Understanding the Link Between Financial Crime and Public Values: A Panel Data Analysis

Abstract

This study examines whether the religious values, ethical inclination, and post-materialistic values of the public influence the incidence of money laundering across countries. The research questions are addressed through quantitative analysis of secondary data obtained from the Basel Institute of Governance and the World Values Survey. The dataset covers 54 countries over an 11-year period, and a panel data model is employed for regression analysis. Based on Wald’s F test, the LM test, and the Hausman tests, the random effects model is selected. The findings indicate that both religious and ethical values significantly affect money laundering risk. Contrary to the theoretical postulates of the VBN framework, higher religio-ethical values are associated with an increased risk of money laundering. These results are consistent with existing literature, which highlights how grey areas in religion and ethics can be used to rationalise illicit financial behaviour, and also documents instances of religious institutions being involved in such activities. In contrast, post-materialistic values are found to have no significant impact on money laundering. The study suggests that post-materialistic values, embedded in secular-liberal philosophies, may encourage individualistic behaviour that overlooks the consequences of financially complex crimes. At the same time, religio-ethical values that ostensibly promote collective good may be reinterpreted to justify individualistic goals. Using the VBN lens, the study identifies a disconnect in the theorised value–behaviour chain, arising from conflicting values and their reinterpretation. From a policy perspective, the promotion of ethical and religious values alone is insufficient to combat money laundering; greater emphasis is needed on institutional frameworks, transparency, and stringent policy implementation.