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on Payment Systems and Financial Technology |
| By: | Carlos Cantú; Jon Frost; Tirupam Goel; Jermy Prenio |
| Abstract: | To successfully manage their financial obligations and have confidence in their financial future (financial health) people need to access and use financial services (financial inclusion). Yet inclusion alone may not be sufficient: financial health can suffer if the quality of use of financial services is poor (eg issues with provision such as scams or a lack of financial literacy and know-how on the part of the consumers). Public policy can boost financial health by promoting financial consumer protection, advancing financial literacy and enacting foundational policies like sound regulation and open finance. |
| Date: | 2024–03–28 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:85 |
| By: | Rodney Garratt; Priscilla Koo Wilkens; Hyun Song Shin |
| Abstract: | Existing correspondent banking processes have struggled to adapt to new regulatory and supervisory requirements, posing questions on the future of the correspondent banking model. The tokenisation of correspondent banking, as embodied in Project Agorá (BIS (2024b)), could unlock streamlined pre-screening and atomic settlement, and pave the way for superior customer verification and anti-money laundering (AML) procedures. Tokenisation could substantially reduce duplication and miscoordination, thereby revitalising cross-border payments by fostering a robust network of correspondents and corridors. |
| Date: | 2024–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:87 |
| By: | Sebastian Hernandez; Helena Wang; Badr Omrane; Vera Roberts; David Pereyra |
| Abstract: | Designing inclusive and user-friendly digital payment systems is crucial to eliminate barriers faced by users. This research focuses on fostering empathy for and identifying the needs of users who exhibit behaviours that indicate they encounter accessibility or usability barriers in digital systems. Specifically, we examine two types of users based on two common behaviours: users who rely on others to perform tasks and those who avoid interacting with technology. The Bank of Canada partnered with the Inclusive Design Research Centre at OCAD University to gain a deeper understanding of these groups. Co-design sessions with end users were used to identify scenarios when cooperative efforts are needed, system features that facilitate supported banking and pain points customers and their support people encounter. The findings show that individuals in the two groups avoid systems they expect lack usability. Addressing these issues through standard accessibility practices, live assistance and thoughtful interface design can enhance user interaction and trust. For accessibility issues that cannot realistically be eliminated, technology that enhances cooperative relationships and allows account owners to control information sharing is key. Classification-JEL: A14 C90 D83 O33 Y80 |
| Keywords: | Accessibility; Bank notes; Central bank research; Digital currencies and fintech; Digitalization; Financial services |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocadp:25-02 |
| By: | Ozili, Peterson K |
| Abstract: | In explaining the cause of financial exclusion, dissatisfaction with the formal financial system stands out as a possible cause of financial exclusion according to the dissatisfaction theory of financial inclusion. This paper revisits the dissatisfaction theory of financial inclusion and extends the theory by providing an elaborate discussion of (i) the relationship between customer dissatisfaction and financial inclusion using a grid, (ii) the sources of customer dissatisfaction and (iii) ways to deal with customer dissatisfaction. The theory argues that previously banked adults who left the formal financial system and have become unbanked again can be brought back to the formal financial sector through persuasion if the element of dissatisfaction has been removed or resolved. The theory is significant because it explains one of the major reasons why people leave the formal financial system despite the availability of formal financial services and ease of access to financial services in the financial system. |
| Keywords: | financial services, access to finance, financial inclusion, dissatisfaction, digital financial inclusion |
| JEL: | G21 G28 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123294 |
| By: | Di Wu |
| Abstract: | Bitcoin, widely recognized as the first cryptocurrency, has shown increasing integration with traditional financial markets, particularly major U.S. equity indices, amid accelerating institutional adoption. This study examines how Bitcoin exchange-traded funds and corporate Bitcoin holdings affect correlations with the Nasdaq 100 and the S&P 500, using rolling-window correlation, static correlation coefficients, and an event-study framework on daily data from 2018 to 2025.Correlation levels intensified following key institutional milestones, with peaks reaching 0.87 in 2024, and they vary across market regimes. These trends suggest that Bitcoin has transitioned from an alternative asset toward a more integrated financial instrument, carrying implications for portfolio diversification, risk management, and systemic stability. Future research should further investigate regulatory and macroeconomic factors shaping these evolving relationships. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.09911 |
