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on Payment Systems and Financial Technology |
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Issue of 2024‒03‒04
27 papers chosen by |
| By: | Ana Fern\'andez Vilas; Rebeca P. D\'iaz Redondo; Daniel Couto Cancela; Alejandro Torrado Pazos |
| Abstract: | Cryptocurrencies are a type of digital money meant to provide security and anonymity while using cryptography techniques. Although cryptocurrencies represent a breakthrough and provide some important benefits, their usage poses some risks that are a result of the lack of supervising institutions and transparency. Because disinformation and volatility is discouraging for personal investors, cryptocurrencies emerged hand-in-hand with the proliferation of online users' communities and forums as places to share information that can alleviate users' mistrust. This research focuses on the study of the interplay between these cryptocurrency forums and fluctuations in cryptocurrency values. In particular, the most popular cryptocurrency Bitcoin (BTC) and a related active discussion community, Bitcointalk, are analyzed. This study shows that the activity of Bitcointalk forum keeps a direct relationship with the trend in the values of BTC, therefore analysis of this interaction would be a perfect base to support personal investments in a non-regulated market and, to confirm whether cryptocurrency forums show evidences to detect abnormal behaviors in BTC values as well as to predict or estimate these values. The experiment highlights that forum data can explain specific events in the financial field. It also underlines the relevance of quotes (regular mechanism to response a post) at periods: (1) when there is a high concentration of posts around certain topics; (2) when peaks in the BTC price are observed; and, (3) when the BTC price gradually shifts downwards and users intend to sell. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.10238&r=pay |
| By: | Muñoz, Manuel A.; Soons, Oscar |
| Abstract: | The bulk of cash is held for store of value purposes, with such holdings sharply increasing in times of high economic uncertainty and only a fraction of the population choosing to hoard cash. We develop a Diamond and Dybvig model with public money as a store of value and heterogeneous beliefs about bank stability that accounts for this evidence. Only consumers who are sufficiently pessimistic about bank stability hold cash. The introduction of a central bank digital currency (CBDC) as a store of value lowers the storage cost of public money and induces partial bank disintermediation, which is nevertheless mitigated by an increase in relative maturity transformation. This has heterogeneous welfare consequences across the population. While cash holders always benefit by switching to CBDC, each of all other consumers may be better off or not depending on the probability of a bank run, her (and all others’) belief about such probability and the degree of technological superiority of CBDC. JEL Classification: E41, E58, G11, G21 |
| Keywords: | bank stability, cash hoarding, central bank digital currency, disagreement, uncertainty shocks, welfare, flight-to-safety |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:srk:srkwps:2024146&r=pay |
| By: | Saruta, Fuyuki |
| Abstract: | This study examines the degree and manner by which first-party selling by a platform affects the profits of a third-party seller and a competing platform. After developing a model in which a third-party seller distributes goods through two competing platforms, with only one platform able to have a private label, we analyze first-party selling effects in both monopoly and duopoly platform cases. Our findings demonstrate the following. In a monopoly case, a platform consistently reduces the seller fee when introducing a private label. In a duopoly case, the two platforms will jointly raise or lower fees upon private label introduction. Additionally, first-party selling can either positively or negatively affect the competing platform's profit. Results suggest that competition among platforms might upset the influence of first-party selling on commission fees. Consequently, platforms might opt for first-party selling as a strategy to weaken commission fee competition and retail competition. |
| Keywords: | First-party selling; Platform competition; Marketplaces; Agency contracts; Wholesale contracts |
| JEL: | D21 L13 L22 |
| Date: | 2023–12–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119585&r=pay |
| By: | Babina, Tania (Columbia University); Bahaj, Saleem (Bank of England); Buchak, Greg (Stanford University); De Marco, Filippo (Bocconi University); Foulis, Angus (Bank of England); Gornall, Will (University of British Columbia); Mazzola, Francesco (ESCP Business School); Yu, Tong (Imperial College London and Financial Conduct Authority) |
| 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; and ii) small and medium‑sized enterprises 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 |
