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Survival amidst chaos: The impact of catastrophic natural disasters on SME corruption practices

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  • Vu, Kieu Trang
  • Kim, Maria H.
  • Suardi, Sandy

Abstract

Are firms likely to engage in corruption in times of catastrophic natural disasters? This paper provides evidence that a natural disaster is associated with a 38.8% increase in affected firms' informal payments. An increase in informal payments helps SMEs in affected provinces offset the reduction in government assistance following natural disasters. The relationship between natural catastrophes and corruption becomes less pronounced in firms with political connections, high tax avoidance, family control and superior local governance quality. This research carries significant implications for governments and policymakers aiming to mitigate the surge in firms' corruption practices following catastrophic natural disasters.

Suggested Citation

  • Vu, Kieu Trang & Kim, Maria H. & Suardi, Sandy, 2026. "Survival amidst chaos: The impact of catastrophic natural disasters on SME corruption practices," Emerging Markets Review, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:ememar:v:70:y:2026:i:c:s1566014125001505
    DOI: 10.1016/j.ememar.2025.101401
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    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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