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Globalization and Development: A Study of the Hawala System in Afghanistan
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The paper describes the operational characteristics of hawala in Afghanistan. It describes the system’s geographic characteristics, convenience, effectiveness, cost, and its relationship with the formal financial system. It case studies of the domestic transfer of development funds by international aid institutions and nongovernmental organizations to discusses the hawala system’s benefits as well as the operational characteristics that make it vulnerable to abuse. Finally, its presents the authors conclusions on the developmental role of informal financial institutions in the Afghan financial system; the implications for financial management practices of donor-financed development programs; and the regulatory and supervisory options for DAB.
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