| Keywords: | Open banking; entrepreneurship; fintech; financial innovation; data access; data rights; data portability; Big Data; financial regulation; financial sector; banks |
| JEL: | G21 G28 |
| Date: | 2024–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:1059&r=pay |
| By: | Müller, Karsten (National University of Singapore, Department of Finance); Pan, Yuanyuan (National University of Singapore, Department of Finance); Schwarz, Carlo (Bocconi University, Department of Economics) |
| Abstract: | We investigate the effect of social media adoption on stock market participation in the United States. Using plausibly exogenous variation in the early adoption of Twitter across counties, we show that a 10% increase in social media usage is associated with a 2.5% higher rate of stock ownership and an overall increase in stock market wealth. Consistent with the idea that social media can lower the cost of accessing information, we find that Twitter adoption is associated with a decline in the number of financial advisors and has larger effects on stock ownership in counties with lower levels of pre-existing stock market knowledge. Twitter adoption also fuels interest in “meme stocks, †which tend to be more volatile and owned by retail investors. Overall, our results suggest a distinct impact of social media platforms on household portfolio choices that differs from that of other modern information technologies. |
| Keywords: | Social Media, Stock Market Participation, Household Finance, Participation Puzzle JEL Classification: |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:699&r=pay |
| By: | Wale-Awe, Olawale; Evans, Olaniyi |
| Abstract: | This study investigates the causal relationship between digital financial inclusion (DFI) and the growth-inequality-poverty triangle in a panel of 42 African countries for the period 1995 to 2018. Simultaneous-equations models, the two-step system generalized method of moments (GMM) versus the default one-step approach, and Toda Yamamoto causality test are used to investigate this relationship. The main results provide evidence that digital financial inclusion has significant negative effects on poverty and inequality, but significant positive effects on growth of GDP per capita, implying that increase in DFI is associated with reduction in poverty and inequality, but increase in economic growth. The implication is that DFI can promote economic growth, as well as alleviate poverty and stem the tide of inequality. The empirical results further show that there is unidirectional causality flowing from DFI to growth and inequality while bi-directional causality exists between DFI and poverty. Interestingly, there is bi-directional causality between growth and inequality, growth, and poverty, as well as between inequality and poverty. Overall, the findings imply that improving digital access to financial services across the continent is essential to increasing income levels, alleviating poverty, and aiding more even distribution of income. Future studies can improve on the extant literature by exploring whether the established findings withstand empirical analysis within country-specific settings. |
| Keywords: | Bitcoin returns, efficient market hypothesis, long memory in volatility, cryptocurrency |
| JEL: | G1 G10 O1 O12 |
| Date: | 2023–01–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119455&r=pay |
| By: | Jorge Abad; Galo Nuño; Carlos Thomas |
| Abstract: | We analyze the impact of introducing a central bank-issued digital currency (CBDC) on the operational framework of monetary policy and the macroeconomy as a whole. To this end, we develop a New Keynesian model with heterogeneous banks, a frictional interbank market, a central bank with deposit and lending facilities, and household preferences for different liquid assets. The model is calibrated to replicate the main monetary and financial aggregates in the euro area. Our analysis predicts that CBDC adoption implies a roughly equivalent reduction in banks’ deposit funding. However, this ‘deposit crunch’ has a rather small effect on bank lending to the real economy, and hence on aggregate investment and GDP. This result reflects the parallel impact of CBDC on the central bank’s operational framework. For relatively moderate CBDC adoption levels, the reduction in deposits is absorbed by an almost one-to-one fall in reserves at the central bank, implying a transition from a ‘floor’ system –with ample reserves– to a ‘corridor’ one. For larger CBCD adoption, the loss of bank deposits is compensated by increased recourse to central bank credit, as the corridor system gives way to a ‘ceiling’ one with scarce reserves. |
| Keywords: | central bank digital currency, interbank market, search and matching frictions, excess reserves |
| JEL: | E42 E44 E52 G21 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10896&r=pay |
| By: | Mosleh, Mohsen; Eckles, Dean (MIT); Rand, David Gertler |
