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Corruption and business confidence: a panel data analysis

Author

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  • Gabriel Caldas Montes

    (Fluminense Federal University and National Council for Scientific and Technological Development)

  • André Almeida

    (Fluminense Federal University and IBGE)

Abstract

Decisions taken by entrepreneurs and investors are guided, to some extent, by expectations and feelings about the economy and their business. In turn, once corruption impacts the economy, and therefore affects the business environment; and since the economic environment affects business confidence, and therefore entrepreneurs' decisions, an important issue to be verified is whether corruption is capable of undermining business confidence. Although there exists evidence that corruption is harmful to the economy, there are no empirical studies regarding the effect of corruption on business confidence. Thus, this study analyzes the effect of corruption on business confidence. The effect of corruption on business confidence is estimated using panel data methodology for a sample of 40 countries (28 developed and 12 developing) covering the period between 1990 and 2013 and the period between 1995 and 2013 (annual data). The estimates are made for the total sample and then for the sample of developed countries. The results suggest corruption negatively impacts business confidence.

Suggested Citation

  • Gabriel Caldas Montes & André Almeida, 2017. "Corruption and business confidence: a panel data analysis," Economics Bulletin, AccessEcon, vol. 37(4), pages 2692-2702.
    • Handle: RePEc:ebl:ecbull:eb-17-00725
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    More about this item

    Keywords

    corruption; business confidence; developed countries; panel data;
    All these keywords.

    JEL classification:

    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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