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on Payment Systems and Financial Technology |
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Issue of 2019‒03‒11
23 papers chosen by |
| By: | Tomaso Aste |
| Abstract: | We study the dependency and causality structure of the cryptocurrency market investigating collective movements of both prices and social sentiment related to almost two thousand cryptocurrencies traded during the first six months of 2018. This is the first study of the whole cryptocurrency market structure. It introduces several rigorous innovative methodologies applicable to this and to several other complex systems where a large number of variables interact in a non-linear way, which is a distinctive feature of the digital economy. The analysis of the dependency structure reveals that prices are significantly correlated with sentiment. The major, most capitalised cryptocurrencies, such as bitcoin, have a central role in the price correlation network but only a marginal role in the sentiment network and in the network describing the interactions between the two. The study of the causality structure reveals a causality network that is consistently related with the correlation structures and shows that both prices cause sentiment and sentiment cause prices across currencies with the latter being stronger in size but smaller in number of significative interactions. Overall our study uncovers a complex and rich structure of interrelations where prices and sentiment influence each other both instantaneously and with lead-lag causal relations. A major finding is that minor currencies, with small capitalisation, play a crucial role in shaping the overall dependency and causality structure. Despite the high level of noise and the short time-series we verified that these networks are significant with all links statistically validated and with a structural organisation consistently reproduced across all networks. |
| Date: | 2019–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:1903.00472&r=all |
| By: | Prashant Bharadwaj; William Jack; Tavneet Suri |
| Abstract: | Developing country lenders are taking advantage of fintech tools to create fully digital loans on mobile phones. Using administrative and survey data, we study the take up and impacts of one of the most popular digital loan products in the world, M-Shwari in Kenya. While 34% of those eligible for a loan take it, the loan does not substitute for other credit. The loans improve household resilience: households are 6.3 percentage points less likely to forego expenses due to negative shocks. We conclude that while digital loans improve financial access and resilience, they are not a panacea for greater credit market failures. |
| JEL: | O16 O33 O55 |
| Date: | 2019–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:25604&r=all |
| By: | Amadou N Sy; Rodolfo Maino; Alexander Massara; Hector Perez Saiz; Preya Sharma |
| Abstract: | FinTech is a major force shaping the structure of the financial industry in sub-Saharan Africa. New technologies are being developed and implemented in sub-Saharan Africa with the potential to change the competitive landscape in the financial industry. While it raises concerns on the emergence of vulnerabilities, FinTech challenges traditional structures and creates efficiency gains by opening up the financial services value chain. Today, FinTech is emerging as a technological enabler in the region, improving financial inclusion and serving as a catalyst for the emergence of innovations in other sectors, such as agriculture and infrastructure. |
| Keywords: | Sub-Saharan Africa;Financial services;Technological innovation;Financial inclusion;FinTech; Financial Technology; Financial Inclusion; Innovation; Sub-Saharan Africa |
| Date: | 2019–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfdep:19/04&r=all |
| By: | Rudolf Kerschbamer; Daniel Neururer; Matthias Sutter |
| Abstract: | Credence goods markets are characterized by pronounced informational asymmetries between consumers and expert sellers. As a consequence, consumers are often exploited and market efficiency is threatened. However, in the digital age, it has become easy and cheap for consumers to self-diagnose their needs using specialized webpages or to access other consumers' reviews on social media platforms in search for trustworthy sellers. We present a natural field experiment that examines the causal effect of information acquisition from new media on the level of sellers' price charges for computer repairs. We find that even a correct self-diagnosis of a consumer about the appropriate repair does not reduce prices, and that an incorrect diagnosis more than doubles them. Internet ratings of repair shops are a good predictor of prices. However, the predictive valued of reviews depends on whether they are judged as reliable or not. For reviews recommended by the platform Yelp we find that good ratings are associated with lower prices and bad ratings with higher prices, while non-recommended reviews have a clearly misleading effect, because non-recommended positive ratings increase the price. |
