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on Payment Systems and Financial Technology |
| By: | Gregory Phelan; William Chen |
| Abstract: | Banking-sector stability may suffer, yet household welfare may improve should a digital currency be fully integrated into the financial system. Keywords: Central bank digital currency, CBDC, volatility, digital assets, stable coins |
| Date: | 2023–03–22 |
| URL: | https://d.repec.org/n?u=RePEc:ofr:ofrblg:23-06 |
| By: | Cull, Robert J.; Foster, Vivien; Jolliffe, Dean Mitchell; Lederman, Daniel; Mare, Davide Salvatore; Veerappan, Malarvizhi |
| Abstract: | Treating data collected pre- and post-COVID-19 as a quasi-experiment, this paper examines the importance of presumed enablers and safeguards in driving the observed expansion of digital payments and digital financial inclusion. The analysis interacts drivers of digital payment usage with a country-specific proxy of the severity of the COVID-19 shock, leveraging variation in both the drivers and the quasi-treatment (the COVID-19 shock) to identify the parameters. Although regulation of banks and digital economic activity were correlated with digital payments before and during the pandemic, the capabilities of users and connectivity (to electricity, the internet, and mobile telephony) were responsible for increased use of digital financial services in response to the shock. An interpretation is that governments and the private sector were able to overcome underdeveloped banking systems and weak regulation of the digital economy, but only where there was adequate digital infrastructure, connectivity, and a high share of the population that understood and could make use of digital payments. |
| Date: | 2023–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10603 |
| By: | Westermeier, Carola |
| Abstract: | The European Central Bank (ECB) has entered the preparation phase for the potential issuance of a digital euro. The digital euro under consideration represents a retail Central Bank Digital Currency (CBDC), a digital representation of central bank money that is intended for use by the general public. This article foregrounds the digital euro as an infrastructure that furthers European security ambitions. It argues that the development of the digital euro is a materialization of European (in)security rationales that aim to secure pan-European financial transactions amid growing geopolitical tensions. It focuses on the development of the technology and analyses how central bankers’ scenarios of the future manifest in the anticipated design and prototypes. While the provision of a financial infrastructure is the most decisive security-related implication of the digital euro, the introduction of a new form of public money is the decisive financial feature with potentially wide-ranging implications for banks. Although the ECB seeks to balance the interests of banks and other financial actors in the development of the digital euro, its plans are still met with criticism. Finally, the paper argues that the European Central Bank exerts itself more explicitly than before as geopolitical actors in its own regard. |
| Date: | 2024–03–21 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:x45eg_v1 |
| By: | Vargas Da Cruz, Marcio Jose; Pereira Lopez, Mariana De La Paz; Salgado Chavez, Edgar |
| Abstract: | This paper investigates the relationship between disruptive technologies and access to finance for digital tech firms in Africa. Through textual analysis of data from Crunchbase and Pitchbook, the study explores how firms across different age cohorts incorporate disruptive technologies into their offerings in e-commerce, fintech, and information technology services. The findings reveal three key insights for African digital tech startups. First, African startups are less likely to incorporate disruptive technologies into their offerings compared to other regions, except for mobile payments. Second, incorporating these technologies is associated with more funding, but this link is weaker in Africa than in other regions. These results hold when excluding mobile payments and addressing potential endogeneity using instrumental variables. Third, firms that do incorporate disruptive technologies tend to secure funding earlier, with lower initial amounts, but are more likely to succeed in terms of exit or valuation growth than their peers. |
| Date: | 2023–12–07 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10633 |
| By: | Julian Caballero; Sebastian Doerr; Aaron Mehrotra; Fabrizio Zampolli |
| Abstract: | Small and medium-sized enterprises (SMEs) in emerging market economies struggle to access credit, partly due to firms' short financial histories and lack of collateral. The rise of big tech and fintech lenders that make better use of data and digital innovation could reduce the need for collateral and improve SMEs' access to credit. However, big tech and fintech lending so far constitutes only a small share of the total. Digital innovation by itself may not be enough to substantially improve SME lending without further progress in overcoming more deep-seated obstacles. |
| Date: | 2025–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:99 |
| By: | Hornuf, Lars; Momtaz, Paul P.; Nam, Rachel J.; Yuan, Ye |
| Abstract: | We examine how cybercrime impacts victims' risk-taking and returns. The results from our difference-in-differences analysis of a sample of victim and matched non-victim investors on the Ethereum blockchain are in line with prospect theory and suggests that victims increase their long-term total risk-taking after losing part of their wealth, leading to lower risk-adjusted returns in the post-cybercrime period. Victims' long-term total risk-taking increases because they increase diversifiable risk due to victims' post-cybercrime withdrawal from altcoins. At the same time, the reduction in risk-adjusted returns correlates with increased trading activity and churn, due plausibly to managing cybercrime exposure. In the cross-section of Ethereum addresses, we show that the most affluent victims take a systematic approach to restore their pre-cybercrime wealth level, while the least affluent victims turn into gamblers. Finally, a parsimonious forensic model explains a good part of the addresses' probability of being involved in cybercrime, on both the victim and the cybercriminal side. |
