Template-type: ReDIF-Paper 1.0
Author-Name: Raffaella Barone
Author-Name: Donato Masciandaro
Title: CRIME, MONEY LAUNDERING, AND CREDIT MARKETS: CAN USURY EXIST AT THE ZERO LOWER BOUND?
Abstract: In advanced economies, the recent collapse of interest rates to the Zero Lower Bound (ZLB) has triggered a series of research questions on how to navigate the new zero-interest credit environment. Focusing on illegal markets, it is possible to explain why usury still remains widespread after the legal nominal interest rate has fallen to zero. If the lender is a criminal agent with money-laundering aims, the ZLB isn’t an obstacle to design and implement usury contracts. Using a dynamic model of usury for a loan having a variable interest rate and the value of the borrowing firm itself as collateral it is possible to show that notwithstanding the ZLB the criminal actor can be able achieve the money laundering purpose by expropriating the borrower of his/her collateral.
Classification-JEL: K40, K42, K14, G18
Keywords: OPTIMAL CURRENCY AREA, EUROPEAN MONETARY INTEGRATION, MONETARY POLICY, POLITICAL ECONOMICS
Length: 19 pages 
Number: 1761
Creation-Date: 2017
File-URL: https://repec.unibocconi.it/baffic/baf/papers/cbafwp1761.pdf
File-Format: application/pdf
File-Size: 275
Handle: RePEc:baf:cbafwp:cbafwp1761