Is corruption bad for economic growth? Evidence from Asia-Pacific countries

This study utilizes the bootstrap panel Granger causality approach, which incorporates both cross-sectional dependence and heterogeneity across countries, to investigate whether corruption negatively impacts economic growth in thirteen Asia-Pacific countries over the 1997–2013 period. The empirical results show that there is a significantly positive causality running from corruption to economic growth in South Korea, a significantly positive causality running from economic growth to corruption in China and no significant causality between corruption and economic growth for the remaining countries. According to the empirical results, we do not support the common perception that corruption is bad for economic growth for all thirteen Asia-Pacific. On the contrary, results of this study suggest that the “grease the wheels” hypothesis is supported for South Korea. Additionally, results of this study indicate that for most Asia-Pacific countries, policy makers’ use of anti-corruption policies to promote a country's economic development may not be effective. Finally, results of this study also suggest that for China, increase in economic growth leads to an increase in corruption.     

The effect of corruption on entrepreneurship in the presence of weak regulatory quality: Evidence from developing countries

Efforts to improve currently low entrepreneurship in developing countries could be necessary but likely hampered by the high corruption. With poor regulatory quality in most developing countries, the effect of corruption on entrepreneurship could be unique. By using the Generalized Method of Moments (GMM) estimator, utilizing 48 developing countries as the sample for the period from 2008 to 2016, this study finds that there is a conditional effect of corruption on entrepreneurship, implying that poor regulatory quality has forced and opened up the door for individuals to offer bribes in order to start a new business. Nonetheless, as corruption could add to the high cost of business start-ups, to enhance entrepreneurship, policymakers need to give priority to improving regulatory quality and, subsequently, force corruption to fade away.     

The effect of corruption on environmental performance: Does spatial dependence play a role?

Different from previous studies that mainly focused on conventional estimation techniques, this paper explores the role of spatial dependence in the effect of corruption on environmental performance by using a spatial panel data model. Our results show that the direct effects, indirect effects and total effects of corruption on environmental performance are negative and highly significant, implying that corruption is detrimental to environmental performance. More importantly, we find that there is a significant spatial spillover effect between corruption and environmental performance, namely being surrounded by highly corrupt countries has a negative impact on the local country’s environmental performance. Our results also suggest that a larger population density will worsen the environment, while urbanization has a significant positive impact. These results provide some important implications for policymakers seeking to improve their environmental performance.     

Growth and welfare effects of corruption penalties

This paper analyses the steady-state effect of business corruption penalties on economic growth, corruption and welfare. To that end, the baseline horizontal R&D growth model is extended to include corruption, which is generated in intermediate goods production. Taxation on corruption depresses profits in production but also wages, leading to labor being reallocated from production to R&D, and, therefore, to a higher economic growth rate. Moreover, it also reduces corruption and increases welfare if preferences towards a corruption-free environment are strong enough. The results are in line with the data observed for 15 EU countries.     

招行马蔚华首发公务卡 金融创新 遏制腐败

“要把一个好的战略监图有效地转化为全行的经营管理实践,关键在于总行,在于总行的管理能力。我们必须在全行培养一种强有力的执行能力,形成有招商银行自身特色的执行文化”。招行推出公务卡,再一次印证了马蔚华说的话。     

The effects of oil price shocks on inflation in the G7 countries

This study examines the effects of three types of oil price shocks on inflation in the G7 countries with a new method of isolating oil price shocks. Based on monthly data from January 1997 to January 2019, we find that each oil price shock has the largest effect on U.S. inflation among the G7 countries and each country’s response to oil price shocks is different. Moreover, a rolling-window analysis shows that supply shocks, demand shocks and risk shocks have dynamic effects on inflation. The effect of supply shocks on inflation is strong before the financial crisis, but weakens during the crisis. However, the effect of demand shocks increases sharply in this time. The effect of risk shocks mainly occurs during the financial crisis and the European debt crisis. In addition, this study uses two ways to verify the robustness of the results. Our empirical results have important implications for policymakers and manufacturers, since the results provide a good explanation for the response of inflation in the G7 countries to the oil price shocks from different sources.     

Does easy availability of cash affect corruption? Evidence from a panel of countries

Using annual panel data of 54 countries for the period 2005-14, we examine whether currency in circulation, both aggregate and in large denominations, affects the level of corruption in a country. Standard panel data models suggest that the ratios of (i) aggregate currency in circulation to M1 and, (ii) large denomination banknotes to M1 are both statistically significant determinants of corruption. Tests for reverse causality within a panel Granger framework reveal a uni-directional causality of corruption with the first variable, but a bi-directional one with the second. These findings suggest that a limitation in the supply of high-denomination banknotes, inter alia, could be a tool to fight corruption, and bring to the fore the important role of payment systems, extending an earlier study by Goel and Mehrotra (2012). The results also highlight that, along with the government, the central bank of an economy can also play an important role in the fight against corruption.     

