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on Payment Systems and Financial Technology |
| By: | Korobova, Elena; Fantazzini, Dean |
| Abstract: | Stablecoins are a pivotal and debated topic within decentralized finance (DeFi), attracting significant interest from researchers, investors, and crypto-enthusiasts. These digital assets are designed to offer stability in the volatile cryptocurrency market, addressing key challenges in traditional financial systems and DeFi, such as price volatility, transparency, and transaction efficiency. This paper contributes to the existing literature by estimating the credit risk associated with stablecoins, marking the first study to focus exclusively on this market. Our findings reveal that a substantial portion of stablecoins have failed, aligning with existing literature. Using Feder et al.'s (2018) methodology, we observed that 21% of stablecoins were "abandoned" at least once, with only 36% being later "resurrected, " and just 11% maintaining their "resurrected" status. These results support the hypothesis that stablecoins rarely recover once they break their peg, often due to technical issues or loss of user trust. We also found that the time between a statistically significant break in the stablecoin's peg and its subsequent collapse or stabilization averages approximately 10 days. We estimated probabilities of default (PDs) for stablecoins based on market capitalization using various forecasting models. A robustness check further indicated that stablecoins on the Ethereum blockchain are less prone to default, likely due to Ethereum's robust ecosystem and the established presence of older stablecoins. Despite the study's limitations, including a limited dataset of 121 stablecoins and missing market capitalization data, the findings offer practical applications for investors and traders. The techniques and models applied in this research provide tools for evaluating credit risks in the stable-coins market, aiding in portfolio management and investment strategies. |
| Keywords: | stablecoins; crypto-assets; cryptocurrencies; credit risk; default probability; probability of death; ZPP; Cox Proportional Hazards Model. |
| JEL: | C32 C35 C38 C51 C53 G12 G17 G32 G33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122951 |
| By: | Lennart Ante; Aman Saggu |
| Abstract: | The Ethereum blockchain network enables transaction processing and smart-contract execution through levies of transaction fees, commonly known as gas fees. This framework mediates economic participation via a market-based mechanism for gas fees, permitting users to offer higher gas fees to expedite pro-cessing. Historically, the ensuing gas fee volatility led to critical disequilibria between supply and demand for block space, presenting stakeholder challenges. This study examines the dynamic causal interplay between transaction fees and economic subsystems leveraging the network. By utilizing data related to unique active wallets and transaction volume of each subsystem and applying time-varying Granger causality analysis, we reveal temporal heterogeneity in causal relationships between economic activity and transaction fees across all subsystems. This includes (a) a bidirectional causal feedback loop between cross-blockchain bridge user activity and transaction fees, which diminishes over time, potentially signaling user migration; (b) a bidirectional relationship between centralized cryptocurrency exchange deposit and withdrawal transaction volume and fees, indicative of increased competition for block space; (c) decentralized exchange volumes causally influence fees, while fees causally influence user activity, although this relationship is weakening, potentially due to the diminished significance of decentralized finance; (d) intermittent causal relationships with maximal extractable value bots; (e) fees causally in-fluence non-fungible token transaction volumes; and (f) a highly significant and growing causal influence of transaction fees on stablecoin activity and transaction volumes highlight its prominence. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.05299 |
| By: | Shashwat Alok; Pulak Ghosh; Nirupama Kulkarni; Manju Puri |
| Abstract: | Does the ability to generate verifiable digital financial histories, with customers having data-sharing rights, improve credit access? We answer this using India’s launch of an Open-Banking based public digital payment infrastructure (UPI). Using rarely available data on the universe of consumer loans we show credit increases by both fintechs (new entrants) and banks (incumbents), on the intensive and extensive margin, including increased credit to subprime and new-to-credit customers. We show several mechanisms at play: low-cost internet improves credit access, lenders weigh in digital histories, and digital payments with Open Banking effectively complement first-time bank accounts enabling access to formal credit. |
| JEL: | D14 G24 G28 G51 J15 R21 R23 R31 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33259 |
| By: | Martina Pocchiari; Verena Schoenmueller; Yaniv Dover |
