attributes can be readily extracted from a black-box model. Specifically, we show that features measuring customer activity within the e-commerce platform are the most reliable predictors of conversions. Moreover, we uncover significant non-linear relationships between customer features and the likelihood of conversion. |
| Keywords: | Customer Profiling; Conversion; Direct marketing; Explainable artificial intelligence; SHAP value; Accumulated local effects. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp03132024&r=pay |
| By: | Yuxiang Sun; Jingyi Li; Mengdie Lu; Zongying Guo |
| Abstract: | Big data revolutionizes accounting and auditing, offering deep insights but also introducing challenges like data privacy and security. With data from IoT, social media, and transactions, traditional practices are evolving. Professionals must adapt to these changes, utilizing AI and machine learning for efficient data analysis and anomaly detection. Key to overcoming these challenges are enhanced analytics tools, continuous learning, and industry collaboration. By addressing these areas, the accounting and auditing fields can harness big data's potential while ensuring accuracy, transparency, and integrity in financial reporting. Keywords: Big Data, Accounting, Audit, Data Privacy, AI, Machine Learning, Transparency. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2403.07180&r=pay |
| By: | Akter, Shrabony; Miah, Arman; Tasneem, Sadia; Khan, Shihab Uddin; Riaz, Ali |
| Abstract: | This paper contains 12 Case Studies of Bangladesh Digital Security Act(DSA) 2018 Victims i.e. Khadijatul Kubra, Didarul Islam Bhuiyan, Mamunur Rashid Nomani, and others. We delineated the plights of the accused under the DSA from its adoption in 2018 to September 2023. We also analyzed the overall impact of this act on the freedom of expression of the citizens of Bangladesh. Another focus point of the paper was on the Cyber Security Act 2023, which is tagged as 'Old Wine in a New Bottle', by civil society intellectuals. |
| Date: | 2024–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:f4a29&r=pay |
| By: | An, So Hyun (Korea Institute for Industrial Economics and Trade) |
| Abstract: | The COVID-19 pandemic accelerated the digital transformation and affected entrepreneurial environment. Innovation is becoming more important than ever amid the digital transformation of society, and the role of start-ups in innovation has become especially vital, especially as a means of recovering from the economic shock of the COVID pandemic. The digital transformation and the importance of start-ups in economic development and recovery raise questions concerning the direction of entrepreneurship policies in the digital era. This paper explores these questions, probing the relevant academic literature in search of answers. I focus on entrepreneurship policies from an ecosystem perspective and these policies’ importance in the digital era. First, I illustrate the concept of the entrepreneurial ecosystem by summarizing main components as described in the literature. While the body of scholarship on regional economics and entrepreneurship has sought to provide a definition of the concept, the theoretical framework remains a matter of debate. Next, focusing on the role of digital technology as a both a context and enabler of the entrepreneurial ecosystem, I discuss the changes digital transformation has wrought and the growing importance of adopting an ecosystem perspective in entrepreneurial policies in the digital era. Finally, I suggest potential directions for entrepreneurship policies in the digital era by linking them to the characteristics of entrepreneurial ecosystem. |
| Keywords: | entrepreneurship; digital platforms; digital transformation; digital companies; innovation; startups; venture firms; entrepreneurship policy; regional economics; regional innovation; digital technology; Korea; KIET |
| JEL: | L26 R10 R11 R58 |
| Date: | 2024–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kieter:2024_004&r=pay |
| By: | Aoyagi, Jun; Ip, Wang-Hei; Kawaguchi, Kohei; Kuramoto, Wataru; Tsuchida, Shinya |
| Abstract: | Decentralized exchanges (DEXs) adopt automated market makers (AMM) as an alternative to the traditional limit-order book (LOB), which is too costly to implement with blockchain technology. To protect liquidity providers (LPs) against toxic trades by arbitrageurs, Uniswap v3, the leading DEX, has introduced a concentrated liquidity mechanism that allows LPs to restrict the price range accepting trades. We define a liquidity provision game of this setting and characterize the optimal strategy and equilibrium liquidity allocation. We demonstrate that LP profits consist of the competitive and non-competitive parts. Crucially, the non-competitive components arise from toxic trades by arbitrageurs. Consequently, liquidity provision involves a toxicity-competitiveness tradeoff as opposed to the literature understanding them as two independent factors. By incorporating this tradeoff, we derive a novel guideline and implications for liquidity provision in the decentralized financial market. |
| Date: | 2024–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:dvuxw&r=pay |
| By: | Luis F. Dumlao (Ateneo de Manila University); Alvin P. Ang (Ateneo de Manila University); Ser Percival K. Pena-Reyes (Ateneo de Manila University); Genesis Kelly S. Lontoc (Ateneo de Manila University); Satyabhama Andrea C. Gulapa (ACERD); Fernando T. Aldaba (Ateneo de Manila University) |
