Corruption and bank risk-taking: Evidence from emerging economies

Minghua Chen, Bang Jeon, Rui Wang and Ji Wu

Emerging Markets Review, 2015, vol. 24, issue C, 122-148

Abstract: This paper addresses the impact of corruption on banks' risk-taking behavior, using bank-level data from more than 1200 banks in 35 emerging economies during the period 2000–2012. We find consistent evidence that higher levels of corruption increase the risk-taking behavior of banks, in favor of the “sand the wheel” view in the corruption-development nexus. In addition, we examine the indirect effects of corruption on bank risks, and find evidence that the impact of monetary policy on banks' risk-taking behavior is more pronounced with the increasing severity of corruption.

Keywords: Corruption; Bank risk-taking; Risk-taking channel; Emerging economies (search for similar items in EconPapers)
JEL-codes: E52 G21 O16 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:24:y:2015:i:c:p:122-148

DOI: 10.1016/j.ememar.2015.05.009

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