Cryptocurrency or usury? Crime and alternative money laundering techniques

The article presents a novel dynamic setting to compare old—usury—and new—cryptocurrency—money laundering techniques and uses it for calibration to shed light on their relative role as an effective device for the criminal organizations to clean their illegal revenues. The specialness of the usury contract depends on its role in laundering illegal revenues originating from criminal activities and it is independent from the interest rate level, while the cryptocurrency money laundering is associated with an initial coin offering tool. The calibration compares the leverage effect on the overall capital owned by the criminal organizations triggered by the two money laundering techniques.

[1]  M. Long,et al.  The Economics of Usury Regulation , 1965, Journal of Political Economy.

[2]  Philip K. Robins,et al.  THE EFFECTS OF STATE USURY CEILINGS ON SINGLE FAMILY HOMEBUILDING , 1974 .

[3]  J. Ostas.  EFFECTS OF USURY CEILINGS IN THE MORTGAGE MARKET , 1976 .

[4]  USURY LEGISLATION AND MARKET STRUCTURE: AN ALTERNATIVE APPROACH , 1977 .

[5]  USURY LEGISLATION AND MARKET STRUCTURE: REPLY , 1977 .

[6]  Steven M. Crafton.  An Empirical Test of the Effect of Usury Laws , 1980, The Journal of Law and Economics.

[7]  Daniel J. Villegas.  An Analysis of the Impact of Interest Rate Ceilings , 1982 .

[8]  W. Boyes.  In defense of the downtrodden: Usury laws? , 1982 .

[9]  Richard L. Peterson.  Usury Laws and Consumer Credit: A Note , 1983 .

[10]  Implicit interest rates, usury and isolation in backward agriculture , 1984 .

[11]  Helmut Bester,et al.  The Role of Collateral in a Model of Debt Renegotiation , 1994 .

[12]  M. Killias.  The European sourcebook of crime and criminal justice statistics , 1995 .

[13]  E. Glaeser,et al.  Neither A Borrower Nor A Lender Be: An Economic Analysis of Interest Restrictions and Usury Laws1 , 1994, The Journal of Law and Economics.

[14]  D. Masciandaro,et al.  Money Laundering: the Economics of Regulation , 1999 .

[15]  Southern Italy: White Caterpillar, Grey Chrysalis, Black Butterfly: Organised Crime, Financial Crime and Entrepreneurial Distress , 2000 .

[16]  D. Masciandaro.  In Offense of Usury Laws: Microfoundations of Illegal Credit Contracts , 2001 .

[17]  David T. Hamilton.  Default and Recovery Rates of Corporate Bond Issuers: 2000 , 2001 .

[18]  Aldo Tagliani,et al.  Success or failure of a firm under different financing policies: A dynamic stochastic model , 2002, Eur. J. Oper. Res..

[19]  Why Shylock Can Be Efficient? A Theory of Usury Contracts , 2002 .

[20]  Andrea Resti,et al.  The Link between Default and Recovery Rates: Theory, Empirical Evidence and Implications , 2003 .

[21]  H. Bodenhorn.  Usury Ceilings, Relationships and Bank Lending Behavior: Evidence from Nineteenth Century , 2005 .

[22]  Brigitte Unger.  The Scale and Impacts of Money Laundering , 2007 .

[23]  Peter Temin,et al.  Interest Rate Restrictions in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714* , 2008 .

[24]  C. Peterson.  Usury law, payday loans, and statutory sleight of hand: Salience distortion in American credit pricing limits , 2007 .

[25]  Angela K. Littwin,et al.  Beyond Usury: A Study of Credit Card Use and Preference Among Low-Income Consumers , 2007 .

[26]  Illegal finance, interest rates and bank lending: the missing supply side of usury , 2008 .

[27]  R. Stokes,et al.  Virtual money laundering: the case of Bitcoin and the Linden dollar , 2012 .

[28]  Illegal finance and usurers behaviour , 2012 .

[29]  Oren Rigbi,et al.  The Effects of Usury Laws: Evidence from the Online Loan Market , 2012, Review of Economics and Statistics.

[30]  Shylock era banchiere o usuraio? Una teoria del credito d'usura , 2013 .

[31]  Danton Bryans,et al.  Bitcoin and Money Laundering: Mining for an Effective Solution , 2013 .

[32]  Attilio Scaglione.  Estimating the size of the loan sharking market in Italy , 2014 .

[33]  The Scholastic Analysis of ZIRP: Justice, Usury, and the Zero Interest Rate Policy , 2014 .

[34]  Olena Havrylchyk,et al.  Enhancing the financing of the real economy and financial stability in the United Kingdom , 2015 .

[35]  Derivatives and Usury: The Role of Options in Transactions Used to Act in Fraud of the Law , 2015 .

[36]  Yan Liu,et al.  Tackling Small and Medium Enterprise Problem Loans in Europe , 2015 .

[37]  Oded Netzer,et al.  When Words Sweat: Identifying Signals for Loan Default in the Text of Loan Applications , 2019, Journal of Marketing Research.

[38]  Hanna Halaburda.  Digital Currencies: Beyond Bitcoin , 2016 .

[39]  I. Marinaro.  Loan-sharking in a time of crisis: lessons from Rome’s illegal credit market , 2017 .

[40]  Jacob D. Leshno,et al.  Monopoly without a Monopolist: An Economic Analysis of the Bitcoin Payment System , 2017, The Review of Economic Studies.

[41]  B. Hofmann,et al.  Is Monetary Policy Less Effective When Interest Rates are Persistently Low? , 2017 .

[42]  Thorsten V. Koeppl,et al.  The Economics of Cryptocurrencies – Bitcoin and Beyond , 2017, Canadian Journal of Economics/Revue canadienne d'économique.

[43]  Morten L. Bech,et al.  Central Bank Cryptocurrencies , 2017 .

[44]  Athanasios Orphanides.  Central Bank Policies and the Debt Trap , 2017 .

[45]  Tālis J. Putniņš,et al.  Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed Through Cryptocurrencies? , 2018, The Review of Financial Studies.

[46]  Hugo Benedetti,et al.  Digital Tulips? Returns to Investors in Initial Coin Offerings , 2018, Journal of Corporate Finance.

[47]  D. Masciandaro.  Central Bank Digital Cash and Cryptocurrencies: Insights from a New Baumol–Friedman Demand for Money , 2018, Australian Economic Review.

[48]  Lars Klöhn,et al.  Initial Coin Offerings (ICOs): Economics and Regulation , 2018 .

[49]  L. Cong,et al.  Blockchain Disruption and Smart Contracts , 2018, The Review of Financial Studies.

[50]  Markus K. Brunnermeier,et al.  Blockchain Economics , 2018 .

[51]  Drug Trafficking, Money Laundering and the Business Cycle: Does Secular Stagnation Include Crime? , 2018 .

[52]  Sabrina T. Howell,et al.  Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales , 2020 .