The Economic Impact of China's Anti-Corruption Campaign

85 Pages Posted: 5 Jul 2017 Last revised: 4 Sep 2020

See all articles by Nan Chen

Nan Chen

National University of Singapore (NUS) - School of Computing

Zemin (Zachary) Zhong

University of Toronto, Rotman School of Management

Date Written: September 4, 2020

Abstract

We study how China's recent anti-corruption campaign affects local economies. Our identification is based on a staggered difference-in-differences design and county-month level variations in inspection visits. We find that inspection visits decrease business entries by 0.9% in registered capital, and the effect is concentrated on sectors susceptible to corruption, such as construction and infrastructure. Lands sold by local governments become 3.9% more expensive, mostly driven by non-market transactions. Car consumption decreases by 3.4%, which is homogeneous across price tiers. All effects persist for at least 12 months. The heterogeneous effects across different regions suggest different levels and forms of corruption.

Keywords: Corruption, Political Economy, China

JEL Classification: D73, P16, H70

Suggested Citation

Chen, Nan and Zhong, Zemin (Zachary), The Economic Impact of China's Anti-Corruption Campaign (September 4, 2020). Available at SSRN: https://ssrn.com/abstract=2996009 or http://dx.doi.org/10.2139/ssrn.2996009

Nan Chen

National University of Singapore (NUS) - School of Computing ( email )

13 Computing Drive
Computing 1
Singapore 117543, 117417
Singapore

HOME PAGE: http://sites.google.com/site/ttnanchen

Zemin (Zachary) Zhong (Contact Author)

University of Toronto, Rotman School of Management ( email )

105 St. George St.
Rotman School of Management
Toronto, Ontario M5S 3E6
Canada

HOME PAGE: http://zacharyzhong.com

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