| Abstract: | This study documents the existence and prevalence of the “review updating” phenomenon, where consumers change the ratings and content of their existing reviews, and examines its implications for platforms and businesses. Using both primary and secondary data, a dataset comprising 3 million reviews of 50, 000 companies from a large global online review platform, text analysis methods, and staggered adoption design models, the research shows that consumers update between 5% and 30% of their existing reviews across various platforms. Consumers are motivated by the desire to provide more accurate and updated information, and are especially likely to update existing reviews with extreme and/or negative ratings. The updates tend to mitigate the extremity of the review ratings and content: 77.2% of extremely negative ratings increase by an average of 1.83 stars post-update, and the content of updated reviews becomes less emotionally extreme, overall more net positive, and richer in cognitive content. Consumers also rate the same reviews as more helpful post-update. Importantly, the research shows that low-cost, unincentivized platform solicitations can directly increase the likelihood of review updating, suggesting a novel managerial tool to mitigate the undesirable impacts of extreme and negative reviews. The findings contribute to the literature on online reviews by challenging the implicit assumption that reviews remain static in content and ratings post-creation and propose that review updates can benefit consumers, businesses, and platforms. |
| Keywords: | online reviews, online review updating, online review dynamics, online review extremity, user-generated content, e-word of mouth |
| JEL: | E31 F32 Q43 C33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11513 |
| By: | Kim, Jungkeun; Cho, Areum; Lee, Daniel Chaein; Park, Jooyoung; Kim, Aekyoung; Jhang, Jihoon; Kim, Changju |
| Abstract: | Non-fungible tokens (NFTs) are increasingly used to safeguard luxury products from counterfeits. Despite their increasing adoption, limited research has investigated how brands should communicate the use of NFTs—a novel and complex concept for consumers to comprehend—to maximize their benefits. This research aims to examine this gap by highlighting that the ease of visualization is critical for effective communication. Study 1A demonstrated that consumers prefer a visualized NFT to a non-visualized one for authenticating a luxury product. Study 1B further demonstrated that consumers place greater trust in a visualized NFT and are willing to pay higher prices for luxury products that utilize it. Study 2 demonstrated that consumers have more favorable attitudes toward a luxury product that features an easy-to-visualize NFT than those with a difficult-to-visualize NFT and that perceived authenticity mediates this effect. Finally, Study 3 demonstrated that the positive impacts of easy-to-visualize NFT cues were more significant for luxury than non-luxury products. Subsequently, this study suggests an effective communication strategy for NFT use and provides managerial implications for luxury brands aiming to maximize the benefits of using NFTs. |
| Keywords: | authenticity; blockchain; luxury; non-fungible tokens; visual cues; visualization |
| JEL: | F3 G3 L81 |
| Date: | 2025–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126230 |
| By: | Hjalte Fejerskov Boas (Department of Economics, University of Copenhagen); Mona Barake (Skatteforsk, NMBU) |
| Abstract: | Cryptocurrencies pose substantial challenges to tax enforcement due to their anonymous and decentralized properties, undermining conventional regulatory practices. We study the impact of an ambitious new enforcement initiative aimed at addressing these challenges: domestic third-party reporting of crypto income. We estimate tax compliance and behavioral responses to this new policy by combining unique Danish microdata from domestic crypto platforms, administrative tax records, and cross-border bank transfers. Despite the introduction of domestic third-party reporting, over 90% of crypto investors do not declare crypto income. Moreover, we identify a significant and persistent evasion response to the policy as investors shift trading activity from domestic platforms, subject to third-party reporting, to foreign platforms outside regulatory reach. Our findings underscore the limits of domestic enforcement strategies in addressing tax evasion for decentralized, borderless assets like cryptocurrencies, highlighting the need for international coordination. |
| Keywords: | Cryptocurrencies, Tax compliance, Tax enforcement |
| JEL: | D31 H24 H26 H31 G5 |
| Date: | 2024–12–19 |
| URL: | https://d.repec.org/n?u=RePEc:kud:kucebi:2421 |
| By: | Tine De Bock; annelies Costers; Simon Hazée |
| Abstract: | E-commerce is flourishing globally, with more and more organizations developing e-commerce applications and opting for pay-what-you-want (PWYW) as an innovative pricing strategy. Although customers behave differently online (compared to offline) and commonly buy tangible products in this context, prior research on PWYW mainly focused either on offline settings or on the distribution of digital music content (i.e., an intangible product). Therefore, the purpose of this paper is to examine, drawing on signaling theory, the effects of three signaling cues on customer PWYW online payments for tangible products and the mediating effect of trust and risk perceptions. Two-hundred fifty-five adult consumers participated in a 2 (virtual product experience versus no virtual product experience) × 2 (warranty versus no warranty) × 2 (product review versus no product review) between-subjects experiment. The results indicate that offering a product warranty, an online user review, and—to a greater extent—a virtual product experience positively influence customer PWYW online payments for a tangible product. Furthermore, all three signals influence the price that customers want to pay because of enhanced trust regarding the e-vendor rather than reduced risks. The findings provide e-commerce managers with relevant insights to refine their digital strategy, influence customer online trust, and ultimately benefit from PWYW. This research contributes to the literature with an extension of current PWYW research by examining the antecedents of customer PWYW payments for tangible products in an online setting. |
