Financial Payment Instruments and Corruption

Posted: 22 Mar 2016 Last revised: 19 Apr 2016

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Aaron N. Mehrotra

Bank for International Settlements (BIS)

Date Written: 2012

Abstract

Using recent pooled data from a number of developed nations, this research uniquely examines whether the composition of payment instruments has a bearing on the prevalence of corruption in a country. Our results suggest that the choice of instruments matters. Paper credit transfer transactions consistently add to corrupt activities, while credit card transactions check such endeavours. Cheques mostly increase corruption, the results with respect to nonpaper credit transfers are mixed, while direct debits fail to show significant effects on corruption. These findings hold using alternate corruption measures and when allowance is made for endogeneity of payment instruments.

Suggested Citation

Goel, Rajeev K. and Mehrotra, Aaron N., Financial Payment Instruments and Corruption (2012). Applied Financial Economics, Vol. 22, No. 11, pp.877-886, 2012. Available at SSRN: https://ssrn.com/abstract=2752651

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Aaron N. Mehrotra

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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