Autori
Masciandaro, Donato
Portolano, Alessandro

Titolo
Terrorism and Organized Crime, Financial Markets and Lax Regulation Countries.
Periodico
Università degli studi di Lecce - Dipartimento di Scienze Economiche e Matematico-Statistiche. Quaderni. Collana di economia
Anno: 2002 - Fascicolo: 14 - Pagina iniziale: 1 - Pagina finale: 44

The risk of terrorism and of organized crime depend on the actual and potential diffusion of the Lax Financial Regulation (LFR) countries. The LFR country is a jurisdiction in which the features of the financial regulation increase the probability to offer money laundering services, utilised by the terrorist and criminal organization. The paper tackles the issue theoretically and empirically. Lax financial regulation is modelled as an endogenous variable, determined by the policy maker cost-benefits analysis, depending on economic and istitutional country variables, as the growth level, the role of the financial industry, the sensitivity to the international reputation effect, the absence of terrorism and/or of organized crime, the institutional attractiveness, the international degree of technical and political enforcement of sanction mechanisms. The empirical analysis, based on 130 countries data base, confirm the theoretical assumption that jurisdictions, characterized by scant resources, low GDP, foreign dependence in the offering of financial services and absence of terrorism and/or organized crime risks have greater probability to be or to become LFR countries. Furthermore, that probability increase if the country is a Commonwealth member and the level of deocracy decreases. Finally, the same set of variables have no llinks with the probability to be an Offshore centre (OFC). Indications for designing international policies of prevention and combat terrorism and organized crime finance are consequently derived.




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