| Keywords: | e-commerce, innovative pricing, participative pricing, Pay-what-you-want, risk, signaling theory, trust |
| Date: | 2023–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:ete:marwps:725819 |
| By: | Joanna Stavins |
| Abstract: | Credit card accounts held by New England cardholders are less likely to carry a revolving balance or be delinquent compared with accounts held by cardholders in the rest of the country. That is the case for every income group. |
| Keywords: | New England; credit cards |
| Date: | 2025–01–07 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbrb:99396 |
| By: | Aman Saggu |
| Abstract: | Tether Limited has the sole authority to create (mint) and destroy (burn) Tether stablecoins (USDT). This paper investigates Bitcoin's response to USDT supply change events between 2014 and 2021 and identifies an interesting asymmetry between Bitcoin's responses to USDT minting and burning events. Bitcoin responds positively to USDT minting events over 5- to 30-minute event windows, but this response begins declining after 60 minutes. State-dependence is also demonstrated, with Bitcoin prices exhibiting a greater increase when the corresponding USDT minting event coincides with positive investor sentiment and is announced to the public by data service provider, Whale Alert, on Twitter. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.05232 |
| By: | Nidhaleddine Ben Cheikh (ESSCA School of Management); Christophe Rault (University of Orléans) |
| Abstract: | Although financial inclusion would induce greater pollutant emissions through economic activity, improved access to financial services may facilitate investment in clean technologies. This study investigates whether financial inclusion has influenced the dynamics of carbon dioxide (CO2) emissions over the last decade using a sample of 70 countries. We implement panel threshold techniques to explore possible regime shifts in environmental quality. Our results reveal that the influence of increased financial access on air pollution depends on the economic development stage. While financial inclusion can increase CO2 emissions in lower-income regimes, environmental quality appears to be enhanced, with more inclusiveness at later developmental stages. Less-developed countries require more robust environmental policies to align their financial inclusion initiatives with sustainable economic development. |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1713 |
| By: | Daniel H. Cooper; Maddie Haddix |
| Abstract: | This brief examines how the pandemic-related, 43-month moratorium on federal student loan payments and interest accruals affected borrowers’ credit card limits and balances. The pause freed up an average of $280 a month for each of the 17 million student loan holders in active repayment, and it included a provision that erased previous defaults on student loans. |
| Keywords: | student loans; payment pause; consumer behavior; credit cards |
| JEL: | G51 H81 I22 |
| Date: | 2025–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbcq:99440 |
| By: | Bandiera, Antonella (ITAM); , Rojas Daniel |
| Abstract: | This paper examines the effectiveness of media literacy interventions in combating misinformation among in-transit migrants in Mexico and Colombia. We conducted experiments to study whether an established strategy for fighting misinformation works for this understudied yet particularly vulnerable population. We evaluate the effect of digital media literacy tips on migrants' ability to identify false information and their intentions to share migration-related content. We find that these interventions can effectively decrease migrants' intentions to share misleading migration-related information, with a significantly larger reduction observed for false content than accurate information. We also find that prompting participants to think about accuracy can unintentionally obscure sharing intent by acting as a nudge. Additionally, the interventions decreased trust in social media as an information source while maintaining trust in official sources. The findings suggest that incorporating digital literacy tips into official websites could be a cost-effective strategy to reduce misinformation circulation among migrant populations. |
| Date: | 2024–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:md42a |
| By: | Abdoulaye Ndiaye |
| Abstract: | This paper investigates how relative pricing schemes can achieve efficient allocations in blockchain systems featuring multiple transaction queues under a global capacity constraint. I model a capacity-constrained blockchain where users submit transactions to different queues—each representing a submarket with unique demand characteristics—and decide to participate based on posted prices and expected delays. I find that revenue maximization tends to allocate capacity to the highest-paying queue, whereas welfare maximization generally serves all queues. Optimal relative pricing of different queues depends on factors such as market size, demand elasticity, and the balance between local and global congestion. My results have implications for the implementation of local pricing for evolving blockchain architectures, including parallel transaction execution, directed acyclic graph (DAG)-based systems, and multiple concurrent proposers. |
