IDEAS home Printed from https://ideas.repec.org/a/uii/journl/v9y2017i1p66-73.html
   My bibliography  Save this article

Provincial corruption and local development bank performance

Author

Listed:
  • Murharsito
  • Fitri Ella Fauziah
  • Emanuel Kristijadi
  • Rr. Iramani

    (Universitas Islam Nahdlatul Ulama Jepara, Indonesia.
    Universitas Islam Nahdlatul Ulama Jepara, Indonesia.
    Sekolah Tinggi Ilmu Ekonomi Perbanas Surabaya, Indonesia.
    Sekolah Tinggi Ilmu Ekonomi Perbanas Surabaya, Indonesia.)

Abstract

This paper investigates the effect of provincial corruption on the performance of local development bank, specifically to the profitability and credit quality. We use the data of 26 local development banks in 2012 and 2013. For the provincial corruption measurement we use “Public Institution Openness Index”. Results of this study are first, corruption significantly has a negative effect on the profitability of local development bank. Second, corruption doesn’t affect the credit quality of local development bank. These results are expected to enrich the within country corruption effect to the economic studies, particularly to the local development bank which is infrequently investigated.

Suggested Citation

  • Murharsito & Fitri Ella Fauziah & Emanuel Kristijadi & Rr. Iramani, 2017. "Provincial corruption and local development bank performance," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 9(1), pages 66-73, April.
    • Handle: RePEc:uii:journl:v:9:y:2017:i:1:p:66-73
    DOI: 10.20885/ejem.vol9.iss1.art7
    as

