A library of snippets
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A quantitative investigation of financial intermediation in the U.S. over the past 130 years basically says that the finance industry’s share of GDP is high in the 1920s, low in the 1960s, and high again after 1980. Deregulation does not seem to have reduced costs for the users of financial services.
Back in 2012m Thomas Philippon from the New York University Stern School of Business developed a quantitative interpretation of financial intermediation in the U.S. over the past 130 years. This showed that the unit cost of intermediation is now around 2% and in fact increased after the deregulation of the 1970s.
Interestingly, a detailed study of intermediation costs shows that not only did the costs go up after regulation but that high the high values of unit cost after 1990 coincide with the growth of the .market activities of banks
From :
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A 2014 study showed that finance has
become more “expensive” since the 1970s, just when
deregulation was intended to make it more productive. The
growth in intermediation costs between 1970 and 1990 can
nevertheless be explained by macroeconomic and monetary
conditions. By contrast, the increase in unit cost after 1990
coincides with the development of modern finance that gives a
greater role to market activity.
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Calculation of the unit cost of financial intermediation for 20 countries from 1970 to 2015 suggests that in American as in Britain, most productivity gains have been captured by the financial sector.
A national survey by PayNearMe found that the no.1 problem people faced with online bill payments was trying to remember login details and passwords.
The biggest bill payment breakthrough for me personally came earlier in the year when the tax authorities in the UK integrated open banking (using Ecospend). Now, when I log in to pay my small business taxes each month, instead of having to set up a complicated transfer or enter payment card details (they don’t use Apple Pay or Google Pay!) now I just press the “pay from my bank button” and then I get pushed to my bank login to authorise the transfer. It’s simple and easy.
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In the US, a substantial fraction of the population still prefer to pay their bills in cash.
PayNearMe, the modern and reliable payments platform known for making payments easy for both businesses and customers, announced that effective August 2021 PayNearMe customers will be able to complete bill payment transactions at participating Walmart locations. By expanding its partnership with Green Dot (NYSE: GDOT), a financial technology company committed to seamlessly connecting people to their money, PayNearMe can enable consumers to access Green Dot’s more than 90,000 retail locations nationwide.
To pay bills at participating Walmart stores, customers simply show an associate at the Money Services desk or Customer Service desk the scannable code on their smartphone, pay with cash and collect a receipt that confirms the payment is completed. Funds are then transferred to the biller electronically through a single consolidated settlement.
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Seriously, why does anyone rob banks? According to the most recent FBI statistics, there were more than a quarter of a million robberies in the USA in 2019 and 1.4% of these were at banks. Banks lost some half a billion dollars, or a touch over $4,000 per robbery. That doesn’t seem like a lot to me.Yet it is still sufficient to attract the robbers, because their needs are immediate and limited. So long as there is still a little cash in the till, there will be robberies. This is not an observation confined to banking, by the way. Cash begets crime. A study of the American Electronic Benefit Transfer (EBT) program found that “the EBT program had a negative and significant effect on the overall crime rate as well as burglary, assault, and larceny”.
There is a an old paper on “The Decision-Making Practices of Armed Robbers” that is a study of armed robbery in London based on first-hand research (viz, the analysis of over 1,000 police reports and interviews with 88 incarcerated armed robbers). While it’s about the UK rather than the US, I’m sure the thought processes of the perpetrators must have some similarities. Crucially, the paper notes that “almost all of these robbers evaluated the offence as having been financially worthwhile (aside from the fact that they were eventually caught and punished for their crime)”. So robbing a bank seems like good idea, if you exclude the possibility (in fact, the likelihood) of being caught.
One of the interesting snippets this paper contains is that a great many of the armed robbers in the UK use imitation firearms even though they could have access to real ones. I imagine that in the US the use of imitations is vastly less prevalent, since it’s presumably harder to buy an imitation gun than a real one there. Even so, and surprisingly (to a foreigner) only a third involved firearms only a third of US bank robberies involve firearms.
I note that the authors say that “even when the amount of money obtained was quite small (an element often touted in support of the irrationality of economic criminals), it must be recognised that even apparently small sums may be adequate for the offender’s immediate needs. Hence, gains may be subjectively much larger than they appear”. In other words, the guy in the Nixon mask isn’t robbing a bank to pay his way through college or to obtain seed finance for a start up, he just needs to buy a car or some drugs or whatever.
What robbers need, clearly, is innovation. If they hired a management consultancy, then I imagine that the standard practice would be to ask them to explore economies and scale and scope.
Economies of scope might be difficult. I don’t know if the typical armed robber is comfortable with the latest larceny techniques but I would think it is time for them to brush on mugging in the metaverse. Some of them have responded to this challenge already, of course. For example, in an April robbery in Canada, armed thieves tied up a man and stole his computers, bank cards and other valuables. They also took what the Calgary Herald described as “cryptocurrency keys”. Frankly, I’m surprised this doesn’t happen all the time. Or perhaps it does, and we just never hear about it.
The other way to tilt the cost/benefit analysis around bank robbery is through economies of scale. This what a gang of Brazilian bank robbers did last month. They first hijacked and burned vehicles to block roads, barricading the the police headquarters and main road. Then they moved into the city centre and robbed the branches of Banco do Brasil, Banco Safra and Caixa Econômica. They made their getaway by strapping hostages to their vehicles as human shields and scattering explosive devices with proximity sensors along their escape route.
(Brazil is a hotbed of technology-centric criminal innovation by the way. The introduction of an instant payments network there—it’s called “Pix”—has stimulated significant decentralised enterprise. Specifically kidnapping, which has surged in recent months.)
The thing is, if I broke into a bank I wouldn’t bother with the money. What I’d want is the data.
It’s not surprise to any of us that fraud of all kinds has accelerated through the pandemic. Millions of people are interacting and transacting online when they never did before and they are
These suspicions have been confirmed in a detailed study from John Griffin, Samual Kruger and Prateek Mahajan from the Department of Finance at the University of Texas at Austin. They found that in the U.S., loans from fintechs are more than 3.5 times as likely to be initiated by someone with a criminal background, strongly cluster in industry-county pairs to a degree that is “infeasible based on U.S. Census data on establishment counts”, and frequently exhibit similar loan features within lender-county pairs. Their figures show that some fintech lenders seem to “specialize in questionable loans”. What’s more, fintech lenders with the highest misreporting in the first two rounds of the program in 2020 increase both their market share and their misreporting substantially in the third round in 2021.
In other words, lenders were able to grow their market share by facilitating fraudulent loads. This is not, I should stress, a US phenomenon. In the UK, the Financial Times reported on the British pandemic loans scheme “a giant bonfire of taxpayers money with banks handing out the matches” and noted more than 10,000 cases of similar frauds being investigated in Germany.
The UK lacks any form of digital identity infrastructure either for people or for companies.
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Bitcoin (CRYPTO: BTC) and other cryptocurrencies “are not legal tenders and have no actual value support,” according to Deputy Director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China (PBoC) Yin Youping.
What Happened: According to a report by local news outlet People’s Daily Online, Youping said that cryptocurrencies are purely speculative assets.
From Bitcoin Has No Value: People Bank’s Of China Official Announces Further Crackdown:
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Snippings 