| Abstract: | Empirical social networks are characterized by a high degree of triadic closure (i.e. transitivity, clustering), whereby network neighbors of the same individual are also likely to be directly connected. It is unknown to what degree this results from dispositions to form such relationships (i.e. to close open triangles) per se or whether it reflects other processes, such as homophily and more opportunities for exposure. These are difficult to disentangle in many settings, but in social media not only can they be decomposed, but platforms frequently make decisions that can depend on these distinct processes. Here, using a field experiment on social media, we randomize the existing network structure that a user faces when followed by a target account that we control, and we examine whether they reciprocate this tie formation. Being randomly assigned to have an existing tie to an account that follows the target user increases tie formation by 35%. Through the use of multiple control conditions in which the relevant tie is absent (never existent or removed), we are able to attribute this effect specifically to a small variation in the stimulus that indicates the presence (or absence) of a potential mutual follower. Theory suggests that triadic closure should be especially likely in open triads of strong ties, and we find evidence of larger effects when the subject has interacted more with the existing follower. These results indicate a substantial role for dispositions toward triadic closure, which platforms and others can choose to leverage in encouraging tie formation, with implications for network structure and the diffusion of information in online networks. |
| Date: | 2024–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:ys8zw&r=pay |
| By: | Adena, Maja; Hager, Anselm |
| Abstract: | Does online fundraising increase charitable giving? Using the Facebook advertising tool, we implemented a natural field experiment across Germany, randomly assigning almost 8, 000 postal codes to Save the Children fundraising videos or to a pure control. We studied changes in the donation revenue and frequency for Save the Children and other charities by postal code. Our georandomized design circumvented many difficulties inherent in studies based on click-through data, especially substitution and measurement issues. We found that (i) video fundraising increased donation revenue and frequency to Save the Children during the campaign and in the subsequent five weeks; (ii) the campaign was profitable for the fundraiser; and (iii) the effects were similar independent of video content and impression assignment strategy. However, we also found some crowding out of donations to other similar charities or projects. Finally, we demonstrated that click data may be an inappropriate proxy for donations and recommend that managers use careful experimental designs that can plausibly evaluate the effects of advertising on relevant outcomes. |
| Keywords: | Charitable giving, field experiments, fundraising, social media, competition |
| JEL: | C93 D64 D12 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2020302r2&r=pay |
| By: | Xihan Xiong; Zhipeng Wang; Xi Chen; William Knottenbelt; Michael Huth |
| Abstract: | Lido, the leading Liquid Staking Derivative (LSD) provider on Ethereum, allows users to stake an arbitrary amount of ETH to receive stETH, which can be integrated with Decentralized Finance (DeFi) protocols such as Aave. The composability between Lido and Aave enables a novel strategy called "leverage staking", where users stake ETH on Lido to acquire stETH, utilize stETH as collateral on Aave to borrow ETH, and then restake the borrowed ETH on Lido. Users can iteratively execute this process to optimize potential returns based on their risk profile. This paper systematically studies the opportunities and risks associated with leverage staking. We are the first to formalize the leverage staking strategy within the Lido-Aave ecosystem. Our empirical study identifies 262 leverage staking positions on Ethereum, with an aggregated staking amount of 295, 243 ETH (482M USD). We discover that 90.13% of leverage staking positions have achieved higher returns than conventional staking. Furthermore, we perform stress tests to evaluate the risk introduced by leverage staking under extreme conditions. We find that leverage staking significantly amplifies the risk of cascading liquidations. We hope this paper can inform and encourage the development of robust risk management approaches to protect the Lido-Aave LSD ecosystem. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.08610&r=pay |
| By: | Koenraadt, Jeroen; Leung, Edith |
| Abstract: | Despite calls for regulation in the crypto utility token market, it is unclear how crypto tokeninvestors value current regulatory proposals. We find that on average, investors react negatively to news thatincreases the likelihood of securities and transparency-related regulation. We also find that this negativereaction is attenuated for tokens rated higher on quality and transparency by intermediaries, those thathave higher levels of disclosure, and listed on more liquid exchanges. The observed variation in tokentransparency and this muted reaction suggest investors perceive disclosure costs to be lower for tokens inmore transparent environments, suggesting that transparency matters to investors. |
