Karen Nershi



I am a Postdoctoral Fellow at Stanford University's Stanford Internet Observatory and the Center for International Security and Cooperation (CISAC). In the summer of 2021, I completed my Ph.D. in political science at the University of Pennsylvania specializing in the fields of international relations and comparative politics. Through an empirical lens, my research examines questions of international cooperation and regulation within international political economy, including challenges emerging from the adoption of decentralized digital currency and other new technologies.

Specific topics I explore in my research include ransomware, cross-national regulation of the cryptocurrency sector, and international cooperation around anti-money laundering enforcement. My research has been supported by the University of Pennsylvania GAPSA Provost Fellowship for Innovation and the Christopher H. Browne Center for International Politics.

Before beginning my doctorate, I earned a B.A. in International Studies with honors at the University of Alabama. I have lived and studied Arabic in Amman, Jordan and Meknes, Morocco as a Foreign Language and Area Studies Fellow and a Critical Language Scholarship recipient. I also lived and studied in Mannheim, Germany, in addition to interning at the U.S. Consulate General Frankfurt (Frankfurt, Germany).

Encina Hall, 4th Floor
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Stanford University
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1) How Strong Are International Standards in Practice? Evidence from Cryptocurrency Transactions [SSRN] [PDF]
Data source: Law Library Of Congress, U.S. Global Legal Research Directorate, Issuing Body. Regulation of cryptocurrency around the world: November 2021 Update. Washington, D.C., 2021. Pdf. https://www.loc.gov/item/2021687419/.

The rise of cryptocurrency (decentralized digital currency) presents challenges for state regulators given its pseudonymous nature and connection to illegal activity, allowing both individuals and businesses to engage in regulatory arbitrage. I assess the degree to which states have managed to regulate cryptocurrency exchanges, providing a detailed study of international efforts to impose common regulatory standards for a new technology. I provide a dataset of cryptocurrency transactions collected from exchanges located in countries around the world during a two-month period in 2020 and employ bunching estimation to compare levels of unusual activity below a threshold at which exchanges are required by law to screen their customers for money laundering risk. I find that exchanges in some, but not all, countries show unusual activity below the threshold; these findings suggest that while countries have made progress toward regulating cryptocurrency exchanges, gaps in enforcement across countries continue to allow for regulatory arbitrage.

2) Assessing the Political Motivations Behind Ransomware Attacks
with Shelby Grossman

In recent years, ransomware (a type of cybercrime) has received growing attention as a source of risk to the private sector. Although ransomware attacks have traditionally been viewed as apolitical, recent developments suggest there may be a connection between some groups behind these attacks and the Russian government. In this paper, we test whether the behavior of Russia-based ransomware groups is consistent with Russian political goals by comparing the victims of Russia-based groups to those of groups based outside of Russia. To enable this research, we collected a dataset of over 4,000 victims of ransomware attacks located across 102 countries between May 2019 and May 2022 based on information posted to the dark web. Using this data, we find an increase in the average number of attacks by Russia-based groups in the months before an election across six democratic countries, with no similar increase in attacks by groups based outside of Russia. We also analyze leaked chat logs from a major Russia-base ransomware group; based on our analysis, we argue that the Russian government maintains loose ties with ransomware groups in Russia: groups operate as independent criminal organizations but will occasionally perform favors for the government. In exchange, the government provides these groups with safe harbor from prosecution and gains plausible deniability from groups' actions on the world stage. Thus, this paper provides the first evidence of macro-level connections between Russia-based ransomware groups and the Russian government and suggests the need for more analysis of international security threats emerging from cybercrime.