| Abstract: | Starting off from Chapter 11 (Ensure Macroeconomic Stability and Expand Inclusive and Innovative Finance) Subsection 1 (Ensure Macroeconomic Stability and Expand Inclusive and Innovative Finance) of the Philippine Development Plan 2023-2028 (PDP), we focus our research on Monetary and Financial Agenda Towards Inclusion, Consumer Protection, and Innovation. In Section IV, we revisit Republic Act 3765 or the Truth in Lending Act of 1963. In the spirit of consumer protection, we recommend regulations that are expected to improve transparency and empower consumers to make better informed decisions. In Section V, we use literature from behavioral finance on how regulators can nudge consumers to make better financial actions providing opportunities for inclusion and innovation. In Section VI, we discuss starting points for legislative discussion on how to protect retirees from financial and monetary matters as a complement and/or alternative to providing financial literacy programs. One in which our laws are relatively silent is on the treatment of whistleblowers. In Section VII, we discuss conventional practices on the treatment of whistleblowers in other jurisdictions to deter and/or catch nefarious agents and/or practices in the financial industry. In the last two sections, we acknowledge that prohibitively high interest rates on loans is a major hurdle towards inclusion. Part of the reason is that there are laws and/or regulations that charge financial institutions forcing them to pass on thecost to consumers. |
| Keywords: | financial inclusion, financial innovation, consumer protection, monetary policy |
| JEL: | G18 G21 G41 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:agy:dpaper:202407&r=pay |
| By: | Linda S. Goldberg; Oliver Zain Hannaoui |
| Abstract: | The share of U.S. dollar assets in the official foreign exchange reserve portfolios of central banks is sometimes taken as an indicator of dollar status. We show that the observed decline in the aggregate share of U.S. dollar assets does not stem from a systematic shift in currency preferences away from holding dollar assets. Instead, a small group of countries with large foreign exchange reserve balances drive the dollar share decline observed in aggregate statistics. This arises either due to countries conducting monetary policy vis-à-vis the euro or due to preference shifts away from dollars. Regression analysis shows that interest rate differentials between traditional and nontraditional reserve currencies can tilt portfolio composition, particularly in relation to the scale of investment tranches within overall central bank portfolios. Geopolitical distance from the United States and financial sanctions are associated with lower U.S. dollar shares, especially if the primary foreign currency liquidity needs of the central bank are already satisfied. |
| Keywords: | foreign exchange reserves; dollar; liquidity; convenience yields; currency of international debt; Foreign Exchange Reserves |
| JEL: | F3 F31 F33 |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:97928&r=pay |
| By: | Souza, Bruno Rezende (Universidade Federal de Minas Gerais) |
| Abstract: | Scientific publishing has become a complex economic engine intertwined with prestige and power. While publicly funded research fuels prestigious journals owned by private entities, the success of scientists and institutions becomes intimately tied to a cycle of increasing publication costs and limited access. The initial section of this article employs a satirical analogy, drawing parallels between the scientific publishing industry and the familiar framework of social media platforms. It offers a succinct historical overview, elucidating the progression of the present publishing structure. The final section delves into the paradoxical realities of this system. (1) Nation-funded research, public players, private profits: Public institutions and nation-states fuel research, but publishers reap the financial benefits through copyright ownership and inflated Article Processing Charges (APCs); (2) The prestige trap: Journals become platforms for constructing and maintaining scientific authority, with citation counts fueling the cycle of high prices and exclusivity; (3) Higher prices, more visibility: The APCs add a layer of financial burden, hindering access for researchers, especially from developing countries. This article proposes potential solutions such as leveraging existing models. Platforms like arXiv demonstrate sustainable open-access models, relying on voluntary contributions and community engagement. Integrating scientist-driven peer review within open-access frameworks can create a more equitable and accessible system, empowering the scientific community. The future of scientific publishing demands a shift towards transparency, affordability, and open access. By disentangling the economic web and prioritizing open access and transparency, we can create a more equitable and sustainable future for scientific publishing, ensuring that knowledge truly serves its intended purpose – to benefit humanity as a whole. |
| Date: | 2024–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:9ejhm&r=pay |
| By: | El Kadi, Tin |
