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Evaluating the Use of Personal Networks to Circumvent Formal Processes: A Case Study of Vruzki in Bulgaria

Author

Listed:
  • Williams Colin C.

    () (Professor of Public Policy, Sheffield University Management School (SUMS), University of Sheffield)

  • Yang Junhong

    () (Lecturer in Finance, Sheffield University Management School (SUMS), University of Sheffield)

Abstract

The aim of this paper is to evaluate the prevalence and distribution of the use of personal connections to circumvent formal procedures by soliciting favours for and from others, known as vruzki, and how this can be explained and tackled. Reporting data from 2,005 face-to-face interviews conducted in late 2015 in Bulgaria, the finding is that 30 per cent of respondents had used vruzki in the 12 months prior to the survey, particularly when accessing medical services and finding a job. Estimating a logit model and then calculating the marginal effects, the population groups significantly more likely to have used vruzki are those whose norms, values and beliefs are not in symmetry with the formal laws and regulations, perceiving the penalties and detection risks as higher, those reporting their financial situation as very comfortable, and the highest income groups, but also younger people, the unemployed, and those living in larger households. The paper concludes by discussing the theoretical and policy implications along with the future research required.

Suggested Citation

  • Williams Colin C. & Yang Junhong, 2017. "Evaluating the Use of Personal Networks to Circumvent Formal Processes: A Case Study of Vruzki in Bulgaria," South East European Journal of Economics and Business, Sciendo, vol. 12(1), pages 57-67, April.
  • Handle: RePEc:vrs:seejeb:v:12:y:2017:i:1:p:57-67:n:6
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    More about this item

    Keywords

    informal sector; corruption; cronyism; nepotism; Bulgaria; South-East Europe;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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