Economic Shocks and Crime: Evidence from the Crash of Ponzi Schemes

Publicado en

  • Journal of Economic Behavior & Organization

Resumen

  • In November 2008, Colombian authorities dismantled a network of Ponzi schemes, making hundreds of thousands of investors lose tens of millions of dollars throughout the country. Using original data on the geographical incidence of the Ponzi schemes, this paper estimates the impact of their breakdown on crime. We find that the crash of Ponzi schemes differentially exacerbated crime in affected districts. Confirming the intuition of the standard economic model of crime, this effect is only present in places with relatively weak judicial and law enforcement institutions, and with little access to consumption smoothing mechanisms such as microcredit. In addition, we show that, with the exception of economically-motivated felonies such as robbery, violent crime is not affected by the negative shock.

fecha de publicación

  • 2016

Líneas de investigación

  • Colombia
  • Economic Shocks
  • Ponzi Schemes
  • Property Crime

Página inicial

  • 263

Última página

  • 275

Volumen

  • 131

Issue

  • PA