| Keywords: | regulation; transparency; cryptocurrencies; financial markets; crypto tokens |
| JEL: | G10 |
| Date: | 2022–07–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:121614&r=pay |
| By: | Saleem Bahaj (UCL); Ricardo Reis (London School of Economics (LSE); Centre for Macroeconomics (CFM)) |
| Abstract: | China’s current account transactions use an offshore international currency, the CNH, that co-exists as a parallel currency with the mainland domestic currency, the CNY. The CNH is freely used, but by restricting its exchange for CNY, the authorities can enforce capital controls. Sustaining these controls requires tight management of the money supply and liquidity to keep the exchange rate between the dual currencies pegged. After describing how the central bank implements this system, we find a rare instance of identified, exogenous, transitory increases in the supply of money and estimate by how much they depreciate the exchange rate. Theory and evidence show that elastically supplying money in response to demand shocks can maintain a currency peg. Liquidity policies complement these monetary interventions to deal with the pressure on the peg from financial innovation. Finally, deviations from the CNH/CNY peg act as a pressure valve to manage the exchange rate between the yuan and the US dollar. |
| Keywords: | Chinese monetary policy, Gresham’s law, Goodhart’s law, Money markets, RMB |
| JEL: | F31 F33 E51 G15 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:240&r=pay |
| By: | Lu Fang; Yanyou Chen; Chiara Farronato; Zhe Yuan; Yitong Wang |
| Abstract: | Despite substantial efforts to help consumers search in more intuitive ways, text search remains the predominant tool for product discovery online. In this paper, we explore the effects of visual and textual cues for search refinement on consumer search and purchasing behavior. We collaborate with one of the largest e-commerce platforms in China and study its roll out of a new search tool. When a customer searches for a general term (e.g., “headphones”), the tool suggests refined queries (e.g., “bluetooth headphones” or “noise-canceling headphones”) with the help of images and texts. The search tool was rolled out with a long-run experiment, which allows us to measure its short-run and long-run effects. We find that, although there was no immediate effect on orders or total expenditures, the search tool changed customers’ search and purchasing behavior in the long-run. Customers with access to the new tool eventually increased orders and expenditures compared to those in the control group, especially for non top-selling products. The purchase increase comes from more effective searches, rather than an increase in activity on the platform. We also find that the effect is not only driven by the direct value of suggested searches, but also by customers indirectly learning to perform more effective searches on their own. |
| JEL: | D81 D83 L2 L81 L86 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32099&r=pay |
| By: | Ganapati Kumar Biswas |
| Abstract: | Financial inclusion is touted one of the principal drivers for economic growth for an economy. The study aims to explore the impact of financial inclusion on economic growth in Bangladesh. In my study, I used the number of loan accounts as the proxy for financial inclusion. Using time series data from spans from 2004-2021, the study revealed that there exists a long-run relationship between GDP, financial inclusion, and other macroeconomic variables in Bangladesh. The study also found that financial inclusion had a positive impact on economic growth of Bangladesh during the study period. Therefore, the policymakers and the central bank of Bangladesh as the apex authority of financial system should promote financial inclusion activities to achieve sustainable economic growth. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.11585&r=pay |
| By: | Michele Bee (Cedeplar/UFMG); Luiz Felipe Bruzzi Curi (Cedeplar/UFMG) |
| Abstract: | This article shows that Adam Smith is the precursor of neither the orthodox nor the heterodox view of money, as has been doubly argued. According to him, money arose neither as a medium of exchange introduced to overcome the difficulties of barter, as in the orthodox view, nor as a unit of account established by the state, as in the heterodox view. On the contrary, as this article shows, for him money arises from that agreement on the valuation of mutual services that originally takes place in exchange. Money, thus, emerges spontaneously in exchange, but, contrary to the orthodox view, it emerges primarily as a measure of value. At the same time, if the state can intervene to guarantee the universality of a means of payment to settle claims and debts, for Smith this is only the fruit of the historical process and not its beginning, as in the heterodox view. |