| By: | Magomedov, Said; Fantazzini, Dean |
| Abstract: | The popularity of cryptocurrency exchanges has surged in recent years, accompanied by the proliferation of new digital platforms and tokens. However, the issue of credit risk and the reliability of crypto exchanges remain critical, highlighting the need for indicators to assess the safety of investing through these platforms. This study examines a unique, hand-collected dataset of 228 cryptocurrency exchanges operating between April 2011 and May 2024. Using various machine learning algorithms, we identify the key factors contributing to exchange shutdowns, with trading volume, exchange lifespan, and cybersecurity scores emerging as the most significant predictors. Since individual machine learning models often capture distinct data characteristics and exhibit varying error patterns, we employ a forecast combination approach by aggregating multiple predictive distributions. Specifically, we evaluate several specifications of the generalized linear pool (GLP), beta-transformed linear pool (BLP), and beta-mixture combination (BMC). Our findings reveal that the beta-transformed linear pool and the beta-mixture combination achieve the best performances, improving forecast accuracy by approximately 4.1% based on a robust H-measure, which effectively addresses the challenges of misclassification in imbalanced datasets. |
| Keywords: | forecast combination; exchange; bitcoin; crypto assets; cryptocurrencies; credit risk; bankruptcy; default probability |
| JEL: | C35 C51 C53 C58 G12 G17 G32 G33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123416 |
| By: | Escribano Saez, Álvaro; Rodríguez, Juan Andrés; Arranz Cuesta, Miguel Angel |
| Abstract: | Since the influential works of Friedman and Schwartz (1963, 1982) and Hendry and Ericsson (1991), on the monetary history of the United States of America and the United Kingdom from 1876 to 1975, there has been a great concern in the literature about the instability of money demand functions. This concern together with the results of the New Keynesian´s models (Woodford, 2003), produced the abandon of money as an instrument of monetary policy. Recently, using M1 as the measure of money, Benati, Lucas, Nicolini and Weber (2021) have shown, for a shorter and recent period of time, that there is a stable long-run money demand for a long list of countries. However, to date there are no studies showing that stable long-run and short-run money demand equations exist since the XIX century and how it can be used to inform monetary policy based on the quantitative theory of money. By means of nonlinear cointegration and nonlinear error-correction models, this paper presents evidence of UK stable long-run and short-run money demands of real broad monetary balances from 1874 to 2023. These equations provide with key elements to identify periods of excess money demand generating periods of 6.5% excess inflation, over the historical 2.2% average. Stable Money demand estimates provide useful policy rules and additional cross-check instruments for monetary policy to reach inflation targets. Furthermore, they help identifying spurious transmission channels of monetary policy, when theoretical models impose invalid common factor restrictions. |
| Keywords: | Money demand stability; Nonlinear cointegration; Nonlinear equilibrium correction; Nonlinear error correction; Opportunity cost of holding money; Role of money in monetary policy |
| JEL: | E41 E43 E47 E51 |
| Date: | 2025–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:45845 |
| By: | Ozili, Peterson K |
| Abstract: | The study investigates the impact of financial inclusion, financial stability, bank nonperforming loans, inflation, macroeconomic management quality and the unemployment rate on economic growth in Nigeria. The data are analyzed using the ordinary least squares regression, generalized linear model regression, robust least squares regression, and the quantile regression methods. The sample period is from 2007 to 2022. The findings reveal that financial inclusion, inflation rate and macroeconomic management quality are significant determinants of economic growth in Nigeria. Bank nonperforming loans, unemployment rate, international trade and climate change have an insignificant effect on economic growth in Nigeria. Also, financial inclusion, inflation rate, financial stability, macroeconomic management quality and the unemployment rate are significant determinants of economic growth in good economic years in Nigeria. The implication of the findings is that the well-known catalysts of economic growth, such as financial inclusion and financial stability, are not positive catalysts of economic growth in Nigeria during good economic years. Therefore, it is recommended that policymakers should find the right level of financial inclusion, financial stability and unemployment that stimulate economic growth in Nigeria. |
