IDEAS home Printed from https://ideas.repec.org/a/spr/epolin/v47y2020i1d10.1007_s40812-019-00143-9.html
   My bibliography  Save this article

How economic freedom reflects on the Bitcoin transaction network

Author

Listed:
  • Piergiorgio Ricci

    (Università degli studi di Roma “Tor Vergata”)

Abstract

Based on the assumption that economic freedom facilitates the growth of traditional economic sectors, this study seeks to understand the role it plays in fintech sector. For this purpose, by adopting the social network analysis methodological approach, it considers the geographical network of Bitcoin transactions as a proxy to measure the national level of fintech development and compares it with a set of economic freedom indicators related to the top 70 world economies. The analysis revealed significant relationships between the performed network centrality measures and national levels of economic freedom. In particular, as confirmed by the implemented multilevel regression models, high levels of freedom to trade internationally combined with a restrained value of inflation and low administrative requirements can be considered as determining factors for fintech development. The study also showed a large number of Bitcoin transactions conducted in those countries characterized by fewer capital controls and restrictions, a result that feeds suspicions of illegal behavior, such as money laundering or terrorism financing, carried out through the use of cryptocurrencies. Findings of this research might be strategic for fintech entrepreneurship and policymakers interested in designing policies that aim to foster innovative sectors while ensuring the legality of financial flows.