3) Measuring Reputational Harm in Money Laundering Cases [PDF]

Most countries have adopted anti-money laundering laws during the last twenty years, but growing evidence shows widespread lapses in enforcement. Accordingly, scholars seek to understand what factors lead states to enforce these laws. One argument is that countries enforce these laws to protect against the reputational harm that involvement with money laundering could cause. Specifically, scholars argue that both states and financial institutions can experience reputational harm from association with money laundering, leading to decreased foreign investment as actors move their funds to safer jurisdictions. Although this theory is widely referenced, the literature lacks a convincing test of it. To test this, I have collected a new dataset of money laundering cases based on international news coverage. At the state level, I use the \textit{synthetic control }method to test for changes in countries' foreign portfolio investment following news of major money laundering cases in Switzerland, Panama, and Denmark. For financial institutions, I use the \textit{event study }method to test whether the price of a financial institution's security decreases following news of a money laundering investigation. For both states and financial institutions, I find no evidence that news of a money laundering case causes reputational harm. Thus, my findings call into question claims that actors enforce anti-money laundering laws to protect their reputations.

4) Quantifying International Pressure: Synthetic Estimates of the Economic Impact of Blacklisting [PDF]

An important factor in the global adoption of anti-money laundering laws was the use of a blacklist by the Financial Action Task Force (FATF), an international organization dedicated to coordinating the fight against money laundering. Although the blacklist is now defunct, it was an extremely effective tool that allowed the FATF to bring about widespread policy changes in a short period of time. Despite near universal recognition of its success, there is a lack of consensus about how the blacklist functioned and whether it caused financial harm to listed states. We explore several explanations of how blacklisting functioned and argue it primarily relied on economic coercion enabled by the FATF's powerful members. We then test whether blacklisting caused economic harm to listed countries using the synthetic control method, which enables causal estimates by creating a counterfactual ``synthetic'' control unit using a weighted average of like countries. We find that blacklisting contributed to lower gross domestic product (GDP) per capita in the decade after blacklisting for one third of the countries in the sample. Based on these findings, we argue that blacklisting's legacy as a tool of economic coercion -- along with the very real consequences for some listed countries -- can help explain the rapid global diffusion of anti-money laundering laws and continues to influence international efforts to address money laundering today.

5) Ranked Choice Voting & Minority Candidates' Electoral Chances: Evidence from California Local Elections
with Selina Hofstetter

In recent years, Ranked Choice Voting (RCV) as an electoral reform has experienced momentum in the United States with an increasing number of states and cities introducing it. A common expectation is that RCV improves female and racial minority representation. However, while the literature is growing, we still have limited evidence on the political effects of RCV. In this paper, we estimate the impact of RCV on the electoral chances of women and racial minorities using difference in differences and data from California's local elections where four cities introduced RCV for certain political offices between 2004-2018. Our findings show that in open-seat elections, the electoral chances of racial minorities increase, but that there is no effect for women.

6) Ties that Bind? Chinese Foreign Direct Investment & Political Influence in Africa

Over the past two decades, China has invested heavily in Africa alongside a growing demand for key minerals, leading some scholars to argue that investment has increased China’s political influence in receiving countries. Conversely, some argue that Chinese investment has created backlash as it extracts finite natural resources without creating local economic benefits. I test whether Chinese investment has led to political influence by measuring changes in attitudes toward China and support for democracy (the main alternative to the Chinese political model) in localities receiving Chinese investment. Using data from Afrobarometer, Pew Research, and AidData, I test this question across 297 localities in 25 African countries between 1999 and 2015 and employ Bartik-like shift-share instruments to exogenously predict Chinese investment. This paper provides evidence that Chinese investment has negatively impacted support for free elections in Africa (though there is no significant effect for other democracy-related outcomes) and offers a rigorous empirical test of whether foreign investment can produce political influence.

Introduction to International Relations
Teaching Assistant. Fall 2016 and fall 2020. Instructor: Professor Edward D. Mansfield

International Relations and Ethics
Teaching Assistant. Spring 2018. Instructor: Professor Mark A. Pollack

Introduction to International Relations
Teaching Assistant. Fall 2017. Instructor: Professor Alex Weisiger

International Political Economy
Teaching Assistant. Spring 2017. Instructor: Professor Mark A. Pollack

Please email me for syllabi, teaching evaluations, lecture slides, and other course materials.