| Keywords: | Nigeria, financial inclusion, financial stability, nonperforming loans, bank, inflation, macroeconomic management quality, unemployment rate, economic growth, international trade, climate change. |
| JEL: | E31 O4 O55 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123293 |
| By: | Rodney Garratt; Hyun Song Shin |
| Abstract: | Private tokenised monies that circulate as bearer instruments, like stablecoins, may entail departures in their relative exchange values away from par in violation of the "singleness of money". In contrast, tokenised deposits that do not circulate as bearer instruments but rather settle in central bank money are more conducive to singleness. Tokenised deposits may enable expanded functionality by building on the capacity of programmable ledgers to introduce contingent execution and composability of transactions. |
| Date: | 2023–04–11 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:73 |
| By: | Sergio Toro-Maureira; Alejandro Olivares; Rocio Saez-Vergara; Sebastian Valenzuela; Macarena Valenzuela; Teresa Correa |
| Abstract: | The digitalization of public administration has advanced significantly on a global scale. Many governments now view digital platforms as essential for improving the delivery of public services and fostering direct communication between citizens and public institutions. However, this view overlooks the role played by digital intermediaries significantly shape the provision of e-government services. Using Chile as a case study, we analyze these intermediaries through a national survey on digitalization, we find five types of intermediaries: family members, peers, political figures, bureaucrats, and community leaders. The first two classes comprise close intermediaries, while the latter three comprise hierarchical intermediaries. Our findings suggest that all these intermediaries are a critical but underexplored element in the digitalization of public administration. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.10846 |
| By: | Ozili, Peterson K |
| Abstract: | This paper investigates the general level of interest in financial inclusion information using global data. Descriptive statistics and correlation analyses were used to assess the global interest in financial inclusion information. Using Google Trends monthly data from 2004 to 2021, the results show that the term ‘financial inclusion’ was more popular on the web in year 2017 than in any other year. Secondly, the highest level of interest in the term ‘financial inclusion’ by internet users was recorded in non-crisis months particularly after the global financial crisis but before the COVID-19 pandemic while the lowest interest in the term ‘financial inclusion’ by internet users was recorded in crisis months particularly during the global financial crisis and during the COVID-19 period. Thirdly, web search for information about financial inclusion was more popular in Zimbabwe, Rwanda, Fiji, Uganda and Zambia, while news search for information about financial inclusion was more popular in Fiji, India, Malaysia, Kenya, Singapore and Nigeria. This suggests that there was more interest in the term ‘financial inclusion’ among internet users in developing countries than in developed countries. Also, there is a negative correlation between interest in financial inclusion information and the level of country development. |
| Keywords: | Google Trends, financial inclusion, web search, development, internet. |
| JEL: | G21 G23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123298 |
| By: | Ramin Mousa; Meysam Afrookhteh; Hooman Khaloo; Amir Ali Bengari; Gholamreza Heidary |
| Abstract: | Digital currencies have become popular in the last decade due to their non-dependency and decentralized nature. The price of these currencies has seen a lot of fluctuations at times, which has increased the need for prediction. As their most popular, Bitcoin(BTC) has become a research hotspot. The main challenge and trend of digital currencies, especially BTC, is price fluctuations, which require studying the basic price prediction model. This research presents a classification and regression model based on stack deep learning that uses a wavelet to remove noise to predict movements and prices of BTC at different time intervals. The proposed model based on the stacking technique uses models based on deep learning, especially neural networks and transformers, for one, seven, thirty and ninety-day forecasting. Three feature selection models, Chi2, RFE and Embedded, were also applied to the data in the pre-processing stage. The classification model achieved 63\% accuracy for predicting the next day and 64\%, 67\% and 82\% for predicting the seventh, thirty and ninety days, respectively. For daily price forecasting, the percentage error was reduced to 0.58, while the error ranged from 2.72\% to 2.85\% for seven- to ninety-day horizons. These results show that the proposed model performed better than other models in the literature. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.13136 |
