Predicting Public Corruption with Neural Networks: An Analysis of Spanish Provinces

Social Indicators Research, Forthcoming

38 Pages Posted: 27 Nov 2017

See all articles by Félix J. López-Iturriaga

Félix J. López-Iturriaga

University of Valladolid - Department of Financial Economics and Accounting; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Iván Pastor-Sanz

University of Burgos

Date Written: November 22, 2017

Abstract

We contend that corruption must be detected as soon as possible so that corrective and preventive measures may be taken. Thus, we develop an early warning system based on a neural network approach, specifically self-organizing maps, to predict public corruption based on economic and political factors. Unlike previous research, which is based on the perception of corruption, we use data on actual cases of corruption. We apply the model to Spanish provinces in which actual cases of corruption were reported by the media or went to court between 2000 and 2012. We find that the taxation of real estate, economic growth, the increase in real estate prices, the growing number of deposit institutions and nonfinancial firms, and the same political party remaining in power for long periods seem to induce public corruption. Our model provides different profiles of corruption risk depending on the economic conditions of a region conditional on the timing of the prediction. Our model also provides different time frameworks to predict corruption up to three years before cases are detected.

Keywords: Corruption, Prediction, Early Warning System, Neural Networks, Self-Organizing Maps

JEL Classification: C45, D73

Suggested Citation

Lopez-Iturriaga, Felix Javier and Pastor-Sanz, Iván, Predicting Public Corruption with Neural Networks: An Analysis of Spanish Provinces (November 22, 2017). Social Indicators Research, Forthcoming . Available at SSRN: https://ssrn.com/abstract=3075828 or http://dx.doi.org/10.2139/ssrn.3075828

Felix Javier Lopez-Iturriaga

University of Valladolid - Department of Financial Economics and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

HOME PAGE: http://www2.eco.uva.es/flopez

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

Iván Pastor-Sanz (Contact Author)

University of Burgos ( email )

Hospital del Rey, s/n
Burgos, 09001
Spain

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