Sean Higgins, Assistant Professor of Finance, Kellogg School of Management, Northwestern University
How do the supply and demand sides of the market respond to financial technology adoption? In this paper, I exploit a natural experiment that caused exogenous shocks to the adoption of a financial technology over time and space. Between 2009 and 2012, the Mexican government disbursed about one million debit cards to existing beneficiaries of its conditional cash transfer program. I combine administrative data on the debit card rollout with a rich collection of Mexican microdata on both consumers and retailers. The shock to debit card adoption has spillover effects on financial technology adoption on both sides of the market: small retailers adopt point of sale (POS) terminals to accept card payments, which leads other consumers to adopt cards. Specifically, the number of other consumers with debit cards increases by 21 per cent. Richer consumers respond to corner stores’ adoption of POS terminals by substituting 12 per cent of their supermarket consumption to corner stores. Finally, I use microdata on store prices, store geocoordinates, and consumer choices across store types to estimate the consumer gains from the demand side policy’s effect on supply side POS adoption.
Sean Higgins is an Assistant Professor of Finance at the Kellogg School of Management at Northwestern University and a Post Doctoral Fellow in household finance at the National Bureau of Economic Research. His research studies how technology reduces frictions in financial markets, and the effect of reducing these frictions on households and small firms. Prior to joining Kellogg, he was a Post Doctoral Fellow at the Haas School of Business at the University of California, Berkeley.