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on Payment Systems and Financial Technology |
| By: | Daron Acemoglu; Daniel Huttenlocher; Asuman Ozdaglar; James Siderius |
| Abstract: | We present a model where social media platforms offer plans that intermix entertaining content with digital advertising (“ads”). Users derive utility from entertainment and learn about their valuation for a product from ads. While some users are fully rational, others naïvely perceive digital ads as more informative than they actually are. We characterize the profit-maximizing business model of the platform and show that welfare is lower when the platform monetizes through advertising instead of subscription both for naïfs (because they are targeted by intense digital advertising, which makes them over-optimistic about product quality and over-purchase the product) and for sophisticates (because the inflated demand from naïfs increases the firm’s price). This negative welfare effect is intensified when the platform can offer mixed business models that separate the naïve and sophisticated users into different plans. Our results are robust to firm-level and platform-level competition, because digital ads soften competition between both firms and platforms. We also show how digital ad taxes can improve welfare. |
| JEL: | D43 D83 L13 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33017 |
| By: | Andrej Cupak (National Bank of Slovakia); Pavel Gertler (National Bank of Slovakia); Daniel Hajdiak (National Bank of Slovakia); Jan Klacso (National Bank of Slovakia); Stefan Rychtarik (National Bank of Slovakia) |
| Abstract: | This paper presents the findings from a novel survey examining awareness and interest in the future usage of the digital euro in Slovakia. Approximately 34% of the respondents have already heard or read about the digital euro. Around 26% express an intention to use this new digital currency. The likelihood of its usage depends on political preferences, trust in institutions such as the central bank, and preferences for cash payments, in addition to standard socio-economic factors. The survey also reveals that privacy and transaction security are among the top concerns for potential users. The majority of respondents plan to allocate nearly 20% of their net monthly income to digital euro holdings. These insights may provide valuable guidance for shaping the operational framework of the digital euro and informing future communication strategy. |
| JEL: | D14 E42 E51 E52 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1111 |
| By: | Hoang Le; Ricardo Marto |
| Abstract: | Growth in the digital advertising market has allowed big tech companies to better target consumer tastes, potentially increasing firms’ market power. |
| Keywords: | digital (directed) advertising |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:98970 |
| By: | Bair, Sabrine; Miquel-Florensa, Josepa; Ozyilmaz, Hakan |
| Abstract: | This study examines the underadoption of digital wallets as network goods through a field experiment conducted in Jordan. We elicit consumers’ and merchants’ willingness-to-pay (WTP) for interoperable mobile wallets using an incentive-compatible mechanism and measure their expectations regarding cross-market adoption. Our findings indicate a low demand for digital wallets across both sides of the market, with consumers and merchants willing to pay approximately 35% and 40% of the market price, respectively. While consumers’ aggregate expectations of merchant adoption are accurate, they exhibit considerable individual heterogeneity. Crucially, consumers’ sensitivity to cross-network effects is limited: a 1 p.p. increase in crossside adoption expectations translates into a 0.013 USD increase in WTP. Meanwhile, merchants significantly underestimate consumer adoption and demonstrate approximately half the sensitivity of consumers to cross-side network effects. These results hold significant implications for designing interventions that exploit network effects in order to increase digital wallet adoption. |
| Keywords: | financial inclusion, network effects, digital wallet, digital financial literacy |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129817 |
| By: | Martin Peitz; Susumu Sato |
| Abstract: | We propose a tractable model of asymmetric platform oligopoly with logit demand in which users from two distinct groups are subject to within-group and cross-group network effects and decide which platform to join. We characterize the equilibrium when platforms manage user access by setting participation fees for each user group. We explore the effects of platform entry, a change of incumbent platforms’ quality under free entry, and the degree of compatibility. We show how the analysis can be extended to partial user participation. |
| Keywords: | oligopoly theory, aggregative games, network effects, two-sided markets, two-sided single-homing, entry |
| JEL: | L13 L41 D43 |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_428v3 |
| By: | Gersbach, Hans; Zelzner, Sebastian |
| JEL: | E42 E44 E51 G21 G28 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302356 |