| Keywords: | Adam Smith; chartalism; money; agreement; self-esteem. |
| JEL: | B10 B12 B31 D46 E40 Z13 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td666&r=pay |
| By: | Jiří Homan (Faculty of Economics, University of South Bohemia In České Budějovice) |
| Abstract: | This article aims to explain the features of the cloud computing platform and the possible deployment modes of these services. It further explains the concept of big data. Because these phenomena could have a positive benefit in the case of implementation for small and medium-sized Czech companies (SMEs), we devote ourselves to the description and use of existing methodologies that explain the penetration of new technologies towards their users. To form a broader view of the current situation, we, in this paper, provide an overview of the current use of individual services provided through the cloud computing platform by small and medium-sized enterprises. From this overview, it is evident that small and medium-sized enterprises use more and more applications based on cloud computing. Our overview also showed that the field of big data processing is not relevant for SMEs. They do not use cloud solutions aimed at processing big data. This area may be relevant in the future in the future by purchasing Internet of Things services. Among the implemented cloud computing services, services that implementation is not too demanding stand out. It is not yet clear what leads SEMs businesses to this behavior. In our research, we propose to find out, with the help of semi-structured interviews, how the decision-making process takes place in SMEs. We propose a series of questions for these interviews with individual investigated factors. When designing them, we are based on the preliminary research and existing research articles dealing with this topic. |
| Keywords: | Cloud computing, SME, cloud adoption, cloud application usage, IaaS, PaaS, SaaS |
| JEL: | A30 C40 O33 |
| Date: | 2023–05 |
| URL: | http://d.repec.org/n?u=RePEc:boh:wpaper:01_2023&r=pay |
| By: | Mario Sanz-Guerrero; Javier Arroyo |
| Abstract: | Peer-to-peer (P2P) lending has emerged as a distinctive financing mechanism, linking borrowers with lenders through online platforms. However, P2P lending faces the challenge of information asymmetry, as lenders often lack sufficient data to assess the creditworthiness of borrowers. This paper proposes a novel approach to address this issue by leveraging the textual descriptions provided by borrowers during the loan application process. Our methodology involves processing these textual descriptions using a Large Language Model (LLM), a powerful tool capable of discerning patterns and semantics within the text. Transfer learning is applied to adapt the LLM to the specific task at hand. Our results derived from the analysis of the Lending Club dataset show that the risk score generated by BERT, a widely used LLM, significantly improves the performance of credit risk classifiers. However, the inherent opacity of LLM-based systems, coupled with uncertainties about potential biases, underscores critical considerations for regulatory frameworks and engenders trust-related concerns among end-users, opening new avenues for future research in the dynamic landscape of P2P lending and artificial intelligence. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.16458&r=pay |
| By: | Felix Aidala; Daniel Mangrum; Wilbert Van der Klaauw |
| Abstract: | In a previous post, we highlighted that financially fragile households are disproportionately likely to use “buy now, pay later” (BNPL) payment plans. In this post, we shed further light on BNPL’s place in its users’ household finances, with a particular focus on how use varies by a household’s level of financial fragility. Our results reveal substantially different use patterns, as more-fragile households tend to use the service to make frequent, relatively small, purchases that they might have trouble affording otherwise. In contrast, financially stable households tend to not use BNPL as frequently and are more likely to emphasize that BNPL allows them to avoid paying interest on credit-finance purchases. We explore below what drives these differences and consider the implications for future BNPL use. |
| Keywords: | Buy Now Pay Later (BNPL); credit; consumer finance; household borrowing; inequality; financial inclusion |
| JEL: | D14 |
| Date: | 2024–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:97750&r=pay |
| By: | Christian Bach; Robert Edwards; Christian Jaag |
