Bank ownership structure, lending corruption and the regulatory environment

Thierno Barry, Laetitia Lepetit and Frank Strobel

Journal of Comparative Economics, 2016, vol. 44, issue 3, 732-751

Abstract: We empirically examine whether bank lending corruption is influenced by the ownership structure of banks, a country’s regulatory environment and its level of economic development. We find that corruption in lending is higher when state-owned banks or family-owned banks provide a higher proportion of credit to the economy, in both developed and developing countries. A stronger regulatory environment, either through a stronger supervisory regime or a higher quality of external audits, helps to curtail bank lending corruption if induced by family-controlled ownership, but not if induced by state-controlled ownership. We further find that controlled-ownership of banks by other banks contributes to reduce corruption in lending; the same applies to widely-held ownership of banks, but only for developed countries.

Keywords: Bank lending; Corruption; Ownership structure; Regulatory environment; Economic development (search for similar items in EconPapers)
JEL-codes: D73 G21 G28 O16 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:44:y:2016:i:3:p:732-751

DOI: 10.1016/j.jce.2015.08.003

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