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on Financial Literacy and Education |
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Issue of 2024‒03‒11
four papers chosen by |
| By: | Celene Ancalle (Central Reserve Bank of Peru); Maria Gracia Garcia (Central Reserve Bank of Peru) |
| Abstract: | Interoperability is the characteristic of a payment service (e.g. digital wallets) to allow its users to pay any person or company, regardless of the financial institution providing services to the payer or payee. On October 7, 2022, the Central Reserve Bank of Peru (BCRP) issued the Payment Services Interoperability Regulation to massify digital payments in the country. The main objective of this research is to study the impact of interoperability, promoted through regulation, on the use of digital payments. We analyzed transactional data provided daily by market participants in the interoperability regulation, and data obtained from digital wallet users through a survey. The results suggest that interoperability has contributed to increase the use of digital payments, but there are other factors such as fees, user experience and quality of service that can impact the adoption and use of interoperable payment services. Furthermore, our analysis shows that interoperability benefited more individuals in regions with a higher degree of financial inclusion, i.e. financial inclusion is key to benefiting from interoperability. These results serve as a basis for validating, adjusting, and reorienting the future regulatory strategies of the BCRP, aimed at fostering greater adoption and use of digital payments; as well as to guide other payment authorities seeking to implement effective digital payments regulations, drawing lessons from the Peruvian experience. |
| Keywords: | Interoperability; regulation; digital payments; financial inclusion; Peru |
| JEL: | E42 E58 E61 E65 G28 |
| Date: | 2024–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp02-2024&r=fle |
| By: | Tania Babina; Saleem A. Bahaj; Greg Buchak; Filippo De Marco; Angus K. Foulis; Will Gornall; Francesco Mazzola; Tong Yu |
| Abstract: | Open banking (OB) empowers bank customers to share transaction data with fintechs and other banks. 49 countries have adopted OB policies. Consumer trust in fintechs predicts OB policy adoption and adoption spurs investment in fintechs. UK microdata shows that OB enables: i) consumers to access both financial advice and credit; ii) SMEs to establish new fintech lending relationships. In a calibrated model, OB universally improves welfare through entry and product improvements when used for advice. When used for credit, OB promotes entry and competition by reducing adverse selection, but higher prices for costlier or privacy-conscious consumers partially offset these benefits. |
| JEL: | G21 G23 G24 G28 G5 G50 K21 L10 L51 O31 O36 O38 O50 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32089&r=fle |
| By: | Michelle W. Bowman |
| Date: | 2024–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgsq:97754&r=fle |
| By: | Anulo, Olkamo, Degefe |
| Abstract: | Ethiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables. The study used the bounds cointegration test within the Autoregressive Distributive Lag (ARDL) model framework to investigate the existence of long-run integration among series. The ADF unit root test was employed to determine whether variables remained stationary. This paper used the Granger causality test to determine causal influences in the Ethiopian economy. The vector error correction model was employed for this purpose. The study also aimed to identify hypotheses that support these causal influences. The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting economic growth. |
| Keywords: | Testing hypotheses, domestic savings, private sector credit, and Real economy growth |
| JEL: | E6 |
| Date: | 2024–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120066&r=fle |