Abstract
We provide evidence on the importance of coordination frictions in technology adoption, using data from a large provider of electronic wallets during the Indian demonetization. Exploiting geographical variation in exposure to the demonetization, we show that adoption of the wallet increased persistently in response to the large but temporary cash contraction, consistent with the predictions of a technology adoption model with complementarities. Model estimates indicate that adoption would have been 45% lower without complementarities. Our results illustrate how large but temporary interventions can help overcome coordination frictions, though we caution that such interventions may also exacerbate initial differences in adoption.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 3003-3065 |
| Number of pages | 63 |
| Journal | Journal of Political Economy |
| Volume | 131 |
| Issue number | 11 |
| DOIs | |
| State | Published - Nov 2023 |
Funding
Zinman as well as participants at the Kellogg Brown Bag, National Bureau of Economic Research (NBER) Innovation and Entrepreneurship, NBER Digitization, Adam Smith Workshop in Finance, University of North Carolina (UNC) Junior Finance Conference, UNC-Duke Entrepreneurship Conference, Federal Reserve Bank of New York Fintech Conference, 2nd Toronto Fintech Conference, Society for Financial Studies Cavalcade, Fintech and Digital Finance at SKEMA, University of California Berkeley Finance seminar, New York University (NYU) Finance seminar, Centre for Advanced Financial Research and Learning India, NYU Indian Conference, HEC Entrepreneurship Conference, American Finance Association 2020, Midwest Finance Association 2021, Brigham Young University Red Rock Conference, Texas Finance Festival, and Purdue Fintech Conference for helpful comments and discussions. We thank in particular the discussants Kenneth Ahern, Johan Hombert, Ankit Kalda, Roger Loh, Adrian Matray, Rafael Matta, Abhiroop Mukherjee, Amit Seru, Xu Ting, Guillaume Vuillemey, Constantine Yannelis, and four anonymous referees for their insightful comments. We also thank Alvin Lumbanraja, Megan Ren, and Yudan Ying for outstanding research support. We also gratefully acknowledge financial support from the Financial Institutions and Markets Research Center, Kellogg School of Management. Last, we are grateful to the staff at the wallet company for help with their data. The data are shared solely for the purpose of academic research. No user data have been shared in any form. The wallet company does not have any role in drawing inferences in the study, and the views expressed herein are solely those of the authors. This paper was edited by Chad Syverson.
ASJC Scopus subject areas
- Economics and Econometrics