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Is bank lending corruption self-regulatory?

Author

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  • Erotokritos Varelas

    (University of Macedonia, Department of Economics, Thessaloniki, Greece)

Abstract

This article puts forward the possibility that bank-client corruption tends to raise lending rates. If it does and if bank-official corruption counteracts this tendency, bank lending corruption might be seen as a self-regulatory phenomenon, having little if none at all influence on the real economy. An anti-lending corruption policy is deemed to be necessary only under a zero-lower-bound associated monetary policy and in any case, it should treat the two types of banking-sector corruption symmetrically. The negative effects of bank sector fraud on economic growth should be related to the large volume of cybercrime and money laundering rather than to fraud surrounding bank lending. Classification JEL: D21; D73; E43

Suggested Citation

  • Erotokritos Varelas, 2017. "Is bank lending corruption self-regulatory?," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 5(3), pages 31-34, June.
    • Handle: RePEc:lrc:lareco:v:5:y:2017:i:3:p:31-34
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    References listed on IDEAS

    as
    1. Gerasimos T. Soldatos, 2016. "Is the Bureaucrat the Main Responsible for Corruption?," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 12(2), pages 12-18, December.
    2. Park, Junghee, 2012. "Corruption, soundness of the banking sector, and economic growth: A cross-country study," Journal of International Money and Finance, Elsevier, vol. 31(5), pages 907-929.
    3. Raphael Solomon, 2005. "Pocket Banks and Out-of-Pocket Losses: Links between Corruption and Contagion," Staff Working Papers 05-23, Bank of Canada.
    4. Barth, James R. & Lin, Chen & Lin, Ping & Song, Frank M., 2009. "Corruption in bank lending to firms: Cross-country micro evidence on the beneficial role of competition and information sharing," Journal of Financial Economics, Elsevier, vol. 91(3), pages 361-388, March.
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    More about this item

    Keywords

    Bank lending corruption; Bank non-lending fraud; Economic activity.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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