| Abstract: | We introduce limited consumer attention into a two-sided market model to investigate optimal platform pricing for the postal mail sector. Two types of senders – advertisers and nonadvertisers – derive value from attention paid to their mail. Consumers pay more attention to each mail item if they receive less mail and pay more attention to advertising mail if they receive more non-advertising mail. We show that a postal monopolist subsidises non-advertising prices, which increases the value of mail to advertisers, thus inflating advertising prices. Advertisers that are most nuisance or attention-consuming for recipients face high prices. Competitive entry for delivering advertising mail cannibalises the advertising mail market and the cross-subsidisation of prices is shut down. However, if the entrant price-matches rather than competes, all postal operators, mail senders and recipients can benefit. This insight suggests that competition amongst postal operators does not necessarily benefit consumers, especially if the entrant is more efficient. Based on our findings, we argue that Universal Service Obligation policies are not as demanding as traditionally viewed. |
| URL: | http://d.repec.org/n?u=RePEc:liv:livedp:202318&r=pay |
| By: | Joël Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Yasmine Elkhateeb (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Department of Economics, Faculty of Economics and Political Science, Cairo University); Mathilde Maurel (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The use of the Internet to access news has an impact on African citizens' perceptions of democracy. Using repeated cross-sectional data from the Afrobarometer survey across 35 African countries over the period 2011-2018, along with an instrumental variable approach, allows addressing potential endogeneity bias between Internet use and citizens' perceptions. The results indicate that using the Internet to obtain information has a significant negative effect on both the preference for and the perception of the extent of democracy. This negative effect is due to several factors. First, Internet use erodes trust in government institutions, mainly in the parliament and the ruling party. It increases the perception that parliament members are involved in corruption. In addition, the erosion of trust is correlated with more political mobilization, in the form of greater participation in demonstrations and voting. These results echo the existing literature and, in particular, hint at the risks of reversal of nascent democratization processes. Finally, the Internet seems to act as a misinformation channel. On the one hand, Internet users' perception of the extent of democracy and perception of the corruption of legislators diverge from experts' assessments. On the other hand, Internet use increases the likelihood of inconsistency in respondents' stances on their preference for democracy. The Internet is not a neutral information channel: it tends to undermine citizens' preference for democracy while also altering perceptions about political institutions. |
| Keywords: | Internet, Democracy, Misinformation, Africa, Media & democracy |
| Date: | 2024–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-04423752&r=pay |
| By: | Maes, Ivo; Pasotti, Ilaria |
| Abstract: | Especially with the Asian financial crisis of 1997-1998, Asian countries have advocated a profound reform of the international financial architecture. Their proposals focused on two main axes: a reform of the global financial system and stronger regional monetary integration in Asia. There are here significant parallels with the ideas of Robert Triffin (1911-1993). Triffin became famous with trenchant analyses of the vulnerabilities of the international monetary system. Also now, the Triffin dilemma is still present among international monetary policymakers, also in Asia. Triffin put forward several proposals for reforming the global monetary system, but he also developed proposals for regional monetary integration. These were very much based on his experience with the European Payments Union, and focused on the creation of a (European) Reserve Fund and a (European) currency unit. In this paper we focus on Triffin’s proposals for an Asian payments union in the late 1960s, giving special attention to Japan (in Triffin’s time the biggest Asian economy, moreover Triffin had an important Japanese network). |
| Date: | 2024–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:8xgtv&r=pay |
| By: | Demeulemeester, Samuel |
| Abstract: | This paper aims to show how the 100% money proposal, which Irving Fisher came to support in 1935, connects to the rest of his work on monetary instability—in particular, to his credit cycle analysis of 1911, and his debt-deflation theory of 1932-33. Behind these respective analyses, we identify a common explanatory pattern of monetary fluctuations, the “debt-money-prices” triangle, which we use to show how Fisher’s explanations evolved over time, and how his advocacy of 100% money came as a logical conclusion. |
| Date: | 2024–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:tfm6v&r=pay |
| By: | Amberg, Niklas (Research Department, Central Bank of Sweden); Becker, Bo (Stockholm School of Economics, CEPR and ECGI) |
