Does Sovereign Default Risk Explain Cryptocurrency Adoption? International Evidence from Mobile Apps

41 Pages Posted: 13 Dec 2024

See all articles by Rashad Ahmed

Rashad Ahmed

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Stephen A. Karolyi

Office of the Comptroller of the Currency

Leili Pour Rostami

University of Massachusetts Boston

Date Written: November 21, 2024

Abstract

We study the macroeconomic drivers of cryptocurrency adoption using mobile app data for the G20 countries. Among several factors, sovereign default risk is identified as a key determinant of crypto adoption. A 10% increase in sovereign CDS spreads is associated with a 2.9-4% increase in crypto app downloads and usage, and crypto adoption jumps in the months following news related to sovereign risk. These effects are larger in emerging markets and when ex ante sovereign default costs are high. We also find that the impact of inflation on crypto adoption is significantly influenced by the level of ex ante default costs.

Keywords: sovereign debt, consumer finance, cryptocurrency, mobile apps, fintech

JEL Classification: G15, G51, G23, G11, E42, E31

Suggested Citation

Ahmed, Rashad and Karolyi, Stephen A. and Pour Rostami, Leili, Does Sovereign Default Risk Explain Cryptocurrency Adoption? International Evidence from Mobile Apps (November 21, 2024). Available at SSRN: https://ssrn.com/abstract=5029660 or http://dx.doi.org/10.2139/ssrn.5029660

Rashad Ahmed (Contact Author)

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States

Stephen A. Karolyi

Office of the Comptroller of the Currency ( email )

400 7th Street SW
Washington, DC 20219
United States

Leili Pour Rostami

University of Massachusetts Boston ( email )

MA 02125
United States

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