TY  - RPRT
        AU  - Leong, Kaiwen
AU  - Li, Huailu
AU  - Pavanini, Nicola
AU  - Walsh, Christoph
        TI  - The Welfare Effects of Law Enforcement in the Illegal Money Lending Market
        PY  - 2022/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 15359
        UR  - https://www.iza.org/index.php/publications/dp15359
        AB  - We estimate a structural model of borrowing and lending in the illegal money lending market using a unique panel survey of 1,090 borrowers taking out 11,032 loans from loan sharks. We use the model to evaluate the welfare effects of alternative law enforcement strategies. We find that a large enforcement crackdown that occurred during our sample period raised interest rates, lowered the volume of loans, increased the lenders' unit cost of harassment, decreased lender profits, and decreased borrower welfare. We compare this strategy to targeting borrowers and find that targeting medium-performing borrowers is the most effective at lowering lender profits.
        KW  - illegal money lending
KW  - loan sharks
KW  - law enforcement
KW  - crime
        ER  -