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Causes of corruption in European countries: history, law, and political stability

Ronald MacDonald () and Muhammad Majeed ()

Working Papers from Business School - Economics, University of Glasgow

Abstract: This study asks why corruption is increasing in European countries and what are the most important factors that explain such corruption? Although corruption scandals, speeches and reports indicate that corruption persists in European countries no one has tested the causes of corruption in European countries and this study is, to the best of our knowledge, the first to empirically examine the causes of corruption for European countries. Cross-country data for European countries is used to examine the role of legal influences, historical factors and the effect of political stability on corruption. Five key findings are: (1) the effects of the legal strengths on the incidence of corruption are significant with a negative sign - a one-standard-deviation increase in the legal strengths is associated with a decrease in corruption of 0.26 points, 26% of a standard deviation in the corruption index; (2) political stability is a significant determinant of corruption; (3) the interactive effects of history and law are important in reducing corruption levels; (4) the size of government matters in affecting corruption levels; (5) finally, this study shows that an interdisciplinary approach is the most appropriate way to explain corruption.

Keywords: History; Law; Political Instability; Corruption; European Countries (search for similar items in EconPapers)
JEL-codes: K0 O52 P37 C33 H0 (search for similar items in EconPapers)
Date: 2011-12
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Handle: RePEc:gla:glaewp:2011_24