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How Corruption Affects Bank Lending in Russia

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Author Info
Laurent Weill () (Laboratoire de Recherche en Gestion et Economie, Institut d'Etudes Politiques, Strasbourg)

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Abstract

The aim of this study is to investigate the impact of corruption on bank lending in Russia. This issue is of major interest in order to understand the causes of financial underdevelopment and the effects of corruption in Russia. We use regional measures of corruption and bank-level data to perform this investigation. Our main estimations show that corruption hampers bank lending in Russia. We investigate whether this negative role of corruption is influenced by the degree of bank risk aversion, but find no effect. The detrimental effect of corruption is only observed for loans to households and firms, in opposition to loans to government. Additional controls confirm the detrimental impact of corruption on bank lending. Therefore, our results provide motivations to fight corruption to favor bank lending in Russia.

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Paper provided by Laboratoire de Recherche en Gestion et Economie, Université de Strasbourg (France) in its series Working Papers of LaRGE (Laboratoire de Recherche en Gestion et Economie) with number 2008-21.

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Date of creation: 2008
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Handle: RePEc:lar:wpaper:2008-21

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Related research
Keywords: Corruption; Bank; Russia; Financial Development; Economic Transition.;

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Find related papers by JEL classification:
G20 - Financial Economics - - Financial Institutions and Services - - - General
K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
P2 - Economic Systems - - Socialist Systems and Transition Economies

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    Other versions:
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  21. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June. [Downloadable!] (restricted)
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  26. Ross Levine, 1998. "The legal environment, banks, and long-run economic growth," Proceedings, Federal Reserve Bank of Cleveland, issue Aug, pages 596-620.
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  1. Fungáová, Zuzana & Godlewski , Christophe J. & Weill, Laurent, 2009. "Asymmetric Information and Loan Spreads in Russia: Evidence from Syndicated Loans," BOFIT Discussion Papers 7/2009, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
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