Network Externalities in Hawala Exchanges

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Network Externalities in Hawala Exchanges

• Anamaria Berea
•  
• Department for Computational Social Science
• Center for Social Complexity at Krasnow Institute
  for Advanced Studies
• George Mason University
•  

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Introduction

• What is hawala? exchange mechanism
  self-enforced by trust and reputation
• Similar to Western Union
• Mostly associated with certain foreign
  remittances
• No data - social network analysis
• Kuran, 2004 specific informal Islamic
  institutions lead to lock-in situations
• Other business associated with the money transfer
  practice

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Hawala Mechanism
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Purpose of this research

• A methodological proposal on the empirical
  observations
• Common-pooling SNA techniques with nested game
  theory
• Not-empirically exhaustive, but empirical dataset
  mapping

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Method of Analysis

• 1. Building the datasets by proxies and
  informational conjectures
• - proxy the Pakistani players in major
  international business (hawaladars network
  Pakistan vs. Afghanistan)
• - proxy the pool of countries under scrutiny
  for remittances by Interpol and UN frozen assets
• - 3 files personal ties, business ties and
  locations (mini-clusters)

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Method of Analysis

• 2. Analyzing the datasets
• - nested game hypothesis (Tsebelis, 1991)
  correlation matrix
• - shows the network externalities

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Results and Findings
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Ego Networks in Terrorism
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Betwenness Centrality for Location
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The associated businesses network
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Terrorism Periphery and Lock-in Hypothesis
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MDS with geodesic distances
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Degree centrality in the correlation matrix
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Discussion

• Network externalities drugs, gold, Dubai and
  Mumbai
• Lock-in emergence terrorism in NWFP
• High Centrality Measures for ObL, Dawood Ibrahim
  and TTP
• This method of analysis by proxies and game
  theory validates conceptual and theoretical
  publications

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• Thank you!
• Questions?