| By: | José Ignacio Heresi (Facultad de Economía y Negocios, Universidad Alberto Hurtado, Santiago Chile.); Yassine Lefouili (Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l'Université, 31080 Toulouse, Cedex 06, France.) |
| Abstract: | We study how an app store's decision about its ad-valorem fee affects the business models chosen by app developers. We derive optimal choices for the app store and their effects on industry profits, consumers, and total welfare. Surprisingly, the platform's optimal ad-valorem fee may be lower than the socially optimal one. Our findings provide insights into recent antitrust disputes and regulatory debates. |
| Keywords: | business model, ad-valorem fee, platform, app store. |
| JEL: | D21 L21 L40 L50 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2404 |
| By: | Pablo Brañas-Garza (LoyolaBehLAB, Universidad Loyola Andalucía); Jaromír Kovárík (University of the Basque Country and University of West Bohemia); Ericka G. Rascon-Ramirez (Division of Economics, CIDE and Middlesex University London) |
| Abstract: | Although mobile banking is seen as a solution to limited access to banking and financial services in the developing world, its adoption rates-especially among women-fall well below expectations. Hence, how can we promote its adoption among the socially and economically disadvantaged? We compare the effectiveness of two strategies, seeded diffusion via incentivised local leaders and a traditional marketing campaign, to promote the adoption of mobile banking among poor women in rural Peru. For the first one, we exploit the existence of local leaders who were trained by a local firm to promote the diffusion of a mobile banking application. For the sec- ond, we take advantage of an on-going regional marketing campaign. Our findings show that the personalized seeded diffusion via local leaders is an effective promo- tion strategy. It significantly outperforms the traditional campaign, during which adoption rates are statistically indistinguishable from zero and similar to those in our control areas. We additionally show that the seeded incentivised diffusion relies on features of the underlying community networks known to promote trust. Our results emphasize the necessity of personalized approaches to promote technological products such a mobile banking among vulnerable populations. |
| Keywords: | VAmobile banking, field/natural experiments, network diffusion, marketing campaign, gender, innovation, word-of-mouth communication |
| JEL: | C93 D85 G21 O10 O33 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:emc:wpaper:dte641 |
| By: | Kingsley K. Arthur (Kumasi, Ghana); Simplice A. Asongu (Johannesburg, South Africa); Peter Darko (Kumasi, Ghana); Marvin O. Ansah (Kumasi, Ghana); Sampson Adom (Kumasi, Ghana); Omega Hlortu (Kumasi, Ghana.) |
| Abstract: | The current review systematically synthesizes existing literature to provide a comprehensive overview of the nature of financial crimes in Africa and their impact on economic growth. We adopted the PRISMA protocol to identify 128 papers from the Scopus database; which were analyzed using MS Excel, VOS Viewer, and R-packages (Bibliometrix). The survey reveals that financial crimes are on the rise in Africa and have gained increasing concern over the years on the part of scholars, governments and NGOs. The survey also demonstrates that most of the financial crime in Africa emanates from illicit activities such as credit card fraud, cybercrime, mobile money fraud, financial statement fraud, Ponzi scheme, bribery and corruption, public fund mismanagement, terror financing, piracy, identity fraud, tax invasion, drug trafficking, product based-fraud, burglary, trade-based money laundering, sex marketing and gambling; with the majority occurring in specific regions like Western Africa, Southern Africa and Eastern Africa. Socio-political marginalization, poverty and unemployment, weak institutional and financial regulatory systems and individual selfish interests were the major causes. Overall, the content analysis of the studies indicates that financial crimes have significant negative impacts on the economic growth of the African continent. Implications for future research and practices have been discussed. |
| Keywords: | Financial crime, financial fraud, Money laundering, Africa, Economic development, Economic growth, and Bibliometric |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:exs:wpaper:24/029 |
| By: | Yufei Shen (Nova School of Business and Economics, Universidade Nova de Lisboa, 2775-405 Carcavelos, Portugal); Klaus M. Miller (HEC Paris, 78351 Jouy-en-Josas, France); Xitong Li (HEC Paris, 78351 Jouy-en-Josas, France) |
