Lorenzo SPADAVECCHIA
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WORKING PAPERS
Mobile Money, Interoperability, and Financial Inclusion
2023 R&R Review of Economic Studies
with Markus Brunnermeier (Princeton) & Nicola Limodio (Bocconi)
This paper investigates the tradeoff between competition and financial inclusion resulting from the vertical integration between mobile network and money operators. Joining newly assembled data on mobile money fees through the WayBack machine, with sources on network coverage and financials, we examine the staggering across African operators and countries of platform interoperability – a policy that promotes transactions and competition across mobile money operators. Our results show that interoperability benefits users by lowering mobile money fees and their dispersion across operators. However, these positive effects are offset by a decrease in mobile towers and network coverage, especially in rural and poor districts, which, in turn, leads to a lower financial inclusion. We note that combining interoperability with subsidies for rural telecommunications delivers lower fees without hurting coverage.
Emigration Restrictions & Economic Development: Evidence from the Italian Mass Migration to the US
2023 R&R Journal of Labor Economics
with Davide Coluccia (Northwestern)
This article studies the impact of immigration restriction policies on technology adoption in countries sending migrants. Between 1920 and 1921, the number of Italian emigrants to the United States dropped by 85% after Congress passed the Emergency Quota Act, a severely restrictive immigration law. In a difference-in-differences setting, we exploit variation in exposure across Italian districts to this large restriction on human mobility. Using novel individual-level data on Italian emigration to the US and newly digitized historical censuses, we show that this policy substantially hampered technology adoption and capital investment. This evidence is consistent with directed technology adoption theory: an increase in the labor supply dampens the incentive for firms to adopt labor-saving technologies. To validate this mechanism, we show that more exposed districts display a sizable increase in overall population and employment in manufacturing. We provide evidence that "missing migrants," whose migration was inhibited by the Act, drive this result.
Back to Bank: digital currency, deposit substitution and credit
with Jimmy Apaa (Bank of Uganda) & Samuel N. Musoke (Bank of Uganda)
We study the consequences of substitution between bank deposits and digital currency on banks' lending behavior in developing countries. Leveraging an unexpected tax on Mobile Money in Uganda and using an exclusive dataset on the universe of mobile money transactions, we show a drop in mobile money usage and an increase in the flow of bank deposits and ATM withdrawals. The high turnover of new deposits helps us uncover unique insights into banks' hedging against liquidity risk: we show a general decrease in loans' repayment terms, and a transfer of rent from high-risk borrowers lacking credit history to low-risk borrowers. Consequently, the latter group experiences relatively higher loans and lower interest rates.
Nowcasting GDP with Mobile Money data: Evidence from Uganda
with Adam Mugume (Bank of Uganda), Liz Kasekende (Bank of Uganda) & Samuel N. Musoke (Bank of Uganda)
We use monthly Mobile Money transaction data to improve the nowcasting of quarterly GDP in Uganda. Using a real-time nowcasting design over 2011–2024, which replicates the information set available to policymakers at each point in time, we compare baseline models based on standard macro variables with the same specifications augmented by Mobile Money usage indicators. We evaluate multiple approaches, including regularized linear models and Dynamic Factor Models, across within-quarter horizons. Adding Mobile Money information consistently improves forecast accuracy, with RMSE reductions up to 46%. Results are robust to alternative training schemes (fixed and expanding windows) and to specification choices. Overall, digital payments data materially enhances timely macroeconomic monitoring in data-scarce settings, indicating that Mobile Money contains information beyond common macro factors. We provide a practical framework and reproducible code to support adoption by other central banks.
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SELECTED WORK IN PROGRESS
Out of the network: link cost and risk sharing
with Adam Mugume (Bank of Uganda), Jimmy Apaa (Bank of Uganda) and Samuel Musoke (Bank of Uganda)
Think-Manager Think-Male: The role of unconscious discrimination in the workplace