| Keywords: | credence goods, fraud, information acquisition, internet, field experiment |
| JEL: | C93 D82 |
| Date: | 2019–02 |
| URL: | https://d.repec.org/n?u=RePEc:inn:wpaper:2019-02&r=all |
| By: | Sokic, Alexandre |
| Abstract: | This paper is deeply motivated by the need to explore the impressive Bitcoin price development by addressing Bitcoin as money in its essential attribute as a medium of exchange. We adopt a monetary economics viewpoint and resort to a representative agent modelling strategy within a money-in-the-utility function (MIUF) framework. First, we show that the impressive Bitcoin price development observed since its inception can be interpreted as a hyperdeflation when we focus on Bitcoin role as a medium of exchange. Second, we show that specific monetary features of Bitcoin, its asymptotical fixed nominal stock and divisibility down to eight decimal places, account for a strong possibility of speculative hyperdeflationary paths. It is shown that those paths are fully consistent with the medium of exchange monetary role of Bitcoin and the representative agent optimizing behavior. |
| Keywords: | Cryptocurrencies, Bitcoin, hyperdeflation, medium of exchange |
| JEL: | E31 E41 E42 |
| Date: | 2018–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:90603&r=all |
| By: | Shy, Oz (Federal Reserve Bank of Atlanta) |
| Abstract: | Cash users withdraw money from automated teller machines (ATMs) to finance cash payments. However, most ATMs in the United States dispense only multiples of $20 bills. The paper first constructs a consumer's optimization model showing how the precise denomination of dollar bills available from ATMs affects consumers' decision whether to pay with cash or with (plastic) cards. Then, the paper uses various statistical techniques to conduct empirical analyses of consumers who choose to pay cash for transactions below a certain threshold payment amount and pay with cards for transactions exceeding that threshold. |
| Keywords: | currency denomination; automated teller machines; ATM; consumer payment choice; payment methods; point of sale |
| JEL: | D9 E42 |
| Date: | 2019–02–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedawp:2019-02&r=all |
| By: | Paul Dolfen; Liran Einav; Peter J. Klenow; Benjamin Klopack; Jonathan D. Levin; Laurence Levin; Wayne Best |
| Abstract: | E-Commerce represents a rapidly growing share of consumer spending in the U.S. We use transactions-level data on credit and debit cards from Visa, Inc. between 2007 and 2017 to quantify the resulting consumer surplus. We estimate that E-Commerce spending reached 8% of consumption by 2017, yielding consumers the equivalent of a 1% permanent boost to their consumption, or over $1,000 per household. While some of the gains arose from saving travel costs of buying from local merchants, most of the gains stemmed from substituting to online merchants. Higher income cardholders gained more, as did consumers in more densely populated counties. |
| JEL: | L81 L86 O33 O47 |
| Date: | 2019–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:25610&r=all |
| By: | Clément Le Ludec; Paola Tubaro (LRI - Laboratoire de Recherche en Informatique - UP11 - Université Paris-Sud - Paris 11 - Inria - Institut National de Recherche en Informatique et en Automatique - CentraleSupélec - CNRS - Centre National de la Recherche Scientifique, TAU - TAckling the Underspecified - LRI - Laboratoire de Recherche en Informatique - UP11 - Université Paris-Sud - Paris 11 - Inria - Institut National de Recherche en Informatique et en Automatique - CentraleSupélec - CNRS - Centre National de la Recherche Scientifique - UP11 - Université Paris-Sud - Paris 11 - Inria Saclay - Ile de France - Inria - Institut National de Recherche en Informatique et en Automatique - CNRS - Centre National de la Recherche Scientifique); Antonio Casilli (I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Microwork platforms allocate fragmented tasks to crowds of providers with remunerations as low as few cents. Instrumental to the development of today's artificial intelligence, these micro-tasks push to the extreme the logic of casualization already observed in "uberized" workers. The present article