| Keywords: | blockchain, fintech, transactions, parallel execution, fee markets, consensus |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11467 |
| By: | Marc Bourreau; Axel Gautier |
| Abstract: | In this paper, we consider two platforms that compete for the development of a new product to integrate into their ecosystems. The new product can be developed either inhouse by the platforms or by an independent startup active only in the technology market. The presence of the startup affects the platforms’ R&D efforts through an insurance effect, which reduces the cost of failure in innovation, and a competition effect, which diminishes the returns to innovation. The magnitude of these effects depends on the attitude of the competition authorities towards the acquisition of the startup by one of the platforms. We show that allowing acquisitions stimulates platform innovation, but at the cost of a more concentrated market structure. We also compare the funding of the startup by independent venture capitalists or by the platforms themselves, and investigate how the merger regime influences the direction of the startup’s innovation. |
| Keywords: | innovation, startup acquisitions, mergers, digital, big tech, competition policy |
| JEL: | D43 G34 K21 L40 L86 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11569 |
| By: | Müller-Tribbensee, Timo (Goethe University Frankfurt); Miller, Klaus M. (HEC Paris); Skiera, Bernd (Goethe University Frankfurt) |
| Abstract: | Prestigious news publishers, and more recently, Meta, have begun to request that users pay for privacy. Specifically, users receive a notification banner, referred to as a pay-or-tracking wall, that requires them to (i) pay money to avoid being tracked or (ii) consent to being tracked. These walls have invited concerns that privacy might become a luxury. However, little is known about pay-or-tracking walls, which prevents a meaningful discussion about their appropriateness. This paper conducts several empirical studies and finds that top EU publishers use pay-or-tracking walls. Their implementations involve various approaches, including bundling the pay option with advertising-free access or additional content. The price for not being tracked exceeds the advertising revenue that publishers generate from a user who consents to being tracked. Notably, publishers’ traffic does not decline when implementing a pay-or-tracking wall and most users consent to being tracked; only a few users pay. In short, pay-or-tracking walls seem to provide the means for expanding the practice of tracking. Publishers profit from pay-or-tracking walls and may observe a revenue increase of 16.4% due to tracking more users than under a cookie consent banner. |
| Keywords: | rivacy; tracking; consent; behavioral targeting; online advertising |
| JEL: | D12 D83 L86 M31 M38 |
| Date: | 2024–04–04 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1514 |
| By: | Guo, Xue; Cheng, Aaron; Pavlou, Paul A. |
| Abstract: | Online gig platforms have the potential to influence employment in existing industries. Popular press and academic research offer two competing predictions: First, online gig platforms may reduce the supply of incumbent workers by intensifying competition and obsoleting certain skills of workers; or, second, they may boost the supply of workers by increasing client-worker matching efficiency and creating new employment opportunities for workers. Yet, there has been limited understanding of the labor movements amid the rise of online gig platforms. Extending the Skill-Biased Technical Change literature, we study the impact of TaskRabbit—a location-based gig platform that matches freelance workers to local demand for domestic tasks (e.g., cleaning services)—on the local supply of incumbent, work-for-wages housekeeping workers. We also examine the effect heterogeneity across workers at different skill levels. Exploiting the staggered TaskRabbit expansion into U.S. cities, we identify a significant decrease in the number of incumbent housekeeping workers after TaskRabbit entry. Notably, this is mainly driven by a disproportionate decline in the number of middle-skilled workers (i.e., first-line managers, supervisors) whose tasks could easily be automated by TaskRabbit’s matching algorithms, but not low-skilled workers (i.e., janitors, cleaners) who typically perform manual tasks. Interestingly, TaskRabbit entry does not necessarily crowd out middle-skilled housekeeping workers, neither laying them off nor forcing them to other related occupations; rather, TaskRabbit entry supports self-employment within the housekeeping industry. These findings imply that online gig platforms may not naively be viewed as skill-biased, especially for low-skilled workers; instead, they redistribute middle-skilled, managerial workers whose cognitive tasks are automated by the sorting and matching algorithms to explore new self-employment opportunities for workers, stressing the need to reconsider online gig platforms as a means to reshape existing industries and stimulate entrepreneurial endeavors. |
| Keywords: | online gig platforms; employment; skill-biased technical change; difference-in-differences; generalized synthetic control |
| JEL: | R14 J01 J50 |
| Date: | 2024–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124538 |
| By: | - |
