Terrorism and organised crime, financial regulation and non cooperative countries: inside the black (list) box - 2002

Donato Masciandaro , Alessandro Portolano Full Version (PDF)
(Quaderni del Dipartimento di Scienze Economiche e Matematico-Statistiche dell'Università del Salento - Collana di Economia, 32/14 / 2002)
The risks of terrorism and of organised crime depend on the actual and potential diffusion of the Lax Financial Regulation (LFR) countries. The LFR country is a jurisdiction in which the features of the financial regulation increase the probability to offer money laundering services, utilised by the terrorist and criminal organisation. The paper tackles the issue theoretically and empirically.

Lax financial regulation is modelled as an endogenous variable, determined by the policy maker cost -benefits analysis, depending on economic and institutional country variables, as the growth level, the role of the financial industry, the sensitivity to the international reputation effect, the absence of terrorism and/or of organised crime, the institutional attractiveness, the international degree of technical and political enforcement of sanction mechanisms.
The empirical analysis, based on 130 countries data base, confirm the theoretical assumption that jurisdictions, characterised by scant resources, low GDP, foreign dependence in the offering of financial services and absence of terrorism and/or organised crime risks have greater probability to be or to become LFR countries. Furthermore, that probability increases if the country is a Commonwealth member and the level of democracy decreases.
Finally, the same set of variables have no links with the probability to be an Offshore centre (OFC). Indications for designing international policies of prevention and combat terrorism and organised crime finance are consequently derived.

Table of Contents

Introduction     PDF
Donato Masciandaro , Alessandro Portolano 2-6

Lax financial regulation: key concepts     PDF
Donato Masciandaro , Alessandro Portolano 6-8

Opportunism, commitment and reputation: lax financial regulation as contractual devise     PDF
Donato Masciandaro , Alessandro Portolano 8-11

Lax financial regulation and institutions     PDF
Donato Masciandaro , Alessandro Portolano 11-13

Lax financial regulation as endogenous variable: the model     PDF
Donato Masciandaro , Alessandro Portolano 14-23

Lax financial regulation and non co-operative countries: an empirical analysis     PDF
Donato Masciandaro , Alessandro Portolano 24-30

Conclusions     PDF
Donato Masciandaro , Alessandro Portolano 30-32

Bibliography     PDF

Figures and Tables     PDF

Appendix 1     PDF

Appendix 2     PDF

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