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Does Greater Regulatory Burden Lead to More Corruption ? Evidence Using Firm-Level Survey Data for Developing Countries

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  • Amin,Mohammad
  • Soh,Yew Chong

Abstract

Regulation often creates opportunities for public officials to extract bribes. If this is true, deregulation offers a simple way to combat corruption. However, empirical evidence on the corruption and regulation nexus is limited. Further, the corruption indices used are based on experts'opinions, which may suffer from perception bias. The present paper attempts to address these shortcomings using firm-level survey data for 131 mostly developing countries on the experiences of the firms with bribery and regulatory burden. Exploiting within-country and industry-level variation in regulatory burden, the analysis finds a large, positive effect of regulatory burden on corruption. For the baseline results, the bribery rate is higher by about 0.03 percentage point for each percentage point increase in the regulatory burden. The finding is robust to several endogeneity checks.

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  • Amin,Mohammad & Soh,Yew Chong, 2020. "Does Greater Regulatory Burden Lead to More Corruption ? Evidence Using Firm-Level Survey Data for Developing Countries," Policy Research Working Paper Series 9149, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9149
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    Cited by:

    1. Amin,Mohammad, 2021. "Does Competition from Informal Firms Hurt Job Creation by Formal Firms ? Evidence Using Firm-Level Survey Data," Policy Research Working Paper Series 9515, The World Bank.
    2. Mohammad Amin & Cedric Okou, 2020. "Casting a shadow: Productivity of formal firms and informality," Review of Development Economics, Wiley Blackwell, vol. 24(4), pages 1610-1630, November.
    3. Amin,Mohammad & Soh,Yew Chong, 2020. "Does Corruption Hurt Employment Growth of Financially Constrained Firms More ?," Policy Research Working Paper Series 9286, The World Bank.
    4. Amin,Mohammad & Viganola,Domenico, 2021. "Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic ? Evidence from Firm-Level Survey Data," Policy Research Working Paper Series 9697, The World Bank.
    5. Amin,Mohammad & Islam,Asif Mohammed, 2021. "Exports and Women Workers in Formal Firms," Policy Research Working Paper Series 9527, The World Bank.
    6. Amin,Mohammad, 2021. "Does Competition from Informal Firms Impact R&D by Formal SMEs ? Evidence Using Firm-Level Survey Data," Policy Research Working Paper Series 9868, The World Bank.

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