| Abstract: | This paper examines the positive impact of disabling cookie tracking on news consumption. Using an individual-week level panel data from a European news website, we find that disabling cookie tracking increases the number of articles read by 54.3% and the number of news categories consumed by 39.7%. These effects remain robust across various models and persist for over four months. During our sample period, the site introduced personalized news recommendations, allowing us to isolate the impact of enhanced privacy control from content personalization. Our findings suggest that the effects of disabling tracking are even more pronounced when content personalization is absent, indicating that perceived privacy control drives users’ increased news consumption. Additionally, we show that users who disable tracking gain less from personalized recommendations. This study provides initial empirical evidence of the positive effects of disabling data tracking in the digital media ecosystem. |
| Keywords: | cookie tracking; news consumption; consumer privacy; online media |
| JEL: | D12 L86 M37 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2408 |
| By: | Göksu; Sabuncuolu; Kerem Yavuz Arslanli |
| Abstract: | Real estate access has become increasingly challenging due to high property costs and financial difficulties in Turkey especially major cities like Istanbul.These limitations have restricted the opportunity for individual and small-scale investors to participate in large real estate projects. However, solutions such as fractional ownership concepts and real estate investment funds have emerged to overcome these challenges and democratise real estate investments.Fractional ownership divides large properties into smaller shares, offering investors the advantage of acquiring these properties at a lower cost. This model enables individuals and small-scale investors to own real estate assets with smaller amounts of capital. Another effective method that has gained prominence alongside these solutions is real estate tokenization.Real estate tokenization involves converting properties into digital assets, allowing investors to become property owners with more minor, fragmented shares. This facilitates participation in real estate projects with smaller amounts of capital, and investors can hold property ownership through digital tokens. Tokenization manages these transactions transparently and reliably, providing a faster and more cost-effective investment process.To democratise real estate access in Turkey, various financial tools, combined with solutions brought by the digital revolution, offer investors a broader and more effective range of investment opportunities. As a result, the real estate sector becomes more accessible and diversified, leading to healthier growth for individual investors and the industry.In this research, existing fractional ownership practices in Turkey are examined, and solutions for the challenges of regulating tokenisation are proposed by referencing various applications of real estate investment funds. A new model of real estate tokenisation, named 'ISToken' (Istanbul Token), is introduced, offering technological, legal, and financial solutions to make the real estate sector more accessible and liquid. |
| Keywords: | DLT; Smart Contract; STO; tokenization |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-019 |
| By: | Cristobal Cheyre (Cornell University); Li Jiang (George Washington University); Florian Schaub (University of Michigan); Zijun Ding (Carnegie Mellon University); Cristiana Firullo (Cornell University); Yucheng Li (Carnegie Mellon University); Alessandro Acquisti (Carnegie Mellon University) |
| Abstract: | We present the design of a field experiment on the impact of tracking, targeting, ad-blocking, and anti-tracking technologies on consumers’ behavior and economic outcomes. The online data industry has often heralded the benefits of online tracking and targeting, particularly in the context of online advertising. Its claims are juxtaposed by the privacy concerns associated with the vast number of ad-tech companies tracking and analyzing consumers’ online behavior – often without consumers’ awareness. We use a field experiment to analyze the impact of online tracking and targeting as well as ad-blocking and anti-tracking technologies, focusing on consumers’ online behaviors (such as browsing and shopping), and their ultimate purchasing outcomes (as measured by amounts of money spent online, product prices paid, time spent on product searching, and purchase satisfaction). In this draft, we describe the rationale and motivations behind the study; the experimental design and the instrumentation infrastructure developed for the experiments; and the plans for data collection. |
| Keywords: | economics of digitization, economics of privacy, online experiments, online advertising, behavioral advertising |
| JEL: | C93 D01 M37 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:net:wpaper:2410 |
| By: | Kiwhan Song; Mohamed Ali Dhraief; Muhua Xu; Locke Cai; Xuhao Chen; Arvind; Jie Chen |
