Crypto-asset market development: the role of country’s institutional quality
Journal of Money Laundering Control
ISSN: 1368-5201
Article publication date: 6 June 2023
Issue publication date: 28 November 2023
Abstract
Purpose
Crypto-asset can be traded on many different exchanges worldwide with servers located in countries with different financial characteristics and institutional surroundings. Trading volume on these servers varies considerably regarding the server’s location, even though the prices do not differ greatly. Crypto-asset markets are poorly regulated and, as such, may leave a place for potential fraudulent activities and be linked to corruption. This paper aims to examine the role of country’s institutions in attracting Bitcoin traders.
Design/methodology/approach
Assuming heterogeneity between countries where crypto-asset exchange servers are located, the Pool Mean Group Estimator is used.
Findings
Results indicate that, from institutional variables, corruption in the country attracts while internal and external conflicts repel investors. Additionally, the growth of global uncertainty and the decline in the local stock markets motivate investors to trade Bitcoin.
Originality/value
Previous research has empirically proved the importance of institutions’ quality for financial market development. This paper goes one step further and tries to empirically confirm the theoretical assumptions and investigate in detail the role of institutions in choosing servers in a particular country for Bitcoin trading.
Keywords
Acknowledgements
Statements and Declarations: Authors hereby declare they have no competing interests regarding the publication of this paper.
Research funding: This work has been fully supported by the Croatian Science Foundation under the project HRZZ-IP-2019–04-7816.
Citation
Škrabić Perić, B., Rimac Smiljanić, A. and Jerković, I. (2023), "Crypto-asset market development: the role of country’s institutional quality", Journal of Money Laundering Control, Vol. 26 No. 6, pp. 1221-1236. https://doi.org/10.1108/JMLC-02-2023-0038
Publisher
:Emerald Publishing Limited
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