Corruption and Government Intervention on Bank Risk-Taking: Cases of Asian Countries

Abstract

This paper aims to addresses the impact of corruption, anti-corruption commission, and government intervention on bank’s risk-taking using banks in Asian Countries such as Indonesia, Malaysia, Thailand, and South of Korea during the period 1995-2016. This paper uses corruption variable, bank-specific variables, macroeconomic variables, dummy variables and interaction variable to estimate bank’s risk-taking variable. Using data from 76 banks in Indonesia, Malaysia, Thailand and South Korea over 21 years, this research finds consistent evidence that higher level of corruption and government intervention in crisis-situation will increase the risk-taking behaviour of banks. In the other hand, bank risk-taking behaviour minimized by the existence of anti-corruption commission. In addition, this paper also finds that government intervention amplifies corruption’s effect on bank’s risk-taking behaviour because of strong signs of moral hazard and weaknesses in the governance and supervision.

Corruption and Financial Development : Evidence from Eastern Europe and Central Asia Countries

“…A number of papers have examined the dimensions of corruption perception on stock market development (Ayaydın and Baltacı, 2013;Ming et al, 2018) and on banking sector (Weill, 2011;Ahmad, 2013;Arshad and Rizvi, 2013;Anaere, 2014;chen et al, 2015;son et al, 2017;Toader et al, 2018;Nurhidayat and Rokhim, 2018;Ali et al, 2019;Bolarinwa and soetan, 2019;ozili, 2019). some of these are given below:…”

Untitled

“…Both models show that the foreign banks' penetration do not have a significant impact on banking stability but they suggest that high perception of corruption which indicate lack of governance may reduce banking stability. Banks' stability falls with the severity of corruption and banks' engagement in riskier activities leads to higher vulnerability as banks involve in more risk-taking behavior (Chen, Feng, & Wang, 2018;Nurhidayat & Rokhim, 2018). Notes: S.e = robust standard error.…”

Korrupció és pénzügyi fejlettség : Kelet-európai és közép-ázsiai országokról szóló értékelés

“…számos tanulmány vizsgálta a korrupcióészlelésnek a tőzsdepiaci fejlődésre (Ayaydın, Baltacı, 2013;Ming et al, 2018) és a bankszektorra gyakorolt hatásait (Weill, 2011;Ahmad, 2013;Arshad, Rizvi, 2013;Anaere, 2014;Chen et al, 2015;son et al, 2017;Toader et al, 2018;Nurhidayat, Rokhim, 2018;Ali et al, 2019;Bolarinwa, soetan, 2019;Ozili, 2019). Néhányat ezek közül a következőkben röviden bemutatunk.…”