New Publication in the Journal of Banking and Finance

We are pleased to announce the latest publication by Prof. Dr. Lars Hornuf in the Journal of Banking and Finance (VHB Ranking: A) titled Cybercrime on the ethereum blockchain and co-authored by Paul Momtaz, Rachel Nam, and Ye Yuan. The study examines how cybercrime affects victims' investment behavior and financial outcomes in the Ethereum blockchain ecosystem.

Using a difference-in-differences analysis, the authors find that cybercrime victims increase their long-term total risk-taking after losing part of their wealth. This behavior aligns with prospect theory and leads to lower risk-adjusted returns in the post-cybercrime period. The increase in risk-taking is attributed to victims' withdrawal from altcoins, which raises diversifiable risk. Furthermore, heightened trading activity and churn suggest that victims attempt to manage their exposure to cybercrime, ultimately reducing their returns.

The study also highlights differences in responses among investors: affluent victims systematically aim to restore their pre-cybercrime wealth, while less affluent victims exhibit gambling-like behavior. Additionally, a forensic model developed in the paper explains a significant portion of the addresses' probability to be involved in cybercrime, both as victims and perpetrators.