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Corruption, growth, and governance: Private vs. state-owned firms in Vietnam


  • Nguyen, Thuy Thu
  • van Dijk, Mathijs A.


We provide a firm-level analysis of the relation between corruption and growth for private firms and state-owned enterprises (SOEs) in Vietnam. We obtain three different measures of the perceived corruption severity from a 2005 survey among 741 private firms and 133 SOEs. We find that corruption hampers the growth of Vietnam’s private sector, but is not detrimental for growth in the state sector. We document significant differences in the corruption severity across 24 provinces in Vietnam that can be explained by the quality of provincial public governance (such as the costs of new business entry, land access, and private sector development policies). Our results suggest that corruption may harm economic growth because it favors the state sector at the expense of the private sector and that improving the quality of local public governance can help to mitigate corruption and stimulate economic growth.

Suggested Citation

  • Nguyen, Thuy Thu & van Dijk, Mathijs A., 2012. "Corruption, growth, and governance: Private vs. state-owned firms in Vietnam," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 2935-2948.
  • Handle: RePEc:eee:jbfina:v:36:y:2012:i:11:p:2935-2948 DOI: 10.1016/j.jbankfin.2012.03.027

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    1. repec:mhr:jinste:urn:sici:0932-4569(201709)173:3_454:ppracs_2.0.tx_2-e is not listed on IDEAS
    2. Petra Koudelkova & Wadim Strielkowski & Denisa Hejlova, 2015. "Corruption and System Change in the Czech Republic: Firm-level Evidence," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 25-46, March.
    3. Dang, Duc Anh, 2013. "How foreign direct investment promote institutional quality: Evidence from Vietnam," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1054-1072.
    4. Axel Demenet & Hoang-Anh Ho & Sarah Morcillo, 2017. "Firm-level corruption: Unravelling sand from grease," WIDER Working Paper Series 123, World Institute for Development Economic Research (UNU-WIDER).
    5. Thomas Gries & Ha van Dung, 2014. "Institutional environment, human capital, and firm growth: Evidence from Vietnam," Working Papers CIE 83, Paderborn University, CIE Center for International Economics.
    6. Petrou, Andreas P. & Thanos, Ioannis C., 2014. "The “grabbing hand” or the “helping hand” view of corruption: Evidence from bank foreign market entries," Journal of World Business, Elsevier, vol. 49(3), pages 444-454.
    7. repec:ers:journl:v:xx:y:2017:i:3b:p:99-111 is not listed on IDEAS
    8. World Bank, 2015. "Governance Reforms of State-Owned Enterprises," World Bank Other Operational Studies 22749, The World Bank.
    9. Nguyen Trong, Co & Vu Van, Huong & Bartolacci, Francesca, 2017. "Government support and firm financial performance: New evidence from a transitional economy," MPRA Paper 81752, University Library of Munich, Germany.
    10. Hakimi, Abdelaziz & Hamdi, Helmi, 2015. "How Corruption affect Growth in MENA region? Fresh Evidence from a Panel Cointegration Analysis," MPRA Paper 63750, University Library of Munich, Germany.
    11. Doan, Quang Hung & Vu, Hoang Nam & Dao, Ngoc Tien, 2013. "Sub-National Institutions and Firm Survival in Vietnam," MPRA Paper 63653, University Library of Munich, Germany.
    12. Tran Quang Tuyen & Vu Van Huong & Doan Thanh Tinh & Tran Duc Hiep, 2016. "Corruption, provincial institutions and manufacturing firm productivity.New evidence from a transitional economy," Estudios de Economia, University of Chile, Department of Economics, vol. 43(2 Year 20), pages 199-215, December.
    13. Vu, Van Huong, 2012. "Private manufacturing SMEs survival and growth in Vietnam: The role of export participation," MPRA Paper 42489, University Library of Munich, Germany.
    14. repec:ers:journl:v:xx:y:2017:i:3a:p:124-132 is not listed on IDEAS
    15. repec:vul:omefvu:v:8:y:2017:i:1:id:219 is not listed on IDEAS
    16. Tien Manh Vu & Hiroyuki Yamada & Tsunehiro Otsuki, 2014. "The rise and fall of multinational enterprises in Vietnam: survival analysis using census data during 2000-2011," OSIPP Discussion Paper 14E001, Osaka School of International Public Policy, Osaka University.
    17. Edgardo Cayón, 2014. "The Effects of Contagion During the Global Financial Crisis in Government-Regulated and Sponsored Assets in Emerging Markets," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 30.

    More about this item


    Corruption; Growth; Governance; Private firms; State-owned enterprises;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal


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