| Abstract: | Anti-Money Laundering (AML) involves the identification of money laundering crimes in financial activities, such as cryptocurrency transactions. Recent studies advanced AML through the lens of graph-based machine learning, modeling the web of financial transactions as a graph and developing graph methods to identify suspicious activities. For instance, a recent effort on opensourcing datasets and benchmarks, Elliptic2, treats a set of Bitcoin addresses, considered to be controlled by the same entity, as a graph node and transactions among entities as graph edges. This modeling reveals the "shape" of a money laundering scheme - a subgraph on the blockchain. Despite the attractive subgraph classification results benchmarked by the paper, competitive methods remain expensive to apply due to the massive size of the graph; moreover, existing methods require candidate subgraphs as inputs which may not be available in practice. In this work, we introduce RevTrack, a graph-based framework that enables large-scale AML analysis with a lower cost and a higher accuracy. The key idea is to track the initial senders and the final receivers of funds; these entities offer a strong indication of the nature (licit vs. suspicious) of their respective subgraph. Based on this framework, we propose RevClassify, which is a neural network model for subgraph classification. Additionally, we address the practical problem where subgraph candidates are not given, by proposing RevFilter. This method identifies new suspicious subgraphs by iteratively filtering licit transactions, using RevClassify. Benchmarking these methods on Elliptic2, a new standard for AML, we show that RevClassify outperforms state-of-the-art subgraph classification techniques in both cost and accuracy. Furthermore, we demonstrate the effectiveness of RevFilter in discovering new suspicious subgraphs, confirming its utility for practical AML. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.08394 |
| By: | Carolina Celis (Inter-American Development Bank); Arturo Galindo (Inter-American Development Bank); Liliana Rojas-Suarez (Center for Global Development) |
| Abstract: | This paper presents findings from a comprehensive survey of 18 central banks and banking supervisor authorities in Latin America and the Caribbean, including major economies like Argentina, Brazil, Chile, Colombia, and Mexico. The survey aimed to assess the adoption of the Basel III standards across the region and revealed significant diversity in regulatory capital frameworks. Notably, while 75 percent of respondent countries have adopted Basel III for some financial intermediaries, 44 percent still maintain hybrid systems allowing for Basel I or II standards. These results highlight the region's varied approach to financial regulation, pointing to both progress in adopting international standards and the persistence of legacy regulatory regimes. The detailed findings and constructed indexes provide valuable insights into the state of financial regulation in the region, reflecting a landscape of both convergence and divergence in banking supervision practices. |
| Keywords: | Financial Regulation, Banking Supervision, Basel III Adoption |
| JEL: | E58 G21 G28 |
| Date: | 2024–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:wpaper:705 |
| By: | Sami Ben Naceur; Bertrand Candelon; Farah Mugrabi |
| Abstract: | This study contributes to the literature by analyzing the impact of financial inclusion (FI) on various bank risk dimensions, including systemic risk, which has been underexplored. We expand on recent research by examining not only the type of financial services, but also the source of FI, particularly the role of non-commercial banks (NCB). Our findings reveal that contrary to developed countries, credit expansions are linked to lower commercial banking risks, underscoring the benefits of loan diversification in developing and emerging economies, . However, while FI in deposits generally reduces individual banking risks, its effect on systemic risk is weaker in these countries, likely due to limited asset diversification. Moreover, NCBs tend to increase systemic and idiosyncratic risks for commercial banks through competitive pressures in the loan and deposit markets. Our results suggest that coordinating macroprudential policies with credit developments further reduces systemic risk by discouraging excessive risk-taking when banks’ capital is more at stake. Banks with stronger Basel capital ratios show reduced idiosyncratic risks, yet there is evidence that banks may relax these ratios to accommodate lending demands. These insights underscore the necessity for regulators to synchronize macroprudential policies with FI developments and consider NCBs’ role in financial stability. |
| Date: | 2024–09–20 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/203 |
| By: | Alberto Botta; Eugenio Caverzasi; Daniele Tori |
