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Does Financial Development Reduce Corruption?

Author

Listed:
  • John Thornton

    (Bangor Business School)

Abstract

I estimate the impact of bank cred it to the private sector on corruption using indicators of a country's legal origin as instrumental variables to assess causality. I find that bank credit reduces corruption, with the result robust to instrumenting for bank credit and for different controls.

Suggested Citation

  • John Thornton, 2009. "Does Financial Development Reduce Corruption?," Working Papers 09003, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    • Handle: RePEc:bng:wpaper:09003
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    File URL: http://www.bangor.ac.uk/business/docs/BBSWP09003.pdf
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    Cited by:

    1. is not listed on IDEAS
    2. Rajesh Barik & Sanjaya Kumar Lenka, 2023. "Does financial inclusion control corruption in upper-middle and lower-middle income countries?," Asia-Pacific Journal of Regional Science, Springer, vol. 7(1), pages 69-92, March.
    3. Jha, Chandan Kumar, 2015. "Financial Reforms and Corruption," MPRA Paper 65420, University Library of Munich, Germany.
    4. Joël CARIOLLE, 2014. "Corruption in Turbulent Times: a Response to Shocks?," Working Papers P106, FERDI.
    5. Song, Chang-Qing & Chang, Chun-Ping & Gong, Qiang, 2021. "Economic growth, corruption, and financial development: Global evidence," Economic Modelling, Elsevier, vol. 94(C), pages 822-830.
    6. Joël CARIOLLE, 2016. "The voracity and scarcity effects of export booms and busts on bribery," Working Papers P146, FERDI.
    7. Carol M. Sánchez & Kevin Lehnert., 2018. "Firm-level trust in emerging markets: the moderating effect on the institutional strength- corruption relationship in Mexico and Peru," Estudios Gerenciales, Universidad Icesi, vol. 34(147), pages 127-138.
    8. Yener Altunbaş & John Thornton & Chrysovalantis Vasilakis, 2023. "More Foreign Aid, Less Financial Development," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 76(4), pages 495-528.
    9. Frank Kwabi & Agyenim Boateng & Samuel Fosu & TingTing Zhu & Marian Chijoke‐Mgbame, 2022. "Foreign equity portfolio flow and corruption: A cross‐country evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 68-87, January.
    10. Kumar Shaurav & Badri Narayan Rath, 2024. "The Linkage Between ICT Development and Corruption in the Case of Emerging Market Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 6604-6616, June.
    11. Haojue Zhang & Yifu Sun & Changyu Meng, 2023. "Sustainable Urban Competitiveness from a Financial Development Perspective: An Empirical Study of China," Sustainability, MDPI, vol. 15(5), pages 1-18, February.
    12. Joël CARIOLLE, 2014. "Corruption in Turbulent Times: a Response to Shocks?," Working Papers P106, FERDI.
    13. Sosson Tadadjeu & Brice Kamguia & Ronald Djeunankan, 2023. "Access to drinking water and sanitation in developing countries: Does financial development matter?," International Review of Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 457-481, July.
    14. Hsiu-I Ting, 2017. "Financial development, role of government, and bank profitability: evidence from the 2008 financial crisis," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(2), pages 370-391, April.
    15. Chandan Sharma & Sudharshan Reddy Paramati, 2021. "Does financial development reduce the level of corruption? Evidence from a global sample of 140 countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5093-5109, October.
    16. Chowdhury, Md Shahedur R. & Khraiche, Maroula & Boudreau, James W., 2023. "Corruption and stock market development: Developing vs. developed economies," International Review of Financial Analysis, Elsevier, vol. 89(C).
    17. Vishal Jaunky, 2013. "Democracy and economic growth in Sub-Saharan Africa: a panel data approach," Empirical Economics, Springer, vol. 45(2), pages 987-1008, October.

    More about this item

    Keywords

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    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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