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Governance of Money Laundering: An Application of the Principal-agent Model

Author

Listed:
  • Syed Azhar Hussain Shah

    (St. George College, London, U.K)

  • Syed Akhter Hussain Shah

    (Pakistan Institute of Development Economics, Islamabad.)

  • Sajawal Khan

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

In this model we evaluate the strategy of principal (international financial regime) and affectivity of the network of money transaction to minimize transaction of money through money laundering by making laws and procedure and get these implemented by agents. With the application of present value method of cost and returns to agents and clients payoff matrix is developed. The present strategy of principal seems suboptimal to involve informal agents and clients in anti- money laundering measures and it needs revision to involve them through incentives.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Syed Azhar Hussain Shah & Syed Akhter Hussain Shah & Sajawal Khan, 2006. "Governance of Money Laundering: An Application of the Principal-agent Model," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 1117-1133.
  • Handle: RePEc:pid:journl:v:45:y:2006:i:4:p:1117-1133
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    File URL: http://www.pide.org.pk/pdf/PDR/2006/Volume4/1117-1133.pdf
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    References listed on IDEAS

    as
    1. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    2. Mulligan, C. B. & Sala-i-Martin, X., 1997. "A labor income-based measure of the value of human capital: An application to the states of the United States," Japan and the World Economy, Elsevier, vol. 9(2), pages 159-191, May.
    3. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, January.
    4. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
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    Cited by:

    1. Shah, Syed Azhar Hussain & Shah, Syed Akhter Hussain & Khan, Sajawal, 2007. "Anti Money Laundering Mechanism: An Application of Principal-Agent Model for Pakistan," MPRA Paper 7436, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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