| Keywords: | Ethereum blockchain, market manipulation, financial fraud, token investment scam, cybercrime, cryptocurrency |
| JEL: | G14 G24 G30 L26 M13 O16 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:312431 |
| By: | Bosch, Oriol J. (The London School of Economics and Political Science); Asensio, Marc; Roberts, Caroline |
| Abstract: | Smartphones are now ubiquitous in daily life, requiring the development of accurate methodologies to study their impact on various aspects of human experience. A promising approach to collect mobile log data is to ask participants to donate, in the context of online surveys, the data that is already available to them through features such as iOS Screen Time and Android Digital Wellbeing. This approach grants participants control over the data they share while providing researchers with valuable observational insights into their mobile and app behaviours. However, the active involvement required from participants poses challenges, leading to low compliance rates and potential biases in the final sample of donors. This study investigates whether the method used to collect data donations, and the incentives provided, have an impact on compliance rates, and the subsequent composition of the sample. Specifically, we implemented a 2 x 3 between-subject web survey experiment (N = 872) in a research-led probability-based panel in Switzerland. Participants were randomly asked to capture and share their data through screenshots, video recordings, and by manual imputation (which we call enhanced recall). Results show that, while compliance rates are very low when using screenshots and video recordings as data donation methods, almost two thirds of participants donated their data by manually imputing their log data. The methods also differ in terms of sample composition, with enhanced recall introducing fewer biases. Overall, our study sheds light on maximizing compliance in data donation studies, offering insights for researchers studying mobile and app usage. |
| Date: | 2024–04–18 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:q8v35_v1 |
| By: | Baganz, Emilie; McMahon, Tadgh; Khorana, Sukhmani; Magee, Liam; Culos, Ingrid |
| Abstract: | Globally we are living through a continuing transition into the ‘information age’, where information and communication technology has transformed almost every aspect of people’s lives. The COVID-19 pandemic arguably accelerated this change. For refugees, as with other people, digital inclusion is arguably critical to social inclusion. This article seeks to better understand the digital inclusion of refugees during the COVID-19 pandemic, using data from two phases of research conducted in 2020 and 2021 with refugees who had recently resettled in Australia. Digital inclusion was mapped against three domains – access, affordability, and literacy – used in the annual Australian Digital Inclusion Index. Our research makes three contributions: it examines levels of digital inclusion among recently arrived refugees; it explores the relation of these levels to social links and bonds; and discusses differences within the sample according to gender, age, language group and type of digital inclusion. |
| Date: | 2023–12–14 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:nqu8c_v1 |
| By: | Alhorr, Layane |
| Abstract: | Social norms and childcare responsibilities often constrain women's mobility and work. This paper investigates the promise of digitalization in unlocking the growth of home-based businesses, an economic lifeline for women in developing countries. To do so, Jordanian female entrepreneurs were offered access to virtual storefronts through Facebook business pages, as well as access to an online digital marketing training created in collaboration with local social media influencers. After six months of hands-on support, treated women had higher business survival, weekly revenue, and attracted more online clients. Machine learning heterogeneity analysis reveals that higher business performance and limitations on the owner's ability to leave her house at baseline are particularly predictive of effects. Together, results suggest that when constraints to technology adoption are lifted, digitalization can unlock windows of opportunity to talented female entrepreneurs, especially those mobility-constrained among them. |
| Date: | 2024–06–13 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10803 |
| By: | Jeremy Brotherton; Tarakaram Gollamudi; Jeremy Kassis; James Lovejoy; Narayanan Pillai; Eric C. Thompson |
| Abstract: | Modern payments systems are critical infrastructure for the US and global economy, and they all utilize computing systems to facilitate transactions. These computing systems can be vulnerable to failures and an outage of a payment system could cause a serious ripple effect throughout the economy it supports. Commonly used designs in existing distributed computer systems often lack a built-in defense against certain types of failures (e.g., malicious attacks and silent data corruption) and rely on preventing these failures from happening in the first place via techniques external to the system itself. These computer system failures can cause downtime in the systems (e.g., modern payments systems) that rely on them. Byzantine Fault Tolerant (BFT) systems have the potential of improved resiliency and security. BFT systems can tolerate a larger range of failure modes than contemporary designs but suffer from performance challenges. Our work sought to design and evaluate a scalable BFT architecture and compare its properties to other database architectures used in payments infrastructure. This analysis is intended to better understand technical tradeoffs and is agnostic to broader policy or operational considerations. In this paper, we present Heraclius, a parallelizable leader-based, BFT key-value store that could be extended for use in payment systems. Heraclius executes transactions in parallel to achieve high transaction volumes. We analyze the scalability of the protocol, bottlenecks and potential solutions to the bottlenecks. We ran the prototype implementation with up to 256 nodes and achieved a transactional volume of 110 thousand operations per second with a transaction latency 0.2 seconds. |
