Illegal Finance and Usurers Behaviour
Posted: 19 Jul 2018
Date Written: October 1, 2012
This paper deals with a stochastic dynamic optimization problem in the context of illegal company financing. Our analysis of the usury phenomenon is conducted by searching for the best interest rate which an illegal financier should apply to a company in order to bring about the firm’s bankruptcy whilst still securing the maximum wealth for the firm’s guarantee. In this case, the company itself can be taken over and used by the financier for illegal activities. Because of the highly complex nature of the problem, the analysis will be performed via simulation studies.
Keywords: Usury, External Financing of Companies, Bankruptcy, Stochastic Dynamics, Optimization Problem
JEL Classification: C61, G32, K42
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