Does corruption grease or sand the wheels of development? New results based on disaggregated data

Nur-tegin, Kanybek; Jakee, Keith

doi:10.1016/j.qref.2019.02.001

Cited by 46 publications

(32 citation statements)

References 41 publications

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“…For example, Hassan et al [29] measure credit risk by dividing the loan change off and loan recoveries by last year allowance for non-performing loans. Similarly, bribery has been introduced as a measure of corruption by Nur-tegin and Jakee [40]. However, in an attempt to provide global evidence on the causal nexus between corruption and credit risk, we relied primarily on the data available in the World Bank database.…”

mentioning

confidence: 99%

Corruption and its diverse effect on credit risk: global evidence

Hasan

Ashfaq

2021

Futur Bus J

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Corruption has a complex relationship with economic growth. We have explored the impact of corruption on credit risk from a global perspective. The sample consists of 178 countries and covers 18 years that range from 2000 to 2017. Non-performing loan (NPL) is used as a proxy for credit risk and data regarding NPL is collected from the World Bank Database. Corruption scores are collected from the Transparency International reports. Panel regression results provide a positive association between corruption and credit risk for the global sample. Generalized Methods of Moments regression and robustness tests validate the findings. However, sub-sample analysis provides support for “grease the wheel” hypothesis for high corruption countries and indicates that corruption is beneficial in a weak form of governance and excessive regulatory pressure. This study advocate for the importance of strong governance mechanisms in high corruption countries that can minimize the impact of corruption on banking sector profitability and ensure economic development. Unlike past literature, we provide global evidence on the association between corruption and credit risk for the banking sector which allows generalizability.

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confidence: 99%

Corruption and its diverse effect on credit risk: global evidence

Hasan

Ashfaq

2021

Futur Bus J

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“…There are generally two competing views about the effect of corruption on development or corporate performance. The first view is that it “sands the wheel” of business operation, meaning it is detrimental to business operation while the “grease the wheel” hypothesis suggests that it enhances efficiency (Nur-tegin and Jakee, 2020; Cooray and Schneider, 2018; Méon and Sekkat, 2005).…”

Section: Literature Reviewmentioning

confidence: 99%

Anti-corruption disclosure as a necessary evil: impact on profitability and stability of extractive firms in Africa

Asare

Duho

Agyenim‐Boateng

et al. 2021

JFC

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Purpose This study aims to examine the effect of anti-corruption disclosure on the profitability and financial stability of extractive firms in Africa. It also tests the convergence of profitability and financial stability. Design/methodology/approach The study uses an unbalanced panel data of 27 firms operating in five African countries covering the period 2006–2018. Anti-corruption assessment is done in line with GRI 205: Anti-Corruption. Profitability is measured using the return on asset and return on equity, whereas the z-score measures financial stability. The study uses the panel-corrected error regression technique for estimation. Findings There is evidence that corruption disclosure reduces the financial stability of firms. Disclosures on corruption analysis and corruption training are the main factors driving the reduction in financial stability. The effect on profitability is not significant except in the case of disclosure on corruption response, which also reduces profitability. There is strong statistical evidence to suggest that profitability and financial stability of extractive firms converge. This suggests that less-performing firms catch up with high performers. Research limitations/implications The study has relevant implications for practitioners, policymakers and the academic community. The study uses data that is skewed towards large extractive firms. Originality/value This study is premier in exploring the effect of anti-corruption disclosure on performance metrics among extractive firms in Africa. It is also unique in providing a test of both beta and sigma convergence of performance among the firms.

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“…On the other hand, corruption undermines economic activities and contributes to income inequality, poverty, underdevelopment, and other forms of socio‐economic instability. This is known as “ sands the wheels ” hypothesis (see, Cooray & Schneider, 2018; Dutta & Sobel, 2016; Nur‐tegin & Jakee, 2020; Okpara, 2011; Yakubu, 2019). Moreover, corruption has been reported as the second most problematic factor for doing business in SSA countries.…”

Section: Brief Review Of Literature On Ownership Structure Corruption and Firm Investmentmentioning

confidence: 99%

Ownership structure, corruption, and capital investment: Evidence from firms in selected Sub‐Saharan African countries

Okafor

Ede

Chijoke‐Mgbame

et al. 2021

Thunderbird Intl Bus Rev

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In this study, we investigate the relationship between ownership structure, corruption, and capital investments in firms operating in a selected sample of Sub‐Saharan Africa (SSA) countries. Using a sample of an unbalanced panel of firms over different time periods that ranged from 2003 to 2016, and estimating with the fixed effects technique, we find that foreign ownership and bribery payments have positive and negative effects, respectively, on the capital investment of firms. Furthermore, the marginal effects analysis reveals that the effects of ownership structure and bribery payments differ significantly across our selected sample of countries and across different firm sizes. Policy implications were deduced from the findings.

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Does corruption grease or sand the wheels of development? New results based on disaggregated data

Cited by 46 publications

References 41 publications

Corruption and its diverse effect on credit risk: global evidence

Corruption and its diverse effect on credit risk: global evidence

Anti-corruption disclosure as a necessary evil: impact on profitability and stability of extractive firms in Africa

Ownership structure, corruption, and capital investment: Evidence from firms in selected Sub‐Saharan African countries

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