This paper aims at identifying a causal relationship going from bank interest rates and credit rationing to usury. We manage the endogeneity issues by exploiting the variables that are related to bankruptcy proceedings as exogenous factors that affect bank variables, but not the other nonmeasurable determinants of usury. The estimates carried out in Italian provinces during the period of 1999 2002 provide evidence that a higher bank credit availability reduces illegal lending, while interest rates respond ambiguously. We explain these results with the presence of contrasting forces that drive usury demand and supply. We test the robustness of our estimates using controls that capture economic and financial conditions, social standards, government intervation, the severity of punishments and the presence of organised crime. © 2008, Inderscience Publishers.

DALLA PELLEGRINA, L. (2008). Usury, Interest Rates, and Bank Lending: the Missing Supply-Side. GLOBAL BUSINESS & ECONOMICS REVIEW, 10(3), 265-283 [10.1504/GBER.2008.019984].

Usury, Interest Rates, and Bank Lending: the Missing Supply-Side

DALLA PELLEGRINA, LUCIA
2008

Abstract

This paper aims at identifying a causal relationship going from bank interest rates and credit rationing to usury. We manage the endogeneity issues by exploiting the variables that are related to bankruptcy proceedings as exogenous factors that affect bank variables, but not the other nonmeasurable determinants of usury. The estimates carried out in Italian provinces during the period of 1999 2002 provide evidence that a higher bank credit availability reduces illegal lending, while interest rates respond ambiguously. We explain these results with the presence of contrasting forces that drive usury demand and supply. We test the robustness of our estimates using controls that capture economic and financial conditions, social standards, government intervation, the severity of punishments and the presence of organised crime. © 2008, Inderscience Publishers.
Articolo in rivista - Articolo scientifico
illegal financial markets, justice, usury
English
2008
10
3
265
283
none
DALLA PELLEGRINA, L. (2008). Usury, Interest Rates, and Bank Lending: the Missing Supply-Side. GLOBAL BUSINESS & ECONOMICS REVIEW, 10(3), 265-283 [10.1504/GBER.2008.019984].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/807
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