uses the results of the DiPLab study to estimate the number of people who microwork in France. We distinguish three categories of microworkers, corresponding to different modes of engagement: a group of 14,903 "very active" microworkers, most of whom are present on these platforms at least once a week; a second featuring 52,337 "routine" microworkers, more selective and present at least once a month; a third circle of 266,126 "casual" microworkers, more heterogeneous and who alternate inactivity and various levels of work practice. Our results show that microwork is comparable to, and even larger than, the workforce of ride-sharing and delivery platforms in France. It is therefore not an anecdotal phenomenon and deserves great attention from researchers, unions and policy-makers. |
| Abstract: | Les plateformes de micro-travail allouent des tâches fragmentées à des foules de prestataires dont la rémunération peut être aussi faible que quelques centimes. Indispensables pour développer les intelligences artificielles actuelles, ces micro-tâches poussent à l'extrême les logiques de précarité déjà constatées à l'égard des travailleurs « uberisés ». Cet article propose une estimation du nombre de personnes concernées par la micro-travail en France, sur la base des résultats de l'enquête DiPLab. Nous détectons trois types de micro-travailleurs, correspondant à différents modes d'engagement : un groupe de 14.903 individus « très actifs », dont la plupart sont présents sur ces plateformes au moins une fois par semaine ; un deuxième accueillant 52.337 usagers « réguliers », plus sélectifs et présents au moins une fois par mois ; un troisième de 266.126 « occasionnels », plus hétérogènes et qui alternent entre l'inactivité et une pratique plus intensive du micro-travail. Ces résultats montrent que le microtravail a une incidence comparable voire supérieure aux effectifs des plateformes VTC et de livraison-express en France. Il n'est donc pas un phénomène anecdotique et il mérite une grande attention de la part des chercheurs, des partenaires sociaux et des décideurs publics. |
| Keywords: | Micro-work,digital transformation,digital labor,algorithms,digital platforms |
| Date: | 2019–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:wpaper:hal-02012731&r=all |
| By: | Sara Moricz |
| Abstract: | Norms are challenging to define and measure, but this paper takes advantage of text data and the recent development in machine learning to create an encompassing measure of norms. An LSTM neural network is trained to detect gendered language. The network functions as a tool to create a measure on how gender norms changes in relation to the Metoo movement on Swedish Twitter. This paper shows that gender norms on average are less salient half a year after the date of the first appearance of the hashtag #Metoo. Previous literature suggests that gender norms change over generations, but the current result suggests that norms can change in the short run. |
| Date: | 2019–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:1903.00690&r=all |
| By: | Joël Cariolle; Maelan Le Goff; Olicier Santoni |
| Abstract: | Almost all coastal economies are now connected to the global Internet through over 300 telecommunications submarine cables (SMCs), so digital vulnerability is now shaped by two structural factors, independent from policy: exposure to broadband infrastructure outages and physical distance to these infrastructures, which increases exposure to network failures. We estimate the impact of Internet penetration on local firm performance by adopting an instrumental variable approach reflecting these two sources of digital vulnerability. Multilevel estimations are conducted over a sample of around 44,000 firms from about 250 locations in some 60 developing and transition countries. Results stress large impacts of higher Internet penetration rates at the location level, induced by lower digital vulnerability, on firms’ average revenue and labour productivity, and to a lesser extent, on temporary employment. This evidence is, amongst others, robust to the exclusion of exporters, big firms, foreign firms, and firms created after SMC arrival. |
| Keywords: | NICT, submarine cables, firm performance, developing countries |
| JEL: | F02 O11 O33 O18 L25 L96 |
| Date: | 2019 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:709&r=all |
| By: | Ljungberg, Jonas (Department of Economic History, Lund University); Ögren, Anders (Department of Economic History, Lund University) |
