The Effectiveness of White-Collar Crime Enforcement: Evidence from the War on Terror

71 Pages Posted: 15 Feb 2018

See all articles by Trung Nguyen

Trung Nguyen

Harvard University - Business School (HBS)

Date Written: November 7, 2017

Abstract

This paper studies the deterrent effect of criminal enforcement on white-collar criminal activities. Using the 9/11 terrorist attacks as a shock to the FBI's allocation of investigative resources and priorities, and variations in the Muslim population in the United States as a measure of geographic variations in the shock, I examine two questions: (1) Does the bureau's shift to counter-terrorism investigations after 9/11 lead to a reduction in the enforcement of laws targeting white-collar crime? (2) Does white-collar crime increase as a result of less oversight? Using a difference-in-differences estimation approach, I find that there is a significantly greater reduction in white-collar criminal cases referred by FBI field offices that shift their investigative focus away from white-collar crime to counter-terrorism. I also find that areas overseen by FBI field offices that shift their attention from white-collar crime to counter-terrorism experience a significantly greater increase in wire fraud, illegal insider trading activities, and fraud within financial institutions.

Keywords: Regulation, Fraud, White-Collar Crime, Enforcement

JEL Classification: G14, G18, H50, K22, K42, M48

Suggested Citation

Nguyen, Trung, The Effectiveness of White-Collar Crime Enforcement: Evidence from the War on Terror (November 7, 2017). Available at SSRN: https://ssrn.com/abstract=3117719 or http://dx.doi.org/10.2139/ssrn.3117719

Trung Nguyen (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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