Regulation and Corporate Corruption: New Evidence from the Telecom Sector
Forthcoming. Journal of Comparative Economics
45 Pages Posted: 26 Nov 2010 Last revised: 26 Jul 2012
Date Written: November 24, 2011
This paper examines how government regulation in developing countries affects the form of corruption between business customers and service providers in the telecom sector. We match the World Bank enterprise-level data on bribes with a unique cross-country telecom regulation dataset collected by Wallsten et al. (2004), finding that (1) strong regulatory substance (the content of regulation) and regulatory governance reduce corruption; (2) competition and privatization reduces corruption; (3) the effects of regulatory substance on corruption control are stronger in countries with state-owned or partially state-owned telecoms, greater competition, and higher telecommunication fees; and (4) bureaucratic quality exert substitution effects to regulatory substance in deterring corruption. Overall, our results suggest that regulatory strategies that reduce information asymmetry and increase accountability tend to reduce illegal side-payments for connections.
Keywords: Telecommunications, Regulation, Corruption
JEL Classification: K4, L5, L9
Suggested Citation: Suggested Citation