| Abstract: | While there is a huge literature on exchange rate systems since the classical gold standard, less research has been devoted to comparisons of the different arguments that guided the choices. While the origin of the international gold standard in the 1870s was a result of silver coins disappearing from circulation due to rising silver prices, the gold standard has later been interpreted as a quest for monetary discipline. This discipline argument was introduced by the end of WWI as a support for a restoration of the gold standard. Its failure led to an emphasis on the need to avoid external imbalances, which came to the fore in the preparations of the Bretton Woods system. The balance argument was also central in the early discussions of a monetary union in Europe, but with the critique of Keynesianism it was superseded by the disciplinary argument which became determinant for the design of EMU. |
| Keywords: | exhange rates; Europe; gold standard; EMU |
| JEL: | F31 N13 N14 |
| Date: | 2019–02–28 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:luekhi:0190&r=all |
| By: | Syed Zwick, Hélène; Syed, Sarfaraz Ali Shah |
| Abstract: | This study applies threshold regression model in a bivariate framework to explore the nonlinear and long-term relationship among daily Bitcoin and gold prices over the period April 2010 to December 2018. Our empirical results are threefold: first, we show that gold is a significant predictor of Bitcoin prices. Second, we find evidence of a non-linear relationship between Bitcoin and gold prices characterized rather by a two-regime relationship with a structural break occurring in October 2017. Third, we explain the existence at before the break, there is statistically significant, negative but weak causality indicating that Bitcoin is a speculative asset. However, after the break, the relationship becomes positive and strong revealing the diversifier and hedge properties of Bitcoin. |
| Keywords: | Bitcoin, gold prices, hedge, diversifier, structural break, threshold regression |
| JEL: | C24 E42 G15 |
| Date: | 2019–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:92512&r=all |
| By: | Christian Fries; Peter Kohl-Landgraf; Bj\"orn Paffen; Stefanie Weddigen; Luca Del Re; Wilfried Sch\"utte; David Bacher; Rebecca Declara; Daniel Eichsteller; Florian Weichand; Michael Streubel |
| Abstract: | In this note we describe the application of existing smart contract technologies with the aim to construct a new digital representation of a financial derivative contract. We compare several existing DLT based technologies. We provide a detailed description of two separate prototypes which are able to be executed on a centralized and on a DLT platform respectively. Beyond that we highlight some insights on legal aspects as well as on common integration challenges regarding existing process and system landscapes. For a further introductory note and motivation on the theoretical concept we refer to [1]. A very detailed methodological overview of the concept of a smart derivative contract can be found in [3]. |
| Date: | 2019–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:1903.00067&r=all |
| By: | Dhaoui, Iyad |
| Abstract: | Technology is changing our world at an astonishing pace. One of the features of technological development is its great contribution to enhance e-governance. E-governance is introduced as a mean to reduce costs, improve services for citizens and increase effectiveness and efficiency of the public sector. The purpose of this paper is to examine the potential opportunities of e-governance as well as the challenges encountered it. This paper tries to give a general overview of these issues. |
| Keywords: | e-governance; ICTs; public services |
| JEL: | H11 H40 O1 |
| Date: | 2019–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:92545&r=all |
| By: | Ajay Agrawal; Joshua S. Gans; Avi Goldfarb |
| Abstract: | Recent advances in artificial intelligence are primarily driven by machine learning, a prediction technology. Prediction is useful because it is an input into decision-making. In order to appreciate the impact of artificial intelligence on jobs, it is important to understand the relative roles of prediction and decision tasks. We describe and provide examples of how artificial intelligence will affect labor, emphasizing differences between when automating prediction leads to automating decisions versus enhancing decision-making by humans. |
| JEL: | J20 O33 |
| Date: | 2019–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:25619&r=all |
| By: | Zakaria Babutsidze (SKEMA Business School, Université Côte d’Azur (GREDEG) and OFCE, Sciences Po Paris); Nobuyuki Hanaki (Université Côte d’Azur, CNRS, GREDEG); Adam Zylbersztejn (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France) |
