The effects of policy interventions to limit illegal money lending

• 成果类型: Article
• 署名作者: Leong, Kaiwen; Li, Huailu; Pavanini, Nicola; Walsh, Christoph
• 署名单位: Griffith University; Fudan University; Shanghai Institute of International Finance & Economics; Tilburg University; Centre for Economic Policy Research - UK; Tilburg University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103894
• 发表日期: 2024
• 关键词: Illegal money lending; Loan sharks; law enforcement; crime; structural estimation

摘要

We estimate a structural model of borrowing and lending in the illegal money lending market using a unique panel survey of 1,090 borrowers taking out 11,032 loans from loan sharks. We use the model to evaluate the effects of interventions aimed at limiting this market. We find that an enforcement crackdown that occurred during our sample period increased lenders' unit cost of harassment and interest rates, while lowering volume of loans, lender profits and borrower welfare. Policies removing borrowers in the middle of the repayment ability distribution, reducing gambling or reducing time discounting are also effective at lowering lender profitability.