Please use this identifier to cite or link to this item:
Gräbner, Claudius
Elsner, Wolfram
Lascaux, Alexander
Year of Publication: 
Series/Report no.: 
ICAE Working Paper Series 62
We study the functioning of informal value transfer systems (IVTS) with the example of Hawala. More precisely, we use computational experiments to study the roles of generalized trust and social control for the stability and efficiency of IVTS. Previous literature was ambiguous with regard to: (i) how trust and control should be operationalized formally, (ii) which, if any of the two, carries a larger relevance for the functioning of IVTS, (iii) whether (and when) they relate to each other as substitutes or complements, and (iv) how they interact with a number of other environmental conditions. Our experiments suggest answers to all these questions. We show that both trust and control are necessary, but not sufficient to guarantee the functioning of Hawala, and that other relevant conditions, such as population size, interaction density, and forgiveness of the agents, provide important contexts. Aside from clarifying these questions, we provide a theoretically grounded operationalization of generalized trust and social control that is applicable to informal exchange systems in general.
Computational experiment
Informal Value Transfer Systems
Social Control
Document Type: 
Working Paper

Files in This Item:

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