| Abstract: | In this paper, we analyze the role of financialization, namely securitization and the production of structured financial products, within the functioning of a monetary capitalist economy of production. We do this by embedding such ‘financial innovations’ in an extended financialized monetary circuit. We complement this theoretical analysis with data about the evolution of the commercial banks in the US economy since the end of World War II. We show how the ‘financial side of financialization’, by allowing commercial banks to extend more credit to the economy, and household sector in particular, may have significantly contributed to the monetization of surplus value in neoliberal capitalist regimes. In this sense, we stress how financialization appears to be fully consistent rather than dysfunctional to the needs of capitalist economies. We also note that this may come at the cost of heightened systemic fragility. While financialization may enable capitalist system to monetize profits more easily, it also modifies the structure of the pyramid of money hierarchy and favor the expansion of what has been defined as ‘fictitious liquidity’ relative to bank money. In our view, this last contradiction, can make capitalist economies more exposed to in-depth macro-financial instability as soon as financial turmoil emerges. |
| Keywords: | monetary circuit theory, financialization, profits, class conflict |
| JEL: | B50 E11 E12 E44 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2413 |
| By: | Rodepeter, Elisa; Gschnaidtner, Christoph; Hottenrott, Hanna |
| JEL: | L26 O32 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302358 |
| By: | Lambrecht, Marco; Oechssler, Jörg; Weidenholzer, Simon |
| JEL: | C91 D81 G12 G20 G41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302354 |
| By: | Bernardo Caldarola; Luca Fontanelli |
| Abstract: | Recent empirical evidence finds positive associations between digitalisation and industry concentration. However, ICT may not be all alike. We investigate the effect of the purchase of cloud services on the long run size growth rate of French firms. Our findings suggest that cloud services positively impact firm growth rates, with smaller firms experiencing more significant benefits compared to larger firms. This evidence suggests that the diffusion of cloud technologies may help mitigate concentration in the era of the digital transition by favouring the digitalisation and growth of smaller firms, especially when the cloud services provided are more advanced. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.17035 |
| By: | Hans Degryse; Olivier De Jonghe; Leonardo Gambacorta; Cedric Huylebroek |
| Abstract: | Theory offers conflicting predictions on whether and how lenders' sectoral specialization would affect firms' innovation activities. We show that the sign and magnitude of this effect vary with the degree of "asset overhang" across sectors, which is the risk that a new technology has negative spillovers on the value of a bank's legacy loan portfolio. Using both patent data and micro-level innovation survey data, we find that lenders' sectoral specialization improves innovation for firms operating in sectors with low asset overhang, but impedes innovation for firms operating in sectors with high asset overhang. These results hold for two distinct measures of asset overhang and using bank mergers as a source of exogenous variation in bank specialization. We further show that these heterogeneous effects arise through financial contracting. Overall, our findings provide novel insights into the dual facets of bank specialization and, more broadly, the link between banking and innovation. |
| Keywords: | bank specialization, bank lending, corporate innovation, asset overhang, financial frictions |
| JEL: | G20 O30 L20 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1218 |
| By: | Kaufmann, Daniel; Stuart, Rebecca |
| Abstract: | Using newly collected discount rate data for six Swiss cities, we find no evidence of increasing integration during a 30-year period of lightly regulated free banking. We attribute this to two structural issues: banks had incentives to protect their local monopolies, and the inherent instability of free banking meant that there was always a risk (which varied across banks) of a bank run. We use a novel counterfactual to show that these risks increased discount rate dispersion, and argue that as a result, public regulation of payments infrastructure was necessary for money market integration. |
| Keywords: | Switzerland, discount rates, money market, financial integration, monetary union, 19th century |
| JEL: | E43 E44 F33 F45 N13 N23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:qucehw:303522 |
| By: | Toni Ahnert; Sebastian Doerr; Nicola Pierri; Yannick Timmer |
| Abstract: | We study the importance of information technology (IT) in banking for entrepreneurship. Guided by a parsimonious model, we establish that job creation by young firms is stronger in US counties more exposed to banks with greater IT adoption. We present evidence consistent with banks' IT adoption spurring entrepreneurship through a collateral channel: entrepreneurship increases by more in IT-exposed counties when house prices rise. Further analysis suggests that IT improves banks' ability to determine collateral values, in particular when collateral appraisal is more complex. IT also reduces the time and cost of disbursing collateralized loans. |
| Keywords: | Technology in banking; Entrepreneurship; Information technology; Collateral; Screening |
| JEL: | D82 G21 L26 |
| Date: | 2024–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-83 |