| Abstract: | Digital divide is the issue, digital inclusion is the work, digital equity is the goal.” – Puerto Rico Digital Equity Plan. Digital transformation does not inherently bring benefits to individuals or communities. Rather, it brings opportunities to be seized and risks to be managed, along with other changes that cannot be neatly fitted into either category. Digital technology can be used to support sustainable development aspirations and make societies more resilient, but can also harm individuals and communities, directly and indirectly. The more dependent societies become on digital technology, the more difficult life will become for those that are digitally excluded, meaning those who do not have access to digital technology, the skills to use it, or the means or privilege to derive benefits from it (Alexander and others 2023). There are also general risks associated with data breaches and other cybersecurity incidents that may make societies as a whole more vulnerable. Because digital divides are so intertwined with societal dynamics of power and privilege, marginalized people and communities are typically the ones being excluded and harmed, while the most privileged people and communities derive the most benefit. In summary: “Digital divides reflect and amplify existing social, cultural and economic inequalities” (United Nations, 2020). To achieve the Sustainable Development Goals (SDGs), digital divides must be addressed, so that we “leave no one behind”, “reach the furthest behind first” (2030 Agenda), and “reduce inequality within and among nations” (SDG 10), among others. |
| Date: | 2024–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col095:81171 |
| By: | Paul S. Calem; Chris Henderson; Jenna Wang |
| Abstract: | This paper conducts a detailed exploration of the factors associated with unbanked status among U.S. households and how these relationships evolved between 2015 and 2019. Biennial FDIC household survey data on bank account ownership and household characteristics, combined with state-level variables, are examined with application of both fixed effects and multilevel modeling. The analysis finds that even as rising incomes drove a decline in the unbanked percentage of the population over this period, income remained the most significant differentiator, with strong associations with race and ethnicity also persisting. Unbanked status became more concentrated among single individuals and disabled individuals and less concentrated among younger households over this period, and less strongly related to unemployment spells. New factors identified by the analysis include lack of digital access and non-citizen immigrant status, both associated with significantly higher likelihood of being unbanked. Identified state-level relationships include an association between financial literacy measures and percent unbanked. Overall, the findings suggest that continuation of recent efforts by policymakers to bridge the digital divide in rural and urban areas and to enhance financial literacy could help expand financial inclusion. Another key takeaway is that unknown structural factors still pose a challenge to explaining who is unbanked, especially regarding gaps by race and ethnicity, underscoring a need to capture more granular data on the unbanked. |
| Keywords: | unbanked; consumer banking; financial inclusion; financial literacy; multilevel modeling |
| JEL: | D14 D31 G21 G53 C81 C83 |
| Date: | 2025–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:99465 |
| By: | Hao Chung; Ke Wu; Elaine Shi |
| Abstract: | Today, many auctions are carried out with the help of intermediary platforms like Google and eBay. We refer to such auctions as platform-assisted auctions.Traditionally, the auction theory literature mainly focuses on designing auctions that incentivize the buyers to bid truthfully, assuming that the platform always faithfully implements the auction. In practice, however, the platforms have been found to manipulate the auctions to earn more profit, resulting in high-profile anti-trust lawsuits. We propose a new model for studying platform-assisted auctions in the permissionless setting. We explore whether it is possible to design a dream auction in thisnew model, such that honest behavior is the utility-maximizing strategy for each individual buyer, the platform, the seller, as well as platform-seller or platform-buyer coalitions.Through a collection of feasibility and infeasibility results, we carefully characterize the mathematical landscape of platform-assisted auctions. We show how cryptography can lend to the design of an efficient platform-assisted auction with dream properties. Although a line of works have also used MPC or the blockchain to remove the reliance on a trusted auctioneer, our work is distinct in nature in several dimensions.First, we initiate a systematic exploration of the game theoretic implications when the service providers are strategic and can collude with sellers or buyers. Second, we observe that the full simulation paradigm is too stringent and leads to high asymptotical costs. Specifically, because every player has a different private outcomein an auction protocol, running any generic MPC protocol among the players would incur at least $n^2$ total cost. We propose a new notion of simulation calledutility-dominated emulation.Under this new notion, we showhow to design efficient auction protocols with quasilinear efficiency. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.03141 |
| By: | Massa, Massimo (INSEAD); Mensah, Albert (HEC Paris); Tang, Vicki Wei (Georgetown University); Asamoah, Prince Elvis (City University of Hong Kong) |