| By: | Mahya Karbalaii |
| Abstract: | With the growing popularity and rising value of cryptocurrencies, skepticism surrounding this groundbreaking innovation persists. Many financial and business experts argue that the value created in the cryptocurrency realm resembles the generation of currency from thin air. However, a historical analysis of the fundamental concepts that have shaped money reveals striking parallels with past transformations in human society. This study extends these historical insights to the present era, demonstrating how enduring monetary concepts are once again redefining our understanding of money and reshaping its form. Additionally, we offer novel interpretations of cryptocurrency by linking the intrinsic nature of money, the communities it fosters, and the cryptographic technologies that have provided the infrastructure for this transformative shift. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.10443 |
| By: | Cigdem Gedikli (Swansea University); Robert Hill (University of Graz); Oleksandr Talavera (University of Birmingham); Okan Yilmaz (Swansea University) |
| Abstract: | Online platforms have transformed many markets, as evidenced by the rise of firms such as Amazon, Uber, and Airbnb. However, the recent emergence of online real estate agencies has not yet received much attention. We investigate the impact of online agencies on the housing market. Our dataset consists of 1, 274, 792 properties in England and Wales, for which we have matched Zoopla listings with actual transactions from the Land Registry. Using an IV approach, we find that time on market is shorter by about 80 days and the sale-list price ratio is smaller by about 2.4% for properties listed with online agencies. These findings, combined with an average fee of less than one-third of that charged by traditional agencies, explain why online agencies have rapidly gained market share. Their share has risen particularly for properties in the mid-price range and in regions with younger demographics. Also, we find that the rise of online agencies has caused traditional agencies to change their behavior – time on market and the sale-list price ratio are lower for traditional agencies in regions with a higher share of online agencies. |
| Keywords: | Online platforms; Digital disruption; Diffusion of new technologies; Real estate market; Time on market; Sale-list price ratio |
| JEL: | L85 L86 O33 R21 R31 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bir:birmec:25-01 |
| By: | Elmira, Elza Samantha; Suryahadi, Asep |
| Abstract: | Many low- and middle-income countries (LMICs) are experiencing a nutrition transition from traditional diets to high-energy, processed foods, increasing non-communicable disease risks. Digitalization of food systems plays a significant role in shaping this transition. This paper investigates the impact of super app expansions (including food delivery, ridesharing, and other daily life assistance) on nutritional outcomes and the underlying mechanisms. Staggered district-level adoption of Indonesia's two largest digital platforms, Gojek and Grab from 2015 to 2018, is used. This information is combined with the health dataset from Indonesia’s Basic Health Survey (Riskesdas) and food consumption data from the National Socioeconomic Survey (Susenas). To address the endogeneity issue associated with the correlation between super app entry decisions and nutritional outcomes, we use doubly robust difference-in-differences, which incorporates baseline covariates ensuring a conditional parallel trend. The results show that super apps contribute to an increase in BMI scores, particularly among individuals who are already overweight and obese. This effect is especially driven by the online food delivery feature and is more pronounced in cities than regencies and among individuals with employment, above median income, and education beyond primary school. These increases could be attributed to unhealthy food consumption (i.e., salty and prepared foods). Our findings suggest that super apps may exacerbate malnutrition. On the other hand, we find underweight reduction in the cities and an overall increase in fruit and meat consumption, indicating super apps’ potential to improve malnutrition. These findings highlight the role of super apps in the nutrition transition in LMICs. |
| Keywords: | Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety |
| Date: | 2025–01–13 |
| URL: | https://d.repec.org/n?u=RePEc:ags:ubzefd:349215 |
| By: | Ozili, Peterson K |
| Abstract: | In this article, I propose the vulnerable group theory of financial inclusion. The theory begins with the premise that vulnerable people are often left behind in society, they suffer the most from economic hardship and crises, and they are at risk of being excluded from the formal financial sector. The theory therefore proposes that financial inclusion efforts should be targeted at all vulnerable people and groups in society. Bringing vulnerable people into the formal financial sector will give them access to available formal financial services, which they can use to earn income and acquire assets that they can use to take themselves out of the vulnerability bracket. The study also identifies the vulnerable groups in need of financial inclusion and proposes a vulnerability grid. Several avenues to expand the theory are suggested. |