| Keywords: | BFT systems; Payment systems |
| Date: | 2025–02–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-12 |
| By: | Luria, Michal; Bhatia, Aliya |
| Abstract: | This report summarizes the key discussions and insights from an in-person symposium held in September 2024 on the topic of children’s online safety policy. The event convened academic researchers, policy experts, and civil society representatives to explore research-driven approaches to addressing critical issues impacting young users in digital environments. During the symposium, we attempted to foster meaningful dialogue, identify areas of consensus and disagreement, and chart actionable paths forward. The symposium included a range of perspectives, and thus the report reflects a synthesis of ideas rather than unanimous agreement. Attendees engaged in two rounds of thematic roundtables covering four key topics related to child safety on online platforms: Connection, Content, Communication, and Characteristics. The event concluded with an all-participant session that summarized some of the main discussions and identified strategies and opportunities to integrate research into policy. |
| Date: | 2025–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:eqwgn_v1 |
| By: | Angst, Mario |
| Abstract: | This essay provides an answer to the question ``What is digitalization policy?'', through the lens of policy integration. To do so, I introduce a core distinction between naive and encompassing understandings of digitalization policy. Then, I posit that digitalization policy does not have a singular policy domain but rather distributed impacts across different policy domains. Digitalization policy is therefore always policy integration. Combining this assertion with an encompassing understanding of digitalization policy, I arrive at a modern definition of digitalization policy as any policy that targets the direct regulation of digital communication and digital infrastructure, in conjunction with the impact of such regulation on any affected policy domain(s). From this perspective, I argue that drivers of digitalization policy can be found in established groups of drivers of policy integration, based on institutions, interests or ideas. The essay suggests a blueprint for constructively approaching research on policy related to digitalization. It concludes with an illustrative application of the blueprint to an empirical example of a digitalization policymaking process in Switzerland, a policy sprint on the contribution of artificial intelligence to sustainability. |
| Date: | 2024–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:xykej_v1 |
| By: | Moya , Andrés; Rozo Villarraga, Sandra Viviana; Urbina Florez, Maria Jose |
| Abstract: | This study assesses if nudges in the form of informational videos sent via WhatsApp are effective in boosting take-up rates among vulnerable populations, specifically in the context of a regularization program for Venezuelan forced migrants in Colombia. The study randomly assigned 1, 375 eligible migrants to receive one of three informational videos or be in a control group. The videos aimed at solving issues related to awareness, trust, and bottlenecks in the step-by-step registration. The main results indicate that program take-up rates for individuals who received any video were eight percentage points lower compared to the control group. The effects are mostly driven by the treated individuals who received the links but did not watch the videos, who are older, busier, and have less internet access relative to other treated individuals. Additionally, the study evaluates the effectiveness of iterative WhatsApp surveys in collecting data from hard-to-reach populations. It finds that while iterative WhatsApp surveys had low retention rates, iterative contacts helped to reduce at trition. Furthermore, switching behaviors from nonresponse to response were common after iterative contact attempts. |
| Date: | 2023–10–12 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10590 |
| By: | Baum, Leonard; Bryson, Joanna J. (Hertie School) |
| Abstract: | Growing global concern about the problems associated with concentrated market power in the digital economy is leading to a renewed interest in competition policy. Since the late 2010s, China’s government has squarely confronted the problems of its own ‘Big Tech’ with a new competition regime for digital markets. Outcomes represent a unique learning opportunity for Western academics, competition authorities and lawmakers alike, which has so far been underutilized. However, given unreliable official figures, a new methodology is needed to assess competition in China’s digital economy. This article introduces a market capitalization approach that builds on the informativeness of China’s financial markets. We use Bloomberg financial data of 1142 publicly listed firms for the period 2019 to 2022 to quantitatively examine the impact of China’s new digital competition regime. We find a causal link between the new governance approach and a reduction of market concentration and aggregate growth in the primary markets of China’s three most dominant digital platforms – Baidu, Alibaba and Tencent (BATs). Further, our results show a robust correlation between the new competition regime and reduced market concentration and market capitalization growth rates across China’s digital markets. Other empirical findings include a negative correlation between market concentration and the openness of digital markets, a non-relationship between market concentration and profits, and the inability of profit and revenue-based metrics to capture market power effectively in China’s digital economy. Finally, we discuss the relevance of these insights for Western regulatory strategies, particularly as the EU and China emerge as global frontrunners in the field of digital competition regulation. |
