TY - JOUR
T1 - Economic shocks and crime
T2 - Evidence from the crash of Ponzi schemes
AU - Cortés, Darwin
AU - Santamaría, Julieth
AU - Vargas, Juan F.
N1 - Publisher Copyright:
© 2016 Elsevier B.V.
PY - 2016/11/1
Y1 - 2016/11/1
N2 - 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.
AB - 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.
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U2 - 10.1016/j.jebo.2016.07.024
DO - 10.1016/j.jebo.2016.07.024
M3 - Research Article
AN - SCOPUS:84988420080
SN - 0167-2681
VL - 131
SP - 263
EP - 275
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
ER -