The effect of corruption on the manufacturing sector in India

This article investigates the effects of corruption on the performance of the manufacturing sector at the state level in India. We employ conviction rates of corruption-related cases as an instrument for the extent of corruption, address the underreporting problem, and examine the impact of corruption on the gross value added per worker, total factor productivity, and capital-labor ratio of three-digit manufacturing industries in each state. Our estimation results show that corruption reduces gross value added per worker and total factor productivity. Furthermore, we show that the adverse effects of corruption are more salient in industries with smaller average firm size.     

The effect of nominal exchange rate volatility on real macroeconomic performance in the CEE countries

This paper analyzes the relation between nominal exchange rate volatility and several macroeconomic variables, namely real output growth, excess credit, foreign direct investment (FDI) and the current account balance, in the Central and Eastern European EU member states. Using panel estimations for the period between 1995 and 2008, we find that lower exchange rate volatility is associated with higher growth, higher stocks of FDI, higher current account deficits, and higher excess credit. At the same time, the recent evidence seems to suggest that following the global financial crisis, “hard peg” countries may have experienced a more severe adjustment process than “floaters”. The results are economically and statistically significant and robust.     

The impact of state power on economic growth rates in OECD countries

Inspired by public choice theories — in particular the work of Bernholz, Downs, Olson and Tullock — two propositions are advanced. First, the older a democracy is, the slower its growth rates should become. Second, the higher the social security spending is, the slower economic growth rates should become. Pooled regression analysis and the growth experience of 19 OECD nations between 1960 and 1985 allow for an empirical test. Unfortunately, results very much depend on a technical issue, i.e., on the inclusion or exclusion of period and country dummy variables. It is argued that inclusion of the dummies is misleading. If you accept these arguments, then the propositions linking age of democracy or social security transfers on the one hand and lower economic growth rates on the other hand are confirmed.     

Employee stock ownership and financial performance in European countries: The moderating effects of uncertainty avoidance and social trust

This study investigates how the effect of employee stock ownership on financial performance may hinge on the diverse cultural and societal contexts of European countries. Based on agency and national culture theories, we hypothesize that the positive relationship between employee stock ownership and return on assets (ROA) is stronger in those nations with lower uncertainty avoidance and higher social trust. Using a multisource, time‐lagged, large‐scale dataset of 1,741 firms from 21 countries in Europe, our multilevel, random coefficient modeling analysis found evidence for these hypotheses, suggesting that uncertainty avoidance and social trust serve as important contextual cues in predicting the linkage between employee stock ownership and financial performance. Our supplemental analysis with distinction between the managerial and nonmanagerial employee stock ownership further indicates managerial employee stock ownership has a direct positive effect on ROA. Although nonmanagerial employee stock ownership had a nonsignificant association with ROA, the relationship was positive and significant when uncertainty avoidance was low and social trust was high. This research contributes to the existing literature by illuminating some of the contextual influences altering the effectiveness of employee stock ownership. Our findings also offer practical suggestions for effectively using employee stock ownership.     

The pioneer evidence of contagious corruption

Quality & Quantity - We investigate the corruption contagion phenomenon using both the spatial econometric model as well as the dynamic panel GMM approach, employing data on 109 countries from...     

The effects of cultural intelligence on expatriate performance: the moderating effects of international experience

In recent years, cultural intelligence (CQ, or the ability that an expatriate has to adapt across cultures), cultural effectiveness (the ability to interact and communicate with host nationals), and cultural adjustment are regarded as three of the most important factors for expatriate performance. However, the interrelationships between these variables have largely been ignored. Moreover, the role of previous international experiences on the above interrelationships has also not been determined. This study focuses on how CQ and expatriates' experience affects cultural adjustment, cultural effectiveness, and expatriates' performance. The results reveal that the positive effect of CQ needs to be mediated by cultural adjustment and cultural effectiveness before affecting expatriate performance. Furthermore, expatriates' prior international working and travel experiences moderate the effects of CQ on cultural adjustment and cultural effectiveness.     

