Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263575 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15359
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
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 welfare effects of alternative law enforcement strategies. We find that a large enforcement crackdown that occurred during our sample period raised interest rates, lowered the volume of loans, increased the lenders' unit cost of harassment, decreased lender profits, and decreased borrower welfare. We compare this strategy to targeting borrowers and find that targeting medium-performing borrowers is the most effective at lowering lender profits.
Subjects: 
illegal money lending
loan sharks
law enforcement
crime
JEL: 
K42
G51
Document Type: 
Working Paper

Files in This Item:
File
Size
1.07 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.