| Abstract: | The decline in cash use and growing use of digital distribution for retail banking leads to a reduced need for bank branches. Lending to small and medium sized firms (SMEs) has not benefited as much from a digital transformation, and widespread branch closures may reduce their supply of credit. Using the closing of two thirds of Swedish branches as a laboratory, we document that corporate lending declines rapidly following branch closures, mainly via reduced lending to small and young firms. The reduced credit supply has real effects: local firms experience a decline in employment and sales and an increase in exit risk after branch closures. Our results thus suggest that the disappearance of bank branches have far-reaching implications for the economy |
| Keywords: | Banks; branch closures; credit supply |
| JEL: | D22 G21 G32 R12 R32 |
| Date: | 2024–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0430&r=pay |
| By: | Ghislain Deleplace (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis) |
| Abstract: | The main monetary issue in Britain during the early 19th-century war with France was about prolonging the suspension of the convertibility of the Bank of England note, which had been decided in 1797. Amidst a difficult return to a peacetime economy it would also be the main issue in the post-war period, since it would take six years after Waterloo before the pre-war monetary situation was re-enacted. During more than two decades, Lord Grenville's views on the monetary system did not change. They were mostly centred on two aspects. First, the suspension of cash payments of its notes by the Bank of England was a calamity: justified at the outset as a temporary measure of necessity, it should not be prolonged year after year, even in time of war. Second, the substitution of country banks' notes for coins which had taken place all over England outside the London area was a threat to economic and social stability. These unflagging views did not prevent Grenville from advocating gradualism in what was to be implemented in order to return to a sound monetary system – that is, one endowed with a metallic standard thanks to the convertibility of the Bank of England note into coin and to the pre-eminence of specie in the country circulation. This mixture of monetary orthodoxy and gradualism led Grenville in 1819 to support Ricardo's novel plan for convertibility into bullion, provided it was understood as a temporary scheme aiming at facilitating the resumption of convertibility into coin. It also led him in the 1820s to resist the pressures in favour of the return to a double standard (gold and silver). Based on Grenville's speeches in Parliament and on private correspondence, the present paper is a contribution to the special session "Money, Finance and Trade at War. The case of early nineteenth-century Britain". |
| Keywords: | Lord Grenville, Bank of England note, convertibility, monetary system |
| Date: | 2023–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04429551&r=pay |
| By: | Gómez Julián, José Mauricio |
| Abstract: | This research studies the relation between money and prices and its practical implications analyzing quarterly data from United States (1959-2022), Canada (1961-2022), United Kingdom (1986-2022), and Brazil (1996-2022). The historical, logical, and econometric consistency of the logical core of the two main theories of money is analyzed using objective bayesian and frequentist machine learning models, bayesian regularized artificial neural networks, and ensemble learning. It is concluded that money is not neutral at any time horizon and that, despite money is ultimately subordinated to prices, there is a reciprocal influence over time between money and prices which constitute a complex system. Non-neutrality is transmitted through aggregate demand and is based on the exchange value of money as a monetary unit. |
| Date: | 2024–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:eskmx&r=pay |
| By: | Hannon, Simona (Tilburg University, School of Economics and Management) |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:4958b451-b30a-4957-9763-140f029de38e&r=pay |
| By: | Lorenzo Casaburi; Jack Willis |
| Abstract: | We study the provision of financial services to small firms, consumers, and workers in developing countries as part of value chain relationships: value chain microfinance (VCMF). We first explore how VCMF can both overcome barriers to financial access – including asymmetric information, enforcement, and behavioral biases – and strengthen value chains, but also how it can introduce new challenges. We then review a recent empirical literature at the intersection of value chains and microfinance studying the demand for and effects of VCMF in credit, insurance, and savings markets. We conclude by highlighting promising directions for future work. |
| JEL: | G20 L14 O16 O17 Q14 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32085&r=pay |