Abstract
Objectives The knowledge of the efects of white-collar crimes is incomplete. In the article, we operationalize white-collar crimes as bankruptcy frauds. Economic models maintain that interlinkages between frms may give ‘domino efects’: bankruptcy events could lead to ‘bankruptcy chains’ in which a bankruptcy spreads to other frms. Analogously, criminologists assert that social and economic networks can be a major source of fraud difusion, with the potential to drive other frms bankrupt. Recent empirical results show that crimes may have detrimental and even asymmetric (nonlinear) efects on economic activity. We analyze the difusion and the aggregate development of bankruptcy frauds in Sweden over nearly two hundred years, specifcally focusing on the relationship between bankruptcy frauds and the bankruptcy volume. We also consider linkages between bankruptcy frauds, bankruptcies, and the macroeconomic cycle. Methods We use long, aggregate time series, collected from several diferent historical and contemporary sources. Applying the recently developed cointegrating nonlinear autoregressive distributed lag (NARDL) model, we investigate whether the bankruptcy volume reacts asymmetrically to increases and decreases in bankruptcy frauds, both in the short and the long run. Results Bankruptcy frauds reveal a causal efect on bankruptcies, showing an asymmetric (nonlinear) difusion efect from economic frauds to the bankruptcy volume. Increases in bankruptcy frauds have a positive and signifcant efect on the bankruptcy volume. However, decreases in bankruptcy frauds show no signifcant efect. No causal relationship between the macroeconomic cycle and bankruptcy frauds is found. Conclusions Our data and research approach demonstrate how previously generated hypotheses in both criminology and economic research on the relationship between (economic) crimes, economic activity, and the difusion of white-collar crime can be tested at an aggregate level.
