Corruption in The Banking Sector and Economic Growth in MENA Countries

Najah Souissi-Kachouri ()
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Najah Souissi-Kachouri: Université Tunis El Manar

No 1432, Working Papers from Economic Research Forum

Abstract: Our purpose in this article is to study the impact of corruption on the banking performance and on economic growth for a group of MENA countries during the period 2000-2016. Our work is done in two stages. First, we conduct an empirical study on this panel of countries using the static panel method and we show that the effect of corruption on the soundness of the banking sector is not linear and that from a certain threshold, corruption significantly affects the problem of impaired loans in the banking sector of these economies. In a second step, we estimate a model of economic growth. We apply the instrumental variable method for the same panel of countries and we show that the non-performing loans significantly affect the economic growth of these economies. Thus, in highly corrupt economies, the banking sector may be a channel for conveying the effects of corruption on economic growth.

Pages: 22
Date: 2020-12-20, Revised 2020-12-20
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Published by The Economic Research Forum (ERF)

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