| Abstract: | We experimentally study the effect of the mode of digital communication on the emergence of swift trust in a principal-agent relationship. We consider three modes of communication: plain text, audio, and video. Communication is pre-play, one-way, and unrestricted, but its content is homogenized across treatments. Overall, both audio and video messages have a positive (and similar) effect on trust compared to plain text; however, the magnitude of these effects depends on the content of agent’s message (promise to act trustworthily vs. no such promise). In all conditions, we observe a positive effect of the agent’s promise on the principal’s trust. We also find that providing visual cues about the sender promotes trust and helps overcome gender favoritism in females. |
| Keywords: | Digital communication, Trust, Hidden action, Principal-agent relationship, Promise |
| JEL: | C72 D83 |
| Date: | 2019 |
| URL: | https://d.repec.org/n?u=RePEc:gat:wpaper:1909&r=all |
| By: | Ringe, Wolf-Georg; Ruof, Christopher |
| Abstract: | In the aftermath of the 2007-09 global financial crisis, regulators in all major jurisdictions introduced significant new requirements for financial firms. Certainly justified in purpose, these regulations have increased market barriers, both directly through specific obligations, and indirectly through the sheer magnitude and complexity they involve. Regulators primarily focused on bolstering financial stability and consumer protection, while frequently disregarding their objective of promoting financial innovation. Ten years after the crisis, it is time to reconsider the appropriate balance between those objectives. In this commentary, the authors show how EU financial regulation may stifle the innovation of financial services. Using the example of automated investment advice, so-called ‘robo-advisors’, they show how a proper balance between regulatory objectives could be achieved through establishing a ‘guided’ regulatory sandbox. |
| Date: | 2019–01 |
| URL: | https://d.repec.org/n?u=RePEc:eps:ecmiwp:14029&r=all |
| By: | Pietro Checcucci |
| Abstract: | The current trends in the ageing of the work-force, which are only in part counterbalanced by immigration flows, risk to expose European enterprises to a widespread situation of skills shortage, together with the loss of a huge wealth of knowledge and experience, as a consequence of baby boomers retirement. In this context, the automation/digitalisation of production represents one of the main tools in the hands of advanced economies and organizations to react to the shrinking of the labour force, while boosting productivity and containing costs. The paper attempts to provide an initial framing of the problematic relationship which intervenes between digital innovation and employability of older workers. The discussion will offer a possible interpretation of on-going transformations and a provisional explanation of the current situation in Italy. The contribution will summarize the most important demographic transformations which affected the labour market during these years, in the light of the (potentially) disruptive spread of digital technologies. The topic of the digital evolution of jobs’ task content and its influence on training needs will be addressed. Reflections concerning the relationship between the adoption of technological innovation and the quality of human capital will be presented and some hypothesis concerning the recent evolution of employers’ attitudes towards older workers, about facing technological innovation, will be suggested. |
| Date: | 2019–02 |
| URL: | https://d.repec.org/n?u=RePEc:ast:wpaper:0040&r=all |
| By: | Alain Alcouffe (LIRHE - Laboratoire Interdisciplinaire de recherche sur les Ressources Humaines et l'Emploi - UT1 - Université Toulouse 1 Capitole - CNRS - Centre National de la Recherche Scientifique); Fanny Coulomb (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes) |
| Date: | 2018–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-02022182&r=all |
| By: | Froukelien Wendt; Peter Katz; Alice Zanza |
| Abstract: | The key objective of this note is to support authorities in their decision making about the optimal organization of central securities depositories (CSDs) in their country. For the purpose of this note, a CSD is defined as an entity that provides securities accounts, a securities settlement system, and central safekeeping services to market participants, which can be banks and other financial institutions. Authorities in developing markets, in particular central banks, may grapple with two questions: (1) whether to pursue a single CSD to increase market efficiencies and benefit from economies of scale and scope and (2) whether to partake in the governance of the CSD as owner or operator. This note presents seven considerations for authorities to take into account when answering these questions and determining the best model for their country. |