| Abstract: | While much attention has been paid to how China’s rise as a digital superpower could threaten US hegemony over cyberspace, much less has been written on what the Digital Silk Road, or the presence of Chinese tech firms in developing countries more broadly, means for technological upgrading and development. This article contributes to filling this gap by investigating the technology spillovers emanating from two Chinese tech giants – Huawei and ZTE – in Algeria and Egypt. Using a political economy framework that combines insights from structuralist economic development and techno-politics and drawing on over 70 semi-structured interviews and field-observations, it argues that despite localizing activities that bear the promise of generating significant linkages, the two Chinese tech firms created no meaningful learning opportunities for domestic entities that contribute to technological upgrading. What could at first seem like developmental connections that promote technology transfers are found to be linkages diffusing Chinese infrastructures, hardware, software, processes, and standards that shape distinct digital systems. Without pro-active policies from host governments, the Digital Silk Road risks creating new technological dependencies; locking local ICT actors into activities and relationships captured and defined by Chinese tech giants. |
| Keywords: | Algeria; Chinese ICT firms; digital transition; Egypt; linkages; technology transfer; techno-politics; Faculty of Humanities; T&F deal |
| JEL: | R14 J01 |
| Date: | 2024–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122001&r=pay |
| By: | M. Kouzez; J. Y. Lee (Audencia Business School); G. Branellec; J. Oh |
| Abstract: | The growing interest in corporate social responsibility (CSR) issues is not only for the traditional banks but also for the online banks. The latter, taking advantage of the Covid context that fosters digital transformation, has undergone remarkable development in recent years. Different from previous studies, our study focuses on online banks and examines how the integration of economic, philanthropic, ethical, and environmental concerns into banking activities affects their business development. Our results highlight the important role played by socially responsible activities in building customer loyalty through the bank's reputation and customer trust. |
| Keywords: | CSR – Online banking – Reputation – Trust – loyalty |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04469792&r=pay |
| By: | Louadi, Mohamed (Institut Supérieur de Gestion) |
| Abstract: | In this paper we delve into the historical evolution of data as a fundamental element in communication and knowledge transmission. The paper traces the stages of knowledge dissemination from oral traditions to the digital era, highlighting the significance of languages and cultural diversity in this progression. It also explores the impact of digital technologies on memory, communication, and cultural preservation, emphasizing the need for promoting a culture of the digital (rather than a digital culture) in Africa and beyond. Additionally, it discusses the challenges and opportunities presented by data biases in AI development, underscoring the importance of creating diverse datasets for equitable representation. We advocate for investing in data as a crucial raw material for fostering digital literacy, economic development, and, above all, cultural preservation in the digital age. |
| Date: | 2024–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:osf:africa:xqtcs&r=pay |
| By: | Zineb Aouni; Marek Hudon; Anaïs A Périlleux; Tyler Wry |
| Abstract: | Unlike traditional investing, where decisions follow a clear financial calculus, it is unclear how and why funders support hybrid ventures. To address this question, we analyze the varied priority that investors place on social impact versus financial returns and draw on categories theory to argue that different priority orderings associate with different perceptions of how hybridity aligns with different investment goals. Results show that funders who prioritize financial goals react positively when they perceive a venture exhibits greater hybridity, while funders who prioritize social impact do not. Our findings contribute to research on impact investing, hybrid organizations, and categories theory. |
| Keywords: | ESG; investment funds; social banks; Sustainable Finance Disclosure Regulation (SFDR); greenwashing; transparency |
| Date: | 2024–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:2013/369203&r=pay |
| By: | Linda S. Goldberg |
| Abstract: | A discussion of the special role of the U.S dollar. |
| Keywords: | dollar; U.S. Dollar; currency; monetary systems |
| Date: | 2024–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:97933&r=pay |
| By: | Emter, Lorenz; McQuade, Peter; Pradhan, Swapan-Kumar; Schmitz, Martin |
| Abstract: | This paper provides insights into the determinants of currency choice in cross-border bank lending, such as bilateral distance, financial and trade linkages to issuer countries of major currencies, and invoicing currency patterns. Cross-border bank lending in US dollars, and particularly in euro, is highly concentrated in a small number of countries. The UK is central in the international network of loans denominated in euro, although there are tentative signs that this role has diminished for lending to non-banks since Brexit. Offshore financial centres are pivotal for US dollars loans, reflecting, in particular, lending to non-bank financial intermediaries in the Cayman Islands, possibly as a result of regulatory and tax optimisation strategies. The empirical analysis suggests that euro-denominated loans face the “tyranny of distance”, in line with predictions of gravity models of trade, in contrast to US dollar loans. Complementarities between trade invoicing and bank lending are found for both the euro and the US dollar. JEL Classification: F31, F33, F34, F36, G21 |
| Keywords: | cross-border banking, currency denomination, dominant currency paradigm, gravity |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20242918&r=pay |