Financial Reforms and Corruption: Which Dimensions Matter?

International Review of Finance, 2018, DOI/10.1111/irfi.12210

16 Pages Posted: 12 Oct 2018

Date Written: February 2018

Abstract

This paper investigates the effects of reforms in different dimensions of the financial sector on corruption in a panel of 82 countries. It finds that several, but not all, of the policies targeted toward liberalizing financial sector reduce corruption. Specifically, entry barriers, directed credit, securities market development, and the extent of banking supervision are significantly negatively associated with corruption. The effects of reforms in different dimensions of the financial sector also depend on the quality of the governance (bad versus good governance) and whether the country is an advanced or a non-advanced economy. Finally, a stronger democracy and better law and order are found to be associated with lower corruption.

Keywords: Financial Reforms, Liberalization, Corruption, Law and Order, Democracy

JEL Classification: D73, G28, K42, O16

Suggested Citation

Jha, Chandan Kumar, Financial Reforms and Corruption: Which Dimensions Matter? (February 2018). International Review of Finance, 2018, DOI/10.1111/irfi.12210, Available at SSRN: https://ssrn.com/abstract=3252606

Chandan Kumar Jha (Contact Author)

Le Moyne College ( email )

Syracuse, NY 13214
United States

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