Mr. Arnoud W.A. Boot, Peter Hoffmann, Mr. Luc Laeven, and Mr. Lev Ratnovski
We study the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution). Both follow historic trends towards an increased use of hard information and less in-person interaction, which are accelerating rapidly. We point to more recent innovations, such as the combination of data abundance and artificial intelligence, and the rise of digital platforms. We argue that in particular the rise of new communication channels can lead to the vertical and horizontal disintegration of the traditional bank business model. Specialized providers of financial services can chip away activities that do not rely on access to balance sheets, while platforms can interject themselves between banks and customers. We discuss limitations to these challenges, and the resulting policy implications.
It takes many years for more efficient electronic payments to be widely used, and the fees that
merchants (consumers) pay for using those services are increasing (decreasing) over time. We
address these puzzles by studying payments system evolution with a dynamic model in a twosided
market setting. We calibrate the model to the U.S. payment card data, and conduct welfare
and policy analysis. Our analysis shows that the market power of electronic payment networks
plays important roles in explaining the slow adoption and asymmetric price changes, and the
welfare impact of regulations may vary significantly through the endogenous R&D channel.
This paper examines innovation, deregulation, and firm dynamics over the life cycle of the
U.S. ATM and debit card industry. In doing so, we construct a dynamic equilibrium model to
study how a major product innovation (introducing the new debit card function) interacted
with banking deregulation drove the industry shakeout. Calibrating the model to a novel
dataset on ATM network entry, exit, size, and product offerings shows that our theory fits the
quantitative pattern of the industry well. The model also allows us to conduct counterfactual
analyses to evaluate the respective roles that innovation and deregulation played in the
Total factor productivity (TFP) growth began slowing in the United States in the mid-2000s,
before the Great Recession. To many, the main culprit is the fading positive impact of the
information technology (IT) revolution that took place in the 1990s. But our estimates of TFP
growth across the U.S. states reveal that the slowdown in TFP was quite widespread and not
particularly stronger in IT-producing states or in those with a relatively more intensive usage
of IT. An alternative explanation offered in this paper is that the slowdown in U.S. TFP
growth reflects a loss of efficiency or market dynamism over the last two decades. Indeed,
there are large differences in production efficiency across U.S. states, with the states having
better educational attainment and greater investment in R&D being closer to the production
International Monetary Fund. Western Hemisphere Dept.
In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
International Monetary Fund. External Relations Dept.
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International Monetary Fund. Asia and Pacific Dept
The Sixth Five Year Plan, as outlined in Bangladesh's Poverty Reduction Strategy Paper, targets strategic growth and employment. The medium-term macroeconomic framework plan entails the involvement of both the private and public sectors. Human resources development strategy programs reaching out to the poor and the vulnerable population, as well as environment, climate change, and disaster risk management, have been included in the plan. Managing regional disparities for shared growth and strategy for raising farm prod