IDEAS home Printed from
   My bibliography  Save this article

Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data


  • Maxim Mironov
  • Ekaterina Zhuravskaya


We provide evidence of corruption in allocation of public procurement and assess its efficiency. Firms with procurement revenue increase tunneling around regional elections, whereas neither tunneling of firms without procurement revenue, nor legitimate business of firms with procurement exhibits a political cycle. Data are consistent with the corruption channel—cash is tunneled to politicians in exchange for procurement contracts—and inconsistent with alternative channels. Using the strength of correlation between procurement revenue and tunneling around elections as a proxy for local corruption, we reject the "efficient grease" hypothesis: in more corrupt localities, procurement contracts go to unproductive firms. (JEL D22, D72, H57, K42, P26, P31, P37)

Suggested Citation

  • Maxim Mironov & Ekaterina Zhuravskaya, 2016. "Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data," American Economic Journal: Economic Policy, American Economic Association, vol. 8(2), pages 287-321, May.
  • Handle: RePEc:aea:aejpol:v:8:y:2016:i:2:p:287-321
    Note: DOI: 10.1257/pol.20140188

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no

    Other versions of this item:


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

    Cited by:

    1. Jin, Xuejun & Chen, Zhenhao & Luo, Deming, 2019. "Anti-corruption, political connections and corporate responses: Evidence from Chinese listed companies," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    2. Yuping Deng & Yanrui Wu & Helian Xu, 2019. "Political Connections and Firm Pollution Behaviour: An Empirical Study," Economics Discussion / Working Papers 19-15, The University of Western Australia, Department of Economics.
    3. Potrafke, Niklas, 2019. "Electoral cycles in perceived corruption: International empirical evidence," Journal of Comparative Economics, Elsevier, vol. 47(1), pages 215-224.
    4. Çağatay Bircan & Ralph De Haas & Andrew KarolyiEditor, 2020. "The Limits of Lending? Banks and Technology Adoption across Russia," Review of Financial Studies, Society for Financial Studies, vol. 33(2), pages 536-609.
    5. Sidorkin, Oleg & Vorobyev, Dmitriy, 2018. "Political cycles and corruption in Russian regions," European Journal of Political Economy, Elsevier, vol. 52(C), pages 55-74.
    6. Palguta, Ján, 2019. "Political representation and public contracting: Evidence from municipal legislatures," European Economic Review, Elsevier, vol. 118(C), pages 411-431.
    7. Audinga Beltrunaite & Cristina Giorgiantonio & Sauro Mocetti & Tommaso Orlando, 2018. "Discration and Supplier Selection in Public Procurement," Working Papers 122, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    8. Deng, Yuping & Wu, Yanrui & Xu, Helian, 2019. "Political connections and firm pollution behaviour : An empirical study," BOFIT Discussion Papers 4/2019, Bank of Finland, Institute for Economies in Transition.
    9. Titl, Vitezslav & Geys, Benny, 2019. "Political donations and the allocation of public procurement contracts," European Economic Review, Elsevier, vol. 111(C), pages 443-458.
    10. Ozlem Akin & Nicholas S. Coleman & Christian Fons-Rosen & José-Luis Peydró, 2016. "Political connections: Evidence from insider trading around TARP," Economics Working Papers 1542, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2018.
    11. Mass, Helene & Fugger, Nicolas & Gretschko, Vitali & Wambach, Achim, 2017. "Imitation perfection - a simple rule to prevent discrimination in procurement," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168217, Verein für Socialpolitik / German Economic Association.
    12. repec:cpr:ceprdp:14341 is not listed on IDEAS
    13. Muraközy, Balázs & Telegdy, Álmos, 2016. "Political incentives and state subsidy allocation: Evidence from Hungarian municipalities," European Economic Review, Elsevier, vol. 89(C), pages 324-344.
    14. Oleg Sidorkin & Dmitriy Vorobyev, 2018. "Extra Votes to Signal Loyalty: Regional Political Cycles and National Elections in Russia," Working Papers 376, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    15. Dmitry I. Ivanov & Alexander S. Nesterov, 2019. "Identifying Bid Leakage In Procurement Auctions: Machine Learning Approach," Papers 1903.00261,
    16. Sokolov, Vladimir & Solanko, Laura, 2016. "Political influence, firm performance and survival," BOFIT Discussion Papers 20/2016, Bank of Finland, Institute for Economies in Transition.
    17. Yuping Deng & Yanrui Wu & Helian Xu, 2020. "Political Connections and Firm Pollution Behaviour: An Empirical Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 867-898, April.
    18. Lisa Chauvet & Hélène Ehrhart, 2015. "Aid and Growth Evidence from Firm-level Data," Post-Print hal-01516877, HAL.
    19. Günther G. Schulze & Nikita Zakharov, 2018. "Corruption in Russia - Historic Legacy and Systemic Nature," CESifo Working Paper Series 6864, CESifo Group Munich.
    20. Chauvet, Lisa & Ehrhart, Hélène, 2018. "Aid and growth: evidence from firm-level data," Journal of Development Economics, Elsevier, vol. 135(C), pages 461-477.
    21. Jääskeläinen, Jan & Tukiainen, Janne, 2019. "Anatomy of public procurement," Working Papers 118, VATT Institute for Economic Research.
    22. Lehne, Jonathan & Shapiro, Jacob N. & Vanden Eynde, Oliver, 2018. "Building connections: Political corruption and road construction in India," Journal of Development Economics, Elsevier, vol. 131(C), pages 62-78.
    23. Tkachenko, Andrey & Yakovlev, Andrei & Kuznetsova, Aleksandra, 2017. "‘Sweet deals’: State-owned enterprises, corruption and repeated contracts in public procurement," Economic Systems, Elsevier, vol. 41(1), pages 52-67.
    24. Andrey Tkachenko & Daniil Esaulov, 2018. "The Role Of Governors In Public Procurement," HSE Working papers WP BRP 19/PSP/2018, National Research University Higher School of Economics.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal


    Access and download statistics


    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:aea:aejpol:v:8:y:2016:i:2:p:287-321. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.