| Keywords: | Access to finance; development; financial exclusion; theory; financial inclusion; unbanked adults; vulnerable groups. |
| JEL: | G01 Q01 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123291 |
| By: | Iñaki Aldasoro; Sebastian Doerr; Leonardo Gambacorta; Rodney Garratt; Koo Wilkens |
| Abstract: | Tokenising claims involves transforming them into tokens on a common programmable platform that combine a core layer, which contains information about the tokenised asset and its ownership, with a service layer embedding the platform's rules and governance. Tokenisation enables the automation of transactions involving money as well as financial and real assets, opening the way to the contingent transfer of claims and combinations of transactions via smart contracts. Economic, legal and technical challenges span a "tokenisation continuum" which describes the feasibility of tokenising traditional assets; gains are modest where tokenisation is easiest but the most valuable gains would involve the largest challenges. |
| Date: | 2023–04–11 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:72 |
| By: | Douglas Kiarelly Godoy de Araujo; Sebastian Doerr; Leonardo Gambacorta; Bruno Tissot |
| Abstract: | Central banks have been early adopters of machine learning techniques for statistics, macro analysis, payment systems oversight and supervision, with considerable success. Artificial intelligence brings many opportunities in support of central bank mandates, but also challenges – some general and others specific to central banks. Central bank collaboration, for instance through knowledge-sharing and pooling of expertise, holds great promise in keeping central banks at the vanguard of developments in artificial intelligence. |
| Date: | 2024–01–23 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:84 |
| By: | Ozili, Peterson K |
| Abstract: | The literature has examined the relationship between financial inclusion and financial stability, but no studies have examined the relationship between financial inclusion and financial crisis. This study examines the effect of financial inclusion on financial crisis using data from 28 countries from 2006 to 2017. Three stylised facts were established based on real world observation. One, the level of financial inclusion, in terms of number of bank depositors, decreases during domestic financial crisis. Two, the level of financial inclusion, in terms of ATM penetration, does not decrease during global and domestic financial crises. Three, the level of financial inclusion, in terms of number of bank branch, decreases during global and domestic financial crises and the contraction is stronger during a domestic financial crisis. Using the panel regression, logit and probit regression estimation methods, the empirical results show that low levels of financial inclusion, measured by fewer bank depositors and fewer bank branches, increase the likelihood that a financial crisis will occur. Low levels of financial inclusion, measured by fewer bank depositors, increase the likelihood that a financial crisis will occur in low financial-inclusion countries. In contrast, greater ATM penetration increases the likelihood that a financial crisis will occur in low financial-inclusion countries. The interaction analyses show that all indices of financial inclusion have a joint positive impact on financial crisis, implying that high levels of financial inclusion increases the likelihood that a financial crisis will occur. |
| Keywords: | Financial crisis, financial inclusion, index, bank branches, ATM, bank depositors. |
| JEL: | G21 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123290 |
| By: | Chanelle Duley; Leonardo Gambacorta; Rodney Garratt; Priscilla Koo Wilkens |
| Abstract: | Crypto-based decentralised finance (DeFi) uses “oracles” to import real-world data into blockchain environments for use in smart contracts. Whether oracles can truly adhere to the complete decentralisation ethos of crypto is debatable. Even if feasible in practice, striving for the ideal of full decentralisation leads to complex consensus protocols that further erode blockchain efficiency. While introducing some degree of centralisation in oracles might boost efficiency, it also means adding trusted parties to a system designed to be trustless. As a result, crypto-based DeFi is likely to remain the preserve of cryptoassets only, rather than being used for real-world assets. |
| Date: | 2023–09–07 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:76 |
| By: | Paul Gertler; Sean Higgins; Ulrike Malmendier; Waldo Ojeda |
