The Effects of Policy Interventions to Limit Illegal Money Lending

Kaiwen Leong, Huailu Li, Nicola Pavanini and Christoph Walsh

No 16779, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 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.

Keywords: Illegal moneylending; Loan sharks; Law enforcement; Crime (search for similar items in EconPapers)
JEL-codes: G51 K42 (search for similar items in EconPapers)
Date: 2022-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP16779 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: The effects of policy interventions to limit illegal money lending (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:16779

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP16779

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().