1. Juan Carlos Echeverry Comments on Crime and Finance: Evidence from Colombia Pshisva and Suarez

2. The title: Crime and finance or “ Kidnappings and investment ” Crucial question for the impact of conflict on Colombian Economic activity: the key channel Estimations of internal armed conflicts show that there was not important impact before mid-nineties

3. The period: 1996 - 2002 There are several stories affecting the second half of the nineties: external shocks, internal politics, shift in the conflict, etc. The relationship: how to tackle it –What does the kidnapper know and do –What does the person likely to be kidnapped know and do –What does the firm know and do

4. Is kidnapping targeted to personal and family wealth or firms These actors react to this possibility by hedging Hence, the emphasis of the paper on “firm-related kidnappings” is not entirely clear What kidnappers know? Only in some cases they actually target the person for his/her link with a specific firm In this period firms should have already internalized this phenomenon and developed strategies to tackle it: the risk of kidnappings can be calculated Hence, the equilibrium level of investment should already have taken that into consideration

5. The dependent variables are subject to measurement errors –kidnappers not identified as owners –kidnappings actually underreported –sons of owners - authors recognize this Kidnappings and regions: the regions that could be driving the results are not really meaningful economically Kidnappings might be endogenous to investment Worrisome: Table 6 separates firms directly affected by kidnappings and nothing comes out

6. The authors compute the “industry effects” which are difficult to understand There is previous evidence that is not mentioned: Parra (1999): I/Y declines in 0.66 facing and increase of 1% in homicide rate Echeverry et al. (2000) decline of 0.54 Characteristics and length of the conflict matter