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Corruption and Social Interaction: Evidence from China

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  • Bin Dong
  • Benno Torgler
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    Abstract

    We explore theoretically and empirically whether social interaction, including local and global interaction, influences the incidence of corruption. We first present an interaction-based model on corruption that predicts that the level of corruption is positively associated with social interaction. Then we empirically verify the theoretical prediction using within-country evidence at the province-level in China during 1998 to 2007. Panel data evidence clearly indicates that social interaction has a statistically significantly positive effect on the corruption rate in China. Our findings, therefore, underscore the relevance of social interaction in understanding corruption.

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    Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2010-22.

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    Date of creation: Nov 2010
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    Handle: RePEc:cra:wpaper:2010-22

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    Keywords: Awards; Signals; Status; Anonymity; Globalization;

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    Cited by:
    1. Guenther G. Schulze & Bambang Suharnoko Sjahrir & Nikita Zakharov, 2013. "Corruption in Russia," Discussion Paper Series, Department of International Economic Policy, University of Freiburg 22, Department of International Economic Policy, University of Freiburg, revised Apr 2013.

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