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Hundi/hawala: the problem of definition

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  • Martin, Marina B.V.

Abstract

In contemporary times, hundi has collected countless labels; the international press has spurned innumerable villainous descriptions, the bulk of which have helped to perpetuate a dense fog of notoriety. The critical problem lies in definition. As there is an incomplete understanding of hundi's form and remit, there is also a rather limited understanding of why the system persists, set against the backdrop of modern banking. In many ways the problem of definition presented legal and financial authorities of the early and late twentieth century with core issues which remain unresolved and problematic for authorities in the twenty-first century. By drawing on archival and other historical material pertaining to the system's usage amongst Indian merchants, this paper attempts to tackle much of the confusion and many misconceptions surrounding hundi. The discussion explores the idea that hundi is more accurately described as an indigenous banking system endowed with a complex range of functions, but whose central purpose is trade.

Suggested Citation

  • Martin, Marina B.V., 2009. "Hundi/hawala: the problem of definition," LSE Research Online Documents on Economics 47415, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:47415
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    File URL: http://eprints.lse.ac.uk/47415/
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    References listed on IDEAS

    as
    1. Listfield, Robert & Montes-Negret, Fernando, 1994. "Modernizing payment systems in emerging economies," Policy Research Working Paper Series 1336, The World Bank.
    2. Samuel Munzele Maimbo, 2003. "The Money Exchange Dealers of Kabul : A Study of the Hawala System in Afghanistan," World Bank Publications - Books, The World Bank Group, number 15087, December.
    3. Mr. Mohammed El Qorchi & Mr. Samuel Munzele Maimbo & Mr. John F. Wilson, 2003. "Informal Funds Transfer Systems: An Analysis of the Informal Hawala System," IMF Occasional Papers 2003/004, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    informal payment system; hundi; hawala; informal value system; remittances; crime; trade; merchants; India; South Asia.;
    All these keywords.

    JEL classification:

    • N0 - Economic History - - General
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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