Suggested Citation

  • Piergiorgio Ricci, 2020. "How economic freedom reflects on the Bitcoin transaction network," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(1), pages 133-161, March.
    • Handle: RePEc:spr:epolin:v:47:y:2020:i:1:d:10.1007_s40812-019-00143-9
    DOI: 10.1007/s40812-019-00143-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40812-019-00143-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40812-019-00143-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stephan F. Gohmann & Bradley K. Hobbs & Myra J. McCrickard, 2013. "Economic freedom, entrepreneurial activity, and the service sector," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 2(2), pages 144-159, October.
    2. Joern H. Block & Christian O. Fisch & Mirjam van Praag, 2017. "The Schumpeterian entrepreneur: a review of the empirical evidence on the antecedents, behaviour and consequences of innovative entrepreneurship," Industry and Innovation, Taylor & Francis Journals, vol. 24(1), pages 61-95, January.
    3. Alan C. Stockman, 1985. "Effects of Inflation on the Pattern of International Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 587-601, August.
    4. Lane, Philip R., 1997. "Inflation in open economies," Journal of International Economics, Elsevier, vol. 42(3-4), pages 327-347, May.
    5. Sean Foley & Jonathan R Karlsen & Tālis J Putniņš, 2019. "Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed through Cryptocurrencies?," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1798-1853.
    6. Stephan F. Gohmann & Bradley K. Hobbs & Myra McCrickard, 2008. "Economic Freedom and Service Industry Growth in the United States," Entrepreneurship Theory and Practice, , vol. 32(5), pages 855-874, September.
    7. Adhami, Saman & Giudici, Giancarlo & Martinazzi, Stefano, 2018. "Why do businesses go crypto? An empirical analysis of initial coin offerings," Journal of Economics and Business, Elsevier, vol. 100(C), pages 64-75.
    8. Richard Cebula & J. Clark, 2012. "Lessons from the experience of OECD nations on macroeconomic growth and economic freedom, 2004–2008," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 59(3), pages 231-243, September.
    9. Carlsson, Fredrik & Lundstrom, Susanna, 2002. "Economic Freedom and Growth: Decomposing the Effects," Public Choice, Springer, vol. 112(3-4), pages 335-344, September.
    10. Cushman, David O., 1983. "The effects of real exchange rate risk on international trade," Journal of International Economics, Elsevier, vol. 15(1-2), pages 45-63, August.
    11. Bawn, Kathleen, 1997. "Choosing Strategies to Control the Bureaucracy: Statutory Constraints, Oversight, and the Committee System," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 101-126, April.
    12. Michael D. McKenzie, 1999. "The Impact of Exchange Rate Volatility on International Trade Flows," Journal of Economic Surveys, Wiley Blackwell, vol. 13(1), pages 71-106, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fairouz Mustafa & Suman Lodh & Monomita Nandy & Vikas Kumar, 2022. "Coupling of cryptocurrency trading with the sustainable environmental goals: Is it on the cards?," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1152-1168, March.
    2. Giancarlo Giudici & Alistair Milne & Dmitri Vinogradov, 2020. "Cryptocurrencies: market analysis and perspectives," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(1), pages 1-18, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zehri, Chokri, 2022. "Asymmetric impact of capital controls on international trade," The Journal of Economic Asymmetries, Elsevier, vol. 25(C).
    2. Rümeysa ÇELİK, 2018. "The Effect of Exchange Rate Volatility on Export: The Case of Turkey (1995-2017)," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 68(1), pages 181-180, June.
    3. Shu Lin & Kang Shi & Haichun Ye, 2018. "Exchange rate volatility and trade: The role of credit constraints," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 203-222, October.
    4. Gil-Pareja, Salvador & Llorca-Vivero, Rafael & Martínez-Serrano, José Antonio, 2008. "Trade effects of monetary agreements: Evidence for OECD countries," European Economic Review, Elsevier, vol. 52(4), pages 733-755, May.
    5. Dulani Jayasuriya Daluwathumullagamage & Alexandra Sims, 2020. "Blockchain-Enabled Corporate Governance and Regulation," IJFS, MDPI, vol. 8(2), pages 1-41, June.
    6. Alpaslan AKÇORAOĞLU, 2012. "Yeni Açık Ekonomi Makroiktisat Teorisi ve Para Politikasının Uluslararası Boyutları," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 23(85), pages 57-82.
    7. Wesley M. Friske & Miles A. Zachary, 2019. "Regulation, New Venture Creation, and Resource-Advantage Theory: An Analysis of the U.S. Brewing Industry," Entrepreneurship Theory and Practice, , vol. 43(5), pages 999-1017, September.
    8. Wolfgang Karl Härdle & Campbell R Harvey & Raphael C G Reule, 2020. "Understanding Cryptocurrencies," Journal of Financial Econometrics, Oxford University Press, vol. 18(2), pages 181-208.
    9. Choudhry, Taufiq, 2005. "Exchange rate volatility and the United States exports: evidence from Canada and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 19(1), pages 51-71, March.
    10. Lucas, David & Boudreaux, Christopher, 2018. "Federal Regulation, Job Creation, and the Moderating Effect of State Economic Freedom," MPRA Paper 92593, University Library of Munich, Germany.
    11. Dmitri Boreiko & Dimche Risteski, 2021. "Serial and large investors in initial coin offerings," Small Business Economics, Springer, vol. 57(2), pages 1053-1071, August.
    12. Yuan, Yan & Awokuse, Titus O., 2003. "Exchange Rate Volatility And U.S. Poultry Exports: Evidence From Panel Data," 2003 Annual meeting, July 27-30, Montreal, Canada 22083, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Klaassen, Franc, 2004. "Why is it so difficult to find an effect of exchange rate risk on trade?," Journal of International Money and Finance, Elsevier, vol. 23(5), pages 817-839, September.
    14. David Greenaway, & Richard Kneller, & Xufei Zhang, 2007. "Exchange Rates and Exports: Evidence from Manufacturing Firms in the UK," Discussion Papers 07/13, University of Nottingham, GEP.
    15. Neil Gandal & J. T. Hamrick & Tyler Moore & Marie Vasek, 2021. "The rise and fall of cryptocurrency coins and tokens," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 44(2), pages 981-1014, December.
    16. Kanu Success Ikechi & Nwadiubu Anthony, 2020. "Exchange Rate Volatility and International Trade in Nigeria," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 6(5), pages 56-72, July.
    17. Fang, WenShwo & Lai, YiHao & Miller, Stephen M., 2009. "Does exchange rate risk affect exports asymmetrically? Asian evidence," Journal of International Money and Finance, Elsevier, vol. 28(2), pages 215-239, March.
    18. Gilles Hilary & Laura Xiaolei Liu, 2021. "Blockchain and Other Distributed Ledger Technologies in Finance," Springer Books, in: Raghavendra Rau & Robert Wardrop & Luigi Zingales (ed.), The Palgrave Handbook of Technological Finance, pages 243-268, Springer.
    19. Lin William Cong & Yizhou Xiao, 2021. "Categories and Functions of Crypto-Tokens," Springer Books, in: Maurizio Pompella & Roman Matousek (ed.), The Palgrave Handbook of FinTech and Blockchain, edition 1, chapter 0, pages 267-284, Springer.
    20. Qiang Zhang & Michael R. Reed & Sayed H. Saghaian, 2010. "The impact of multiple volatilities on import demand for U.S. commodities: the case of soybeans," Agribusiness, John Wiley & Sons, Ltd., vol. 26(2), pages 202-219.

    More about this item

    Keywords

    Bitcoin; Blockchain; Cryptocurrencies; Social network analysis; Fintech;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:epolin:v:47:y:2020:i:1:d:10.1007_s40812-019-00143-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.