| Date: | 2024–01–14 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:zyc6s_v2 |
| By: | Baum, Leonard; Bryson, Joanna J. (Hertie School) |
| Abstract: | Growing global concern about the problems associated with concentrated market power in the digital economy is leading to a renewed interest in competition policy. Since the late 2010s, China’s government has squarely confronted the problems of its own ‘Big Tech’ with a new competition regime for digital markets. Outcomes represent a unique learning opportunity for Western academics, competition authorities and lawmakers alike, which has so far been underutilized. However, given unreliable official figures, a new methodology is needed to assess competition in China’s digital economy. This article introduces a market capitalization approach that builds on the informativeness of China’s financial markets. We use Bloomberg financial data of 1142 publicly listed firms for the period 2019 to 2022 to quantitatively examine the impact of China’s new digital competition regime. We find a causal link between the new governance approach and a reduction of market concentration and aggregate growth in the primary markets of China’s three most dominant digital platforms – Baidu, Alibaba and Tencent (BATs). Further, our results show a robust correlation between the new competition regime and reduced market concentration and market capitalization growth rates across China’s digital markets. Other empirical findings include a negative correlation between market concentration and the openness of digital markets, a non-relationship between market concentration and profits, and the inability of profit and revenue-based metrics to capture market power effectively in China’s digital economy. Finally, we discuss the relevance of these insights for Western regulatory strategies, particularly as the EU and China emerge as global frontrunners in the field of digital competition regulation. |
| Date: | 2024–01–14 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:zyc6s_v1 |
| By: | Villarino, Resti Tito (Cebu Technological University); Villarino, Maureen Lorence |
| Abstract: | Background: In social sciences, ensuring a high level of instrument validation is crucial for upholding the principles of scientific rigor and maintaining the overall quality of research. Objectives: To develop and evaluate an AI chatbot and website for instrument validation, assess their impact on instrument validity improvement, and analyze user perceptions. Methods: Adopting a quantitative design, the study was anchored on the developed Research Instrument Validation Framework (RIVF) of Villarino (2024). Moreover, it was evaluated through users' perceptions (n=100) by administering an online survey, whereby the employment of paired t-tests used contrasting instrument validity-pre-vs post-RIVF scores, and one-way ANOVA was used to determine if a relationship existed between users' perceptions and overall improvement in instrument validity. A G*Power analysis indicated that there was sufficient statistical power for the analyses: for paired t-tests, it was 99.73% (n = 100, dz = 0.5, α = 0.05), and for one-way ANOVA, 80.95% (n = 100, f = 0.25, α=0.05, four groups). All data were analyzed using IBM SPSS version 26. Results: Post-RIVF use, all the validity domains showed significant improvements (p<0.001), but the primary considerable improvement was in construct validity [Mean difference=1.20±0.60, t(49)=14.14]. Participants perceived the AI chatbot as more useful [4.30±0.70 vs. 3.80±0.80, p<0.001] compared to the RIFV website. Conclusion: This AI-powered milieu indicates a potential for increasing the validity of research instruments in RIVF, while an AI chatbot efficiently increments the construct validity. These findings would infer that using AI technologies potentially enhances the quality of research instruments in the social sciences alongside traditional validation methods. Keywords: artificial intelligence (AI), instrument validation, research methodology, social sciences |
| Date: | 2024–07–29 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:rjyzg_v1 |
| By: | Lebrand, Mathilde Sylvie Maria; Mongoue, Arcady; Pongou, Roland; Zhang, Fan |
| Abstract: | This paper investigates whether the expansion of fast internet networks complements or substitutes for the development of roads to improve market access and create more and higher-skilled jobs in Africa. The paper combines the geographic locations of households and firms with the locations of main roads and optical-fiber nodes in 25 Sub-Saharan African countries. Using the difference-in-differences and instrumental variables approaches and leveraging the history of post-independence road building and the timing of the arrival of submarine internet, the paper examines the impacts of access to these two types of infrastructure, both in isolation and in combination. The findings show that improving access to both has large and positive complementary effects. On average, the additional impacts on employment from combining access to both types of infrastructure are 22 percent larger than the sum of their isolated effects. The findings suggest that a big push for combined investments in fast internet and road access could enhance economic development in Africa overall. Firms and workers in urban locations, female workers, and workers with higher levels of education gain the most from the complementarities that emerge. |