    Download full text from publisher

    File URL: https://journal.uii.ac.id/JEP/article/download/7104/6711
    Download Restriction: no
    File URL: https://journal.uii.ac.id/JEP/article/view/7104/6711
    Download Restriction: no
    File URL: https://libkey.io/10.20885/ejem.vol9.iss1.art7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Weill, Laurent, 2011. "How corruption affects bank lending in Russia," Economic Systems, Elsevier, vol. 35(2), pages 230-243, June.
    2. Hasan Ayaydın & Pınar Hayaloglu, 2014. "The Effect of Corruption on Firm Growth: Evidence from Firms in Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(5), pages 607-624.
    3. Hasan Ayaydin & Pinar Hayaloglu, 2014. "The Effect of Corruption on Firm Growth: Evidence from Firms in Turkey," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(5), pages 607-624, May.
    4. Joko Mariyono, 2012. "Corruption and welfare: A simple econometric across countries analysis," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 4(1), pages 63-75, April.
    5. Joko Mariyono, 2012. "Corruption And Welfare: A Simple Econometric Across Countries Analysis," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 4(1), pages 63-75.
    6. Nguyen, Thuy Thu & van Dijk, Mathijs A., 2012. "Corruption, growth, and governance: Private vs. state-owned firms in Vietnam," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 2935-2948.
    7. Rajkumar, Andrew Sunil & Swaroop, Vinaya, 2008. "Public spending and outcomes: Does governance matter?," Journal of Development Economics, Elsevier, vol. 86(1), pages 96-111, April.
    8. Yudistira Permana, 2014. "Financial Efficiency Performance Of Regional Development Bank (Rdb) To Support Regional Economy In Indonesia," Proceedings of International Academic Conferences 0702151, International Institute of Social and Economic Sciences.
    9. 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.
    10. Naceur, Sami Ben & Omran, Mohammed, 2011. "The effects of bank regulations, competition, and financial reforms on banks' performance," Emerging Markets Review, Elsevier, vol. 12(1), pages 1-20, March.
    11. Yudistira Hendra Permana & Ike Yuli Andjani, 2014. "Financial efficiency performance of regional development bank (RDB) to support regional economy in Indonesia," International Journal of Economic Sciences, Prague University of Economics and Business, vol. 2014(4), pages 53-69.
    12. Mushfiq Swaleheen, 2011. "Economic growth with endogenous corruption: an empirical study," Public Choice, Springer, vol. 146(1), pages 23-41, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hatice Jenkins & Ezuldeen Alshareef & Amer Mohamad, 2023. "The impact of corruption on commercial banks' credit risk: Evidence from a panel quantile regression," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 1364-1375, April.
    2. repec:ers:journl:v:xx:y:2017:i:3a:p:538-553 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brzić, Barbara & Dabić, Marina & Kukura, Frane & Podobnik, Boris, 2021. "The effects of corruption and the fraction of private ownership on the productivity of telecommunication companies," Technology in Society, Elsevier, vol. 65(C).
    2. Asteriou, Dimitrios & Pilbeam, Keith & Tomuleasa, Iuliana, 2021. "The impact of corruption, economic freedom, regulation and transparency on bank profitability and bank stability: Evidence from the Eurozone area," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 150-177.
    3. Phuoc Vu Ha & Michael Frömmel, 2023. "Corruption, business environment, and firm growth in Vietnam," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2512-2529, July.
    4. Anh‐Tuan Doan & Bich‐Thanh Truong & Chi‐Cuong Nguyen & Phan‐Tam‐Nhu Nguyen & Hai‐Yen Truong & Anh‐Tuan Le, 2023. "Corruption and corporate leverage in an emerging economy: The role of economic freedom," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 599-629, June.
    5. Lakshmi, Geeta & Saha, Shrabani & Bhattarai, Keshab, 2021. "Does corruption matter for stock markets? The role of heterogeneous institutions," Economic Modelling, Elsevier, vol. 94(C), pages 386-400.
    6. Nerajda Feruni & Eglantina Hysa & Mirela Panait & Irina Gabriela Rădulescu & Alina Brezoi, 2020. "The Impact of Corruption, Economic Freedom and Urbanization on Economic Development: Western Balkans versus EU-27," Sustainability, MDPI, vol. 12(22), pages 1-22, November.
    7. repec:ers:journl:v:xx:y:2017:i:3a:p:538-553 is not listed on IDEAS
    8. Chei Bukari & Emm anuel Atta Anaman, 2021. "Corruption and firm innovation: a grease or sand in the wheels of commerce? Evidence from lower-middle and upper-middle income economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 11(2), pages 267-302, June.
    9. Ben Ali, Mohamed Sami, 2022. "Credit bureaus, corruption and banking stability," Economic Systems, Elsevier, vol. 46(3).
    10. Lee, Mina & Mutlu, Canan & Lee, Seung-Hyun, 2023. "Bribery and Firm Growth: Sensemaking in CEE and Post-Soviet Countries," Journal of International Management, Elsevier, vol. 29(1).
    11. Kim, Dong-Hyeon & Wu, Yi-Chen & Lin, Shu-Chin, 2018. "Heterogeneity in the effects of government size and governance on economic growth," Economic Modelling, Elsevier, vol. 68(C), pages 205-216.
    12. Petrou, Andreas P. & Thanos, Ioannis C., 2014. "The “grabbing hand” or the “helping hand” view of corruption: Evidence from bank foreign market entries," Journal of World Business, Elsevier, vol. 49(3), pages 444-454.
    13. Udit MAHESHWARI & Ashutosh PRIYA & Ravi Kumar GUPTA, 2022. "An analysis of the effect of widespread unemployment on corruption," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(633), W), pages 163-172, Winter.
    14. Khémiri, Wafa & Noubbigh, Hédi, 2021. "Joint analysis of the non-linear debt-growth nexus and capital account liberalization: New evidence from sub-Saharan region," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 614-626.
    15. Oana-Ramona Socoliuc (Guriță) & Nicoleta Sîrghi & Dănuţ-Vasile Jemna & Mihaela David, 2022. "Corruption and Population Health in the European Union Countries—An Institutionalist Perspective," IJERPH, MDPI, vol. 19(9), pages 1-20, April.
    16. Ratbek Dzhumashev, 2014. "The Two-Way Relationship Between Government Spending And Corruption And Its Effects On Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 403-419, April.
    17. Nandika Sanath Kumanayake & Ajantha Sisira Kumara & Asankha Pallegedara, 2023. "The nexus between public sector corruption and private sector efficiency: Evidence from worldwide firm‐level data," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 1056-1077, May.
    18. Chen, Minghua & Jeon, Bang Nam & Wang, Rui & Wu, Ji, 2015. "Corruption and bank risk-taking: Evidence from emerging economies," Emerging Markets Review, Elsevier, vol. 24(C), pages 122-148.
    19. Maya El Hourani & Gérard Mondello, 2019. "The Impact of Bank Capital and Institutional Quality on Lending: Empirical Evidence from the MENA Region," GREDEG Working Papers 2019-34, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    20. Dincer, Oguzhan & Teoman, Ozgur, 2019. "Does corruption kill? Evidence from half a century infant mortality data," Social Science & Medicine, Elsevier, vol. 232(C), pages 332-339.
    21. Colin C. Williams & Abbi M. Kedir, 2016. "The Impacts Of Corruption On Firm Performance: Some Lessons From 40 African Countries," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 21(04), pages 1-18, December.

    More about this item

    Keywords

    provincial corruption; local development bank; profitability; credit quality;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uii:journl:v:9:y:2017:i:1:p:66-73. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ana Yuliani (email available below). General contact details of provider: https://journal.uii.ac.id/JEP/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.