Effects of Corruption on Efficiency of the European Airports

CREATE working paper serie 2015-1

31 Pages Posted: 1 Dec 2018

See all articles by L aingo M. Randrianarisoa

L aingo M. Randrianarisoa

Laval University, Faculté des Sciences Sociales, Département d'Économique

Denis Bolduc

Université Laval - Département d'Économique

Yap Yin Choo

Nanzan University

Tae-Hoon Oum

University of British Columbia (UBC) - Sauder School of Business

Jia Yan

Washington State University

Date Written: February 1, 2015

Abstract

The effect of corruption on airport productive efficiency is analyzed using an unbalanced panel data of major European airports from 2003 to 2009. We first compute the residual (or net) variable factor productivity using the multilateral index number method and then apply robust cluster random effects model in order to evaluate the importance of corruption. We find strong evidence that corruption has negative impacts on airport operating efficiency; and the effects depend on the ownership form of the airport. The results suggest that airports under mixed public-private ownership with private majority achieve lower levels of efficiency when located in more corrupt countries. They even operate less efficiently than fully and/or majority government owned airports in high corruption environment. We control for economic regulation, competition level and other airportsí characteristics. Our empirical results survive several robustness checks including different control variables, three alternative corruption measures: International Country Risk Guide (ICRG) corruption index, Corruption Perception Index (CPI) and Control of Corruption Index (CCI). The empirical findings have important policy implications for management and ownership structuring of airports operating in countries that suffer from higher levels of corruption.

Keywords: Corruption Effect, European Airport Operating Efficiency, Residual (or Net) Variable Factor Productivity, Ownership Form, Random Effects Model

JEL Classification: L93, R40, H00

Suggested Citation

M. Randrianarisoa, L aingo and Bolduc, Denis and Choo, Yap Yin and Oum, Tae-Hoon and Yan, Jia, Effects of Corruption on Efficiency of the European Airports (February 1, 2015). CREATE working paper serie 2015-1. Available at SSRN: https://ssrn.com/abstract=3265410 or http://dx.doi.org/10.2139/ssrn.3265410

L aingo M. Randrianarisoa (Contact Author)

Laval University, Faculté des Sciences Sociales, Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4
Canada

Denis Bolduc

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

Yap Yin Choo

Nanzan University ( email )

18 Yamazato-cho
Showa-ku
Nagoya 466
United States

Tae-Hoon Oum

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Jia Yan

Washington State University ( email )

P.O. Box 646210
Hulbert Hall 101
Pullman, WA 99164-6210
United States

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