| Date: | 2024–03–21 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10730 |
| By: | Dirk Bergemann (Yale University); Rahul Deb (Boston College) |
| Abstract: | We study the robust sequential screening problem of a monopolist seller of multiple cloud computing services facing a buyer who has private information about his demand distribution for these services. At the time of contracting, the buyer knows the distribution of his demand of various services and the seller simply knows the mean of the buyerÕs total demand. We show that a simple Òcommitted spend mechanismÓ is robustly optimal: it provides the seller with the highest profit guarantee against all demand distributions that have the known total mean demand. This mechanism requires the buyer to commit to a minimum total usage and a corresponding base payment; the buyer can choose the individual quantities of each service and is free to consume additional units (over the committed total usage) at a fixed marginal price. This result provides theoretical support for prevalent cloud computing pricing practices while highlighting the robustness of simple pricing schemes in environments with complex uncertainty. |
| Date: | 2025–02–10 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2423 |
| By: | Andrew Rhodes (Toulouse School of Economics); Jidong Zhou (Yale University); Junjie Zhou (Tsinghua University) |
| Abstract: | This paper provides a framework in which a multiproduct ecosystem competes with many single-product firms in both price and innovation. The ecosystem is able to use data collected on one product to improve the quality of its other products. We study the impact of data regulation which either restricts the ecosystem's cross-product data usage, or which requires it to share data with small firms. Each policy induces small firms to innovate more and set higher prices; it also dampens data spillovers within the ecosystem, reduces the ecosystem's incentive to collect data and innovate, and potentially increases its prices. As a result, data regulation has an ambiguous impact on consumers, and is more likely to benefit consumers when small firms are relatively more efficient in innovation. A data cooperative among small firms, which helps them to share data with each other, does not necessarily benefit small firms and can even harm consumers. |
| Date: | 2025–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2426 |
| By: | Plantinga, Paul; Dlamini, Nonkululeko; Gordon, Tanja |
| Abstract: | Whilst there are many new opportunities for using emerging technology to enhance citizen engagement with government decision-making, there are still challenges using existing technologies and many failed initiatives, especially in Africa. These failures are often put down to a mismatch in culture and values, between the local African context and technologies developed in other parts of the world, and between the agile openness of digital initiatives and the bureaucratic practices of public officials. Unfortunately, little is known about the specific roles public officials do or could play in e-participation implementation, how these roles are shaped by distinctive values, and the extent to which these values may conflict or, possibly, complement each other. This paper presents results from a desktop analysis of e-participation projects, largely from the African continent, and shows how a diversity of public official roles and values would be necessary to support the realisation of e-participation outcomes. From legal specialists developing guidelines to comply with personal data protection legislation, to communications officials learning how to moderate social media conversations and technology developers exploring new ways of verifying online identity. |
| Date: | 2024–04–25 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:cbwx5_v1 |
| By: | Mohieldin, Mahmoud; Ramadan, Racha |
| Abstract: | Closing the gender digital divide by ensuring equal access to and benefit of the internet may reduce economic inequalities and close the gender gap in employment by providing new economic opportunities and facilitating access to market information. This paper estimates the impact of digital inclusion, measured by the Inclusive Internet Index on the female-to-male labor force participation ratio, while controlling for other economic and social factors. Using data from the World Development Indicators, the Economist Intelligence Unit database, and the World Bank’s Women, Business and the Law database for 13 countries in the Middle East and North Africa region for four years (2018 to 2021), a pooled cross section dataset is constructed. The model is estimated using generalized least squares to control for heteroskedasticity. The results show that an inclusive internet environment would reduce the gender gap in the labor force. Other key drivers include the structure of the economic growth, norms, and gender roles in the society. These results are relevant for the United Nations Sustainable Development Goals agenda, mainly goals 5 and 10. |
| Date: | 2024–01–10 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10663 |
| By: | Dagmar Chiella; Hashim Hamandi; Ruth Leung |
| Abstract: | In its 2022 Annual Report to Congress, the Office of Financial Research discussed how inflation, monetary tightening, and market volatility elevated financial system risk in 2022. As we begin 2023, OFR’s senior financial analysts Dagmar Chiella, Hashim Hamandi, and Ruth Leung explain five areas of risk they’re currently monitoring. |
| Date: | 2023–03–07 |
| URL: | https://d.repec.org/n?u=RePEc:ofr:ofrblg:23-04 |