The effect of banking market structure on the volatility of growth of manufacturing sectors in developing countries

I explore the effect of banking concentration and banking competition on the volatility of the growth of value added of manufacturing sectors in the developing countries. In this paper, I bring together two strands of literature, one that discusses the effect of financial intermediation on volatility of growth and another one that discusses the effect of banking concentration and competition on credit access. Following the industrial organization literature, I look at the effect of banking competition and banking concentration on the volatility of manufacturing sectors separately. I find that banking concentration has a dampening effect on the volatility of growth of the industries. On the other hand, I find that as banking competition increases, the volatility of the growth of industries increases, also.     

The effects of handling outliers on the performance of bankruptcy prediction models

Ratio type financial indicators are the most popular explanatory variables in bankruptcy prediction models. These measures often exhibit heavily skewed distribution because of the presence of outliers. In the absence of clear definition of outliers, ad hoc approaches can be found in the literature for identifying and handling extreme values. However, it is not clear how these different approaches can affect the predictive power of models. There seems to be consensus in the literature on the necessity of handling outliers, at the same time, it is not clear how to define extreme values to be handled in order to maximize the predictive power of models. There are two possible ways to reduce the bias originating from outliers: omission and winsorization. Since the first approach has been examined previously in the literature, we turn our attention to the latter. We applied the most popular classification methodologies in this field: discriminant analysis, logistic regression, decision trees (CHAID and CART) and neural networks (multilayer perceptron). We assessed the predictive power of models in the framework of tenfold stratified crossvalidation and area under the ROC curve. We analyzed the effect of winsorization at 1, 3 and 5% and at 2 and 3 standard deviations, furthermore we discretized the range of each variable by the CHAID method and used the ordinal measures so obtained instead of the original financial ratios. We found that this latter data preprocessing approach is the most effective in the case of our dataset. In order to check the robustness of our results, we carried out the same empirical research on the publicly available Polish bankruptcy dataset from the UCI Machine Learning Repository. We obtained very similar results on both datasets, which indicates that the CHAID-based categorization of financial ratios is an effective way of handling outliers with respect to the predictive performance of bankruptcy prediction models.     

The impact of ambidexterity on enterprise performance: Evidence from 15 countries and 14 sectors

The assumption made by research on ambidexterity is that enterprises operating ambidextrously perform better as a result. Similarly, the beneficial effects of ambidexterity are often assumed to be invariant across different contexts, such as sector. However, as is widely acknowledged in the literature, there is a paucity of evidence on which to base these assumptions. To address this issue, in this note we examine evidence from the Community Innovation Survey covering 15 countries and 45,113 enterprises. The paper shows a strong, positive effect on growth in sales turnover from ambidexterity in the manufacturing and the scientific and technical services sectors.     

The effect of corruption on firm investment in the presence of missing data

Greater availability of firm-level surveys in developing countries has enabled researchers to consider the effects of corruption at the firm level. One often overlooked issue with these surveys is nonresponse by firms. We examine the impact of corruption on firm investment and demonstrate that failing to account for nonresponse leads to an overestimation of the impact of corruption.     

The effects of ownership structure and diversification strategy on performance

This study developed and tested a model that attempts to describe the influence of ownership structure and diversification strategy on performance. Results based on data from a crosssectional set of 228 Fortune 500 firms suggested that ownership structure and diversification explain differences in performance between firms.     

The macroeconomic implications of corruption in the choice to educate

Educational corruption is a worldwide phenomenon, yet its macroeconomic implications are largely unknown. We formulate a fixed-price bribe model to explore the impact educational corruption may have on growth, income inequality and other factors. When using aggregate ability as our measure of growth, our model produces a v-shaped relationship between growth and corruption, suggesting that corruption is detrimental to growth at lower levels of bribery, but growth enhancing at greater levels. A cross-section of countries is used to empirically test our model and provides qualitative support for our modeling structure. Distributional analysis reveals that an increased prevalence of corruption leads to greater income inequality and reduces the ability of education to signal quality.     

The management of sustainable development: A longitudinal analysis of the effects of environmental performance on economic performance

The literature on sustainable development has largely focused on investigating the relationship between companies' environmental and economic performance. However, many aspects remain unexplored, and empirical studies are far from reaching a consensus due to the heterogeneity of the environmental and economic measures and methodologies used. This study contributes to the literature on sustainable development by considering a panel of 998 US companies observed over the period 2003–2017 using both traditional panel data methods and an unconditional quantile regression technique. The empirical evidence confirms that environmental performance, measured in terms of environmental orientation and environmental innovation, positively affects returns on assets and equity. It also demonstrates that these returns change across quantiles and depend on the capacity of green companies to generate the same streams of income as nongreen companies but with less capital. In other words, green firms tend to be more efficient in generating future wealth.