Capital Flight and Bitcoin Regulation
by Lan Ju, Timothy (Jun) Lu, Zhiyong Tu
ARTICLE | International Review of Finance | Vol.16, SEP 2016
Abstract
This paper studies the risk of Bitcoin being used for the purpose of capital flight. We propose a new indicator, the bitcoin-implied exchange rate discount, to identify empirically capital flight via Bitcoin. Using data from the two largest bitcoin exchanges in the world during our sample period, BTC China and Bitstamp, we find strong evidence of capital flight from the Chinese Renminbi to the US Dollar via Bitcoin before the People's Bank of China, China's central bank, announced its regulatory policy on December 5, 2013, while the evidence displays no trace of capital flight after the announcement. The People's Bank of China's Bitcoin restriction policy successfully halts the illicit capital outflow via Bitcoin, thereby providing valuable policy implications for government regulation on Bitcoin, as well as on other virtual currencies.
Popular Articles
-
International Student Profile: Kevin Kurnia
Oct 12 2017
-
Start your application to join PHBS!
Sep 18 2018
-
PHBS Opening a Campus in UK: Se...
Feb 22 2017
Latest News
-
Peking University HSBC Business S...
Time:Dec 20 2019
-
Studious and Aspiring | Dean Hai...
Time:Dec 20 2019
-
PHBS Holds the Second PHBS Works...
Time:Dec 19 2019
Campus Events