| Abstract: | Firms frequently fail to adopt profitable business opportunities even when they do not face informational or liquidity constraints. We explore three behavioral frictions that explain inertia among individuals—present bias, limited memory, and distrust—in a managerial setting. In partnership with a FinTech payments company in Mexico, we randomly offer 33, 978 firms the opportunity to pay a lower merchant fee. We vary whether the offer has a deadline, reminder, pre-announced reminder, and the size of the fee reduction. Reminders increase take-up by 15%, suggesting a role of memory. Announced reminders increase take-up by an additional 7%. Survey data reveal the likely mechanism: When the FinTech company follows through with the pre-announced reminder, firms' trust in the offer increases. The deadline does not affect larger firms, implying limited or no present bias, but does increase take-up by 8% for smaller firms. Overall, behavioral frictions contribute significantly to explaining profit-reducing firm behavior. |
| JEL: | D9 G4 M1 O14 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33387 |
| By: | Giulio Cornelli; Sebastian Doerr; Jon Frost; Leonardo Gambacorta |
| Abstract: | A new data set on retail holdings of cryptoassets reveals that in the wake of the Terra/Luna collapse and the FTX bankruptcy, crypto trading activity increased markedly, with large and sophisticated investors selling and smaller retail investors buying. Data on major crypto trading platforms over August 2015–December 2022 show that, as a result, a majority of crypto app users in nearly all economies made losses on their bitcoin holdings. Nevertheless, despite crypto's large user base and the substantial losses to many investors, the market turmoil in 2022 had little discernible impact on broader financial conditions outside the crypto universe, underlining the largely self-referential nature of crypto as an asset class. |
| Date: | 2023–02–20 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:69 |
| By: | Shakeel, Jovera; Munir, Shehzil; Mirza, Schaff; Abdullah, Khan |
| Abstract: | The impact of digital literacy on financial outcomes has been well-explored. However, the onset of AI necessitates a pressing need for more granular, cross-country analyses that incorporate local variations in digital infrastructure and socioeconomic conditions. Using data from three sources in 82 countries, we employ a Directed Acyclic Graph (DAG) to examine both the direct and indirect effects of digital literacy on financial well-being. Our study uses two econometrics models, Ordinary Least Squares Regression (OLS) and Structural Equation Model (SEM), along with the machine learning approach of Random Forests. Our results confirm our initial hypothesis that digital literacy has a positive impact on financial well-being through financial inclusion. Through our models, we find that the indirect link through financial inclusion dominates the direct impact of digital literacy on financial well-being, as it accounts for socioeconomic, institutional, and individual factors. |
| Keywords: | Digital literacy; Financial access; Economic outcomes; Human capital; Income distribution; Financial inclusion; Financial literacy; Economic development; Technological change; Data analysis |
| JEL: | C13 C38 C45 D31 D83 G21 G23 J24 O15 O16 O33 |
| Date: | 2024–12–26 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123374 |
| By: | John Theal; Pavel Dvorak |
| Abstract: | We propose an index of digital financial participation to benchmark the level of engagement/participation of EU citizens in an increasingly digitalized financial system. Drawing on data from Eurostat, we adopt a number of variables that reflect households’ and individuals’ digital skills, digital access, digital device usage as well as other factors to first construct a series of sub-indices that measure different dimensions of digital financial participation. In a second and final step, we combine these composite sub-indices into an overall composite indicator of Digital Financial Participation for EU countries. The information contained in the weights of the sub-indicator variables, as well as the weights of the sub-indicators in the final composite indicator provide potentially useful information for policymakers to assess the potential barriers to digital financial participation and inclusion in the EU. We also construct the indicator using the multi-directional Benefit of the Doubt approach to obtain directional improvement vectors that can help to guide policymakers in fostering participation in digital financial activities and digital financial inclusion. |
| Keywords: | Composite indicator, benefit of the doubt, data envelopment analysis, financial inclusion, digital inclusion, payments, digitalization, performance benchmarking |
| JEL: | C14 C43 C44 I30 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:bcl:bclwop:bclwp191 |
| By: | Ozili, Peterson K |
