Bank Ownership Structure, Lending Corruption and the Regulatory Environment

Barry, Thierno; Lepetit, Lætitia; Strobel, Frank

doi:10.2139/ssrn.2574816

Cited by 8 publications

(15 citation statements)

References 43 publications

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“…Meanwhile, research had shown that corruption in underdeveloped countries is a primary obstacle for businesspeople to access the credit. In the type of bank ownership, the countries that have more state-owned banks or more family-owned banks, lending corruption is greater (Barry et al, 2016). In contrast, Barth et al (2009) found that corruption is weaker in the state-owned banks along with the sharing information and competition in bank lending (Barth et al, 2009).…”

Section: Corruption and Bank Soundnessmentioning

confidence: 97%

Does corruption affect Islamic banking? Empirical evidence from the OIC countries

Yunan

2020

JFC

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Purpose This paper aims to examine whether the level of corruption affects profitability and soundness of Islamic banking. Design/methodology/approach This paper uses a dynamic panel of 61 Islamic banks from 12 Organization of Islamic Cooperation (OIC) countries covering the period between 2016 and 2018. Findings This paper finds that the empirical evidence examined shows that corruption does affect the profitability and soundness of Islamic banks. Originality/value The value of this paper is to emphasize further understanding of corruption behaviour on Islamic banking in Islamic countries. This paper contributes to filling the gaps in the current literature on corruption and Islamic banking. Existing literature has only focussed on either profitability or soundness of Islamic banking, whereas this paper analyses the impact of corruption levels for both performance measurements simultaneously.

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Section: Corruption and Bank Soundnessmentioning

confidence: 97%

Does corruption affect Islamic banking? Empirical evidence from the OIC countries

Yunan

2020

JFC

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“…Authors attribute this finding to the fact that the financial institutions or creditors closely monitor borrowers' activities and hence potentially reduces their level of corruption. Similarly, Barry, Lepetit, and Strobel (2016) investigate the role of bank ownership on bank lending corruption by accounting other determinants in the model such as regulatory environment and the level of economic development. The findings indicate that lending corruption is significantly higher in circumstances where a higher proportion of credit comes from the state-owned or family-owned banks.…”

Section: Introductionmentioning

confidence: 99%

Does financial development reduce the level of corruption? Evidence from a global sample of 140 countries

Sharma

Paramati

2020

Int. J Fin Econ

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The current research explores the role of financial sector development on the control of corruption in a global sample of 140 countries. Using annual data from 1996 to 2015, this study makes use of system generalized method of moments technique to identify the determinants of corruption across the full sample, low and lower middle-income countries and, upper middle and high-income countries.Our empirical findings show that financial development plays an important role in controlling the growth of corruption across the full sample, low and lower middle-income countries and upper middle and high-income countries. Similarly, per capita income has a significant positive impact on control of corruption in upper middle and high-income countries, while education plays a similar role in low and lower middle-income countries. On the contrary, the per capita income, trade openness, government expenditure, political rights and civil liberty are the major factors, which promote the growth of corruption in low and lower middle-income countries, whereas trade and civil liberty play the same role in high-income countries. Given these findings, our study makes number policy recommendations and adds new knowledge to the empirical literature.

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“…The disposition of the banks, in aiding and abetting corrupt government officials to steal public funds and providing a haven for them to hide their illicit fund or legalise the proceed of corruption because of their drive for profit is the motivation for this study. Previous studies have examined bank lending corruption and various dimension and consequences (Barth et al , 2016; Barry et al , 2016; and Jiang et al , 2018). The uniqueness of this study from previous studies on corruption in the banking sector is that it fills the gap in the literature on the other side (i.e.…”

Section: Resultsmentioning

confidence: 99%

“…The banking system in such a situation will not be able to perform its primary function of efficient allocation of scarce resources. Barry et al (2016) examined the influence of bank ownership structure, regulatory environment and economic development on bank lending corruption. The findings revealed that corruption was higher when a state-owned bank or family-owned bank provided a higher proportion of credit to the economy.…”

Section: Literature Reviewmentioning

confidence: 99%

Challenges of accountability in Nigeria: the role of deposit money bank

Babajide

Lawal

Amodu

et al. 2020

JMLC

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Purpose The unhealthy drive for deposit in the banking sector has pushed many banks into unethical practices, thereby resulting in high-level corruption cases in the banking sector. The purpose of this study is to investigate the short- and long-run linkages between bank net interest income and deposit liabilities interacted with corruption, to establish the influence of corruption in deposit mobilisation drive of banks in Nigeria. Also, the study analysed the causal relationship between selected bank variables and fraud. Design/methodology/approach The study used quarterly data on selected variables from 1Q 1993 to 4Q 2017 sourced from Nigerian Deposit Insurance Corporation (NDIC) annual reports and Central Bank of Nigeria (CBN) Statistical Bulletin of various issues. Deposit Money Bank various deposit liabilities are interacted with a corruption index and used as the independent variables, while bank earnings serve as the dependent variable. Error Correction Model (ECM) and Engel Granger approach to co-integration technique were used to analyse the data. Findings The findings reveal that various bank deposit liabilities interacted with corruption index has a negative effect on bank profitability in the long run, though only corrupt fixed deposit is statistically significant at the 5 per cent significance level. Bank total asset, total loan and advances and fraud have a significant effect on bank profitability at 1 and 10 per cent significance level. The findings also reveal that banks profit from corrupt fixed deposit and demand deposit in the short run. Social implications Text Originality/value The literature is awash with bank lending corruption and various institutional factors such as competition among banks, credit bureau and information sharing about borrowers, bank supervisory policies, loan loss provisioning, bank ownership structure and regulatory environment and anti-corruption measures. The aspect of deposit mobilisation and corruption has not been well researched in literature; this study, therefore, fills the gap in the literature by examining the extent deposit money banks contributed to corruption in Nigeria through their cutthroat deposit mobilisation drive.

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Bank Ownership Structure, Lending Corruption and the Regulatory Environment

Cited by 8 publications

References 43 publications

Does corruption affect Islamic banking? Empirical evidence from the OIC countries

Does corruption affect Islamic banking? Empirical evidence from the OIC countries

Does financial development reduce the level of corruption? Evidence from a global sample of 140 countries

Challenges of accountability in Nigeria: the role of deposit money bank

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