Greed, Corruption, and the Modern State

Greed, Corruption, and the Modern State

Essays in Political Economy

Edited by Susan Rose-Ackerman and Paul Lagunes

What makes the control of corruption so difficult and contested? Drawing on the insights of political science, economics and law, the expert contributors to this book offer diverse perspectives. One group of chapters explores the nature of corruption in democracies and autocracies, and “reforms” that are mere facades. Other contributions examine corruption in infrastructure, tax collection, cross-border trade, and military procurement. Case studies from various regions – such as China, Peru, South Africa and New York City – anchor the analysis with real-world situations. The book pays particular attention to corruption involving international business and the domestic regulation of foreign bribery.

Chapter 14: Underground banking and corruption

Federico Varese

Subjects: economics and finance, economic crime and corruption, law - academic, corruption and economic crime, politics and public policy, public policy


This chapter explores some theoretical and empirical features of underground banking, with a special attention to corruption. After a discussion of the nature of Informal Value Transfer Systems (IVTSs)—which I use as a synonym for underground banking—and the key theoretical questions related to IVTSs, I turn to the connection between this phenomenon and corruption. By drawing upon two case-studies, I conclude that corruption is not a key ingredient of IVTSs. Rather, pervasive corruption can fuel the demand for informal banking.

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