| Abstract: | The relationship between financial inclusion and exchange rate has not received any attention in the literature. This study investigates the effect of the official exchange rate on the level of financial inclusion. A sample of 17 countries were analysed from 2012 to 2020. Four financial inclusion indicators were used in the analysis: the number of ATMs per 100, 000 adults variable, the number of bank accounts (or depositors) per 1, 000 adults variable, the number of commercial bank branches per 100, 000 adults variable, and a financial inclusion index. The correlation result shows that financial inclusion and exchange rate are negatively correlated while the regression result shows that a weakening official exchange rate or currency depreciation has a significant positive impact on financial inclusion through increase in the number of bank depositors (or bank accounts) and increase in the number of commercial bank branches. The findings support the argument that currency depreciation will lead people to take more loans which will increase bank profitability and encourage banks to expand to new locations to acquire new depositors, thereby increasing financial inclusion. The implication of the study is that currency depreciation is beneficial effect for financial inclusion. It is recommended that policymakers should determine the right level of currency depreciation (or devaluation) that is needed to support national financial inclusion efforts and they should manage the exchange rate around that level. |
| Keywords: | financial inclusion, exchange rate, bank branch, depositors, depreciation, devaluation |
| JEL: | F13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123292 |
| By: | Ozili, Peterson K |
| Abstract: | The study examines the effect of financial inclusion on bank stability, and the effect of bank stability on financial inclusion from 2011 to 2020. The study analyses 33 countries which are divided into Asian countries, African countries, European countries, and countries in the region of the Americas and using the panel regression method. It was found that high levels of financial inclusion have a significant positive impact on bank stability. The regional results show that financial inclusion improves bank stability in African countries and in countries in the region of the Americas while financial inclusion impairs bank stability in European countries. The analysis for the impact of bank stability on financial inclusion shows that bank stability has a significant effect on financial inclusion. The regional analysis shows that greater bank stability decreases financial inclusion in European and African countries while greater bank stability increases financial inclusion in countries in the Americas region. The results suggest that the effect of financial inclusion on bank stability, and the effect of bank stability on financial inclusion, depends on how financial inclusion and bank stability are measured and the region examined. |
| Keywords: | financial inclusion, bank stability, capital adequacy ratio, capital buffer, financial inclusion index, automated teller machines, deposits, commercial banks |
| JEL: | G21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123301 |
| By: | Ozili, Peterson K |
| Abstract: | The objective of this study is to present a theoretical framework that explains the digital agency at work in digital financial inclusion. The digital agency theory of financial inclusion examines the problems and solutions linked to delegating financial inclusion outcomes to a digital agent. The theory also examines the various kinds of incentives and monitoring arrangements that can be deployed by the financial inclusion principal to ensure that the digital agent achieve the specified financial inclusion outcome. The digital agency theory of financial inclusion states that the financial inclusion principal will employ the services of a digital agent who will use appropriate digital technologies to achieve the financial inclusion outcome specified by the financial inclusion principal under a contractual agreement that motivates the digital agent to act in the best interest of the financial inclusion principal. The theory has broad applicability for digital financial inclusion. This study contributes to the emerging theoretical literature on financial inclusion by presenting a digital agency perspective on how to accelerate digital financial inclusion using digital agents. |
| Keywords: | financial inclusion, digital agent, digital financial inclusion, digital technologies, incentives, digital agency theory of financial inclusion, monitoring |
| JEL: | G21 G23 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123296 |
| By: | Beknazar-Yuzbashev, George (Columbia University); Jiménez-Durán, Rafael (Bocconi University); McCrosky, Jesse (IGIER, Chicago Booth Stigler Center, and CESifo); Stalinski, Mateusz (University of Warwick and CAGE) |
| Abstract: | Most social media users have encountered harassment online, but there is scarce evidence of how this type of toxic content impacts engagement. In a pre-registered browser extension field experiment, we randomly hid toxic content for six weeks on Facebook, Twitter, and YouTube. Lowering exposure to toxicity reduced advertising impressions, time spent, and other measures of engagement, and reduced the toxicity of user-generated content. A survey experiment provides evidence that toxicity triggers curiosity and that engagement and welfare are not necessarily aligned. Taken together, our results suggest that platforms face a trade-off between curbing toxicity and increasing engagement. |