| Keywords: | Securities markets;Securities regulations;Depositories;Developing countries;Monetary policy; |
| Date: | 2019–02–04 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfhtn:19/01&r=all |
| By: | Michal Krawczyk (University of Warsaw; Group for Research in Applied Economics (GRAPE)); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw; Institut für Arbeitsrecht und Arbeitsbeziehungen in der Europäischen Union (IAAEU); Institute of Labor Economics (IZA)); Wojciech Hardy |
| Abstract: | This study employs a vignette experiment to inquire, which features of online "piracy" make it ethically discernible from a traditional theft. This question is pertinent since the social norm concerning traditional theft is starkly different from the evidence on ethical evaluation of online "piracy". We specifically distinguish between contextual features of theft, such as for example the physical loss of an item, breach of protection, availability of alternatives, emotional proximity to the victim of theft, etc. We find that some of these dimensions have more weight in ethical judgment, but there are no clear differences between online and traditional theft which could explain discrepancy in the frequency of commitment. |
| Keywords: | online piracy, ethical judgment, vignette experiment |
| JEL: | P45 P52 C14 O16 |
| Date: | 2018 |
| URL: | https://d.repec.org/n?u=RePEc:fme:wpaper:33&r=all |
| By: | Nuno Palma (University of Manchester and CEPR) |
| Abstract: | Classic accounts of the English industrial revolution present a long period of stagnation followed by a fast take-off. However, recent findings of slow but steady per capita economic growth suggest that this is a historically inaccurate portrait of early modern England. This growth pattern was in part driven by specialization and structural change accompanied by an increase in market participation at both the intensive and extensive levels. These, I argue, were supported by the gradual increase in money supply made possible by the importation of precious metals from America. They allowed for a substantial increase in the monetization and liquidity levels of the economy, hence decreasing transaction costs, increasing market thickness, changing the relative incentive for participating in the market, and allowing agglomeration economies to arise. By making trade with Asia possible, precious metals also induced demand for new desirable goods, which in turn encouraged market participation. Finally, the increased monetization and market participation made tax collection easier. This helped the government to build up fiscal capacity and as a consequence to provide for public goods. The structural change and increased market participation that ensued paved the way to modernization. |
| Keywords: | Origins and persistence of modern economic growth; the industrious, industrial and financial revolutions; early modern monetary injections; the great divergence; the little divergence; state-formation; provision of public goods |
| JEL: | E10 E40 E50 N13 N33 O40 |
| Date: | 2019–02 |
| URL: | https://d.repec.org/n?u=RePEc:hes:wpaper:0147&r=all |
| By: | David M. Byrne; Daniel E. Sichel; Ana M. Aizcorbe |
| Abstract: | This paper addresses two measurement issues for mobile phones. First, we develop a new mobile phone price index using hedonic quality-adjusted prices for smartphones and a matched-model index for feature phones. Our index falls at an average annual rate of 17 percent during 2010-2018, close to the rate of decline in the price index used in the GDP Accounts. Given relatively flat average prices over this period, our index points to substantial quality improvement. Second, we propose a methodology to disentangle purchases of phones and wireless services when they are bundled together as part of a long-term service contract. Getting the allocation right is especially important for real PCE because the price deflators for phones and wireless services exhibit very different trends. Our adjusted estimates suggest that real PCE spending currently captured in the category Cellular Phone Services increased 4 percentage points faster than is reflected in published data. |
| Keywords: | Cell phone ; Hedonic indexes ; Mobile phone ; Personal consumption expenditures ; Price indexes ; Quality adjustment ; Smartphone |
| JEL: | E31 E21 O33 |
| Date: | 2019–02–26 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2019-12&r=all |