Quantitative relationship between corruption and development of the Tunisian stock market

Abstract

The aim of this article is to seek especially the impact of corruption on the bond and stock market development. For the methodology/approach, the authors analyze a sample of 20 listed Tunisian firms from the Stock Exchange and Financial market, covering the period from 2006 to 2016 by using pooling cross section techniques. The results find a significant positive effect of the level of corruption on the stock market index and the logarithm of capitalization. This is consistent with the view that corruption accelerates the economic growth by speeding up transactions and allowing private companies to overcome the inefficiencies imposed by the government. Furthermore, the results find a negative association is not significant with the dependent variable of traded value as a percentage of the number of listed companies.

Corruption, Terrorism and the Stock Market: The Evidence from Iraq

“…The regression model shows that the corruption perception index coefficient values are significant at (5%), this finding seems to be consistent with some prior studies which are expected and would satisfy the theoretical viewpoint that high corruption has a negative effect on the stock market due to the investors who are not interested to invest in a corrupted state (Ming et al, 2018;Ojeka et al, 2019). Nevertheless, the study results about corruption are not similar to some other past studies which reveal that the level of corruption is precipitated and speeds up the business and economic growth (Aljazaerli et al, 2016;Shahbaz et al, 2003;Missaoui et al, 2018). Hence the study cannot reject the first hypothesis.…”

“…On contrary, numerous studies support the viewpoint of precipitation of corruption, speeding the business and economic growth (Missaoui et al, 2018). A study clarified a significant positive influence of corruption level on the stock market for a sample of (20) listed companies for the period (2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016) (Aljazaerli et al, 2016;Missaoui et al, 2018). In addition, another study focused on Gulf Cooperation Council (GCC) as a special case of relatively high level of corruption for the period (2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011), as the findings show a positive influence of corruption on stock market development, which is consistent with the view that corruption can speed up the progress of transactions and stimulate the economy (Aljazaerli et al, 2016).…”

“…On contrary, numerous studies support the viewpoint of precipitation of corruption, speeding the business and economic growth (Missaoui et al, 2018). A study clarified a significant positive influence of corruption level on the stock market for a sample of (20) listed companies for the period (2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016) (Aljazaerli et al, 2016;Missaoui et al, 2018).…”

“…A lot of studies have explored the influence of corruption on stock markets and have received a big attention (Missaoui et al, 2018), in spite of the fact that the studies are still ongoing and persistent in the literature to be attributed to the fact that this relationship remains inconsistent and ambiguous (Aljazaerli et al, 2016;Ojeka et al, 2019).…”

Selected economic factors of the quality of business environment

“…They also found that extreme bureaucracy and complex bank loan paperwork drives entrepreneurs towards providing bribes and corrupted activities which is creating barriers for easy access to bank finance. The same situation is observed at the financial market as well (Missaoui et al, 2018).That's why there is a need in some measures against possible acts of corruption, for example, implementation of the Code of Ethics for SMEs (Antoniuk et al, 2018).…”