Debt and domination : Malta’s usurious economy

Abstract

In 2021, Malta was grey listed by the European Union’s Financial Action Task Force for its administrative deficiencies and lack of adequate and transparent regulatory frameworks. Indeed, parallel to the formal economy, lies an equally strong informal economy, characterised by hot money, cheap and precarious labour, and enterprise in illicit activities. In the Maltese Islands today, usury or the charging of interest on loans in excess of 8%, is considered an economic crime, yet despite its criminalisation in 2002, it remains a widespread though hidden phenomenon. Often concealed through bribery and extorted through violence, usury lies at the heart of corrupt societies. Yet, it is largely overlooked as an important issue in terms of socio-economic impact and development. This paper examines the practice of usury within the Maltese Islands from a financial and macro-economic perspective. Based on qualitative interviews with stakeholders engaged in the field and a case review analysis of civil and criminal cases related to usury from 2011 to 2021, the paper presents an analysis of the financial and macro-economic causative factors and impact of usury on stability and economic development. This analysis leads to a number of implications for reform which would provide for adequate living income for all, measures to curb both legalised forms of usury and criminal usury, improved banking services, and enhanced administrative and regulatory and mechanisms.