| Abstract: | We investigate how the information content of alternative data is impounded in prices and the duration of its value to mutual fund managers. Using a regression discontinuity design, we document that mutual funds increase their loadings on specific stocks by 0.7%-3% in response to exogenous, rounding-induced 1-percentage-point increase in ratings from customer-generated comments about companies’ products and services on social media platforms. This effect is more pronounced when information asymmetry is greater. Funds relying more on such data yield higher abnormal future returns and exhibit better stock-picking and market-timing abilities. This effect dissipates when the data becomes public. |
| Keywords: | alternative data; asset pricing; mutual funds |
| JEL: | G11 G12 G14 |
| Date: | 2024–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1518 |
| By: | Mensah, Albert (HEC Paris); Kim, Jeong-Bon (Simon Fraser University); Tang, Vicki Wei (Georgetown University) |
| Abstract: | Compared to dispersed, public creditors (e.g., bondholders), private block creditors (such as traditional banks) are more sophisticated, superior monitors and have privileged information about borrowers. Thus, while publicly available information about borrowers such as social media information may be useful to dispersed, public creditors in their lending decisions, it is ex-ante unclear whether such information is useful for bank loan contracting. Using Twitter as the setting, this study examines whether and how customer-generated comments on social media that portray favorable images of publicly listed borrowers affect loan pricing. In the aggregate sample, we find no evidence of a robust relationship between social media information and loan pricing. In the cross section however, we find such information to be negatively associated with loan spreads only when borrower-provided public disclosure is of questionable quality. In contrast, we find no such evidence for borrowers without information credibility issues. Leveraging favorable customer comments also reduces (increases) bank’s reliance on financial (general) covenants. Our evidence points to decline in information risk as the economic mechanism through which such effects occur. Overall, our results indicate that third-party-generated information on social media substitutes for borrower-provided information in lending decisions when borrower-provided information is less reliable. |
| Keywords: | social media; wisdom of crowds; reliability; bank loan contracting |
| JEL: | D83 G14 G21 G32 M41 |
| Date: | 2024–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1517 |
| By: | Micheler, Eva; Zaccaria, Elena Christine |
| Abstract: | A taskforce, appointed by HM Treasury, has recently proposed legislation to eliminate certificated (paper) shares and to require the investors currently holding paper shares to hold them indirectly through nominees. It has also suggested that disclosure combined with a common messaging protocol will enable the market to improve the ability of indirect shareholders to exercise their rights. In this paper we make a case against legislation eliminating paper certificates. We argue that the industry does not need the Government to remove paper certificates. If they want paper certificates to disappear, they should develop a model for holding uncertificated shares directly that is affordable for retail investors. The Government should nevertheless intervene. It should encourage the Competition and Markets Authority to investigate the price structure of accounts for holding uncertificated shares directly with CREST, which operates as a monopoly provider for such accounts in the UK. We further explain that the current system for holding shares indirectly disenfranchises investors and argue that this not only affects investors but also deprives issuers of oversight of their governance. We use empirical evidence to explain that disclosure combined with a common messaging protocol is unlikely to cause the market to develop a system that better enfranchises indirect shareholders. Consequently, we propose legislation to give indirect investors better access to shareholder rights. |
| Keywords: | digitising securities; corporate governance; intermediated securities; blockchain technology; investor protection |
| JEL: | F3 G3 |
| Date: | 2024–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125288 |
| By: | Arnone, Massimo; Costantiello, Alberto; Leogrande, Angelo |
| Abstract: | The article reviews the linkage of banking credit with technological innovation at global level underlining that access to finance is important for and innovation. The domestic credit percentage involving the private sector to GDP allows projects of high risk but with a very high reward, projects that are key in increasing productivity and global competitiveness significantly. This paper explores that dynamic in infrastructure, creative industries, and greening technologies. Indeed, findings from such studies do show positive correlations, such as between credit and infrastructure development or creative exports, suggesting the capability of systems of finance to transform. These findings indicate the positive relationships that exist in some contexts, such as reduced R&D investment. Taking into account the ecological bottom line, this research underlines ecosystem-based strategies of banking, green credit, and poised financial regulations for sustainable development. Synthesizing into this paper provides actionable insight into how policy makers, financial institutions, and researchers can tap into the synergy between the financial system and innovation. |
| Keywords: | Panel Data, Banking, Innovation. |
| JEL: | G00 G20 G21 G22 G23 G24 G28 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122774 |