| Keywords: | toxic content, moderation, social media, user engagement, browser experiment JEL Classification: C93, D12, D83, D90, I31, L82, L86, M37, Z13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:741 |
| By: | Ologunebi, John; Taiwo, Ebenezer |
| Abstract: | This research explores the profound impact of digital communication on governance, political dynamics, and leadership within the context of Nigeria, a country characterized by its diverse socio-political landscape and evolving digital environment. As the prevalence of the internet and mobile technologies has surged, so has the potential for digital platforms to reshape the way citizens interact with their government, engage in political processes, and influence leadership structures. This study employs a quantitative analysis of social media usage patterns and their correlation with civic engagement metrics. The findings reveal that digital communication significantly enhances transparency and accountability in governance by facilitating real-time feedback and dialogue between citizens and governmental institutions. Social media platforms have emerged as critical arenas for political discourse, mobilization, and activism, enabling citizens to voice their opinions and organize collective actions rapidly. This has been particularly evident in recent movements advocating for social justice, anti-corruption, and electoral reforms, where digital tools have played a pivotal role in amplifying marginalized voices and challenging prevailing power dynamics. Moreover, the research identifies several challenges posed by the increasing reliance on digital communication in political contexts. Misinformation and disinformation campaigns have become prevalent, undermining public trust and leading to political polarization. Additionally, issues of digital literacy and access exacerbate existing inequalities, as not all demographics can fully participate in this digital transformation. Leadership styles have also had to adapt to this new landscape, with political leaders increasingly utilizing digital platforms to communicate directly with constituents, often bypassing traditional media. The implications of this study are significant for understanding the evolving nature of governance and political engagement in Nigeria. It underscores the need for developing robust digital literacy programs, promoting responsible digital citizenship, and strengthening regulatory frameworks to ensure fair and equitable access to digital communication tools. Ultimately, this research contributes to the broader discourse on the interplay of technology and democracy, highlighting how digital communication can both empower democratic processes and present new challenges that require adaptive governance and innovative leadership strategies in Nigeria and beyond. |
| Keywords: | Digital Communication, Governance, Political Dynamics, Leadership, Nigerian Politics, Digital Media Influence, Political Communication, E-Governance in Nigeria, Digital Leadership, Political Participation, Social Media in Politics, Digital Technology in Governance |
| JEL: | M0 M00 Z0 Z00 Z10 Z18 Z19 |
| Date: | 2025–01–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123310 |
| By: | Bogdan Marza; Renate-Doina Bratu; Razvan Serbu; Sebastian Emanuel Stan; Camelia Oprean-Stan |
| Abstract: | In today's world, marked by social distancing and lockdowns, the development of digital financial services is becoming increasingly important, but there is little empirical work documenting the most important factors that contribute to the process of financial and digital inclusion. Because the speed with which states adapt to digital financial services is critical, we must ask how prepared states are for this transition and how far they have progressed in terms of financial and digital inclusion. In this context, the goal of this article is, on the one hand, to propose a financial responsibility process framework capable of raising awareness of the most important harmonized key levels of financial and digital inclusion process that, when properly managed, can lead to achieving an optimal level of financial responsibility, and, on the other hand, to assess the financial and digital inclusion process of two different age groups of individuals who are active in the financial environment (15-34 and 35-59 age groups). The Analytical Hierarchy Process AHP and Fuzzy AHP approaches are proposed as a framework for assessing the mechanism of financial and digital inclusion in five East Central European countries. The findings reflect differences between the analyzed countries in terms of the key levels of financial and digital inclusion (where digital and financial education are the most important levels), with Croatia, Czech Republic, and Poland being the most integrated and Romania being the least. According to the findings, as a country or region's level of financial and digital inclusion increases, so does its level of financial responsibility. This research can be a useful tool in raising awareness about the importance of directed behavior for financial responsibility, particularly for policymakers. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.10001 |