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Corruption and Social Interaction: Evidence from China

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  • Bin Dong

    (QUT)

  • Benno Torgler

    ()
    (QUT)

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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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    Bibliographic Info

    Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 261.

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    Length: 19 pages
    Date of creation: 26 Nov 2010
    Date of revision:
    Handle: RePEc:qut:dpaper:261

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    Web page: http://www.bus.qut.edu.au/faculty/economics/
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    Keywords: corruption; social interaction; China;

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

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