The Political Economy of Corruption and the Role of Financial Institutions

Kira Börner and Christa Hainz
Authors registered in the RePEc Author Service: Kira Boerner

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: In transition and developing countries, we observe rather high levels of corruption even if they have democratic political systems. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. Our model is based on the fact that corrupt officials have to pay an entry fee to get lucrative positions. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more voters become part of the corrupt system. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures.

Keywords: Corruption; Financial Markets; Institutions; Development; Voting (search for similar items in EconPapers)
JEL-codes: D72 D73 O17 (search for similar items in EconPapers)
Date: 2004-08
New Economics Papers: this item is included in nep-dev, nep-fin, nep-mfd, nep-pol and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://epub.ub.uni-muenchen.de/411/1/CorruptionBoernerHainz.pdf (application/pdf)

Related works:
Working Paper: The Political Economy of Corruption and the Role of Financial Institutions (2006)
Working Paper: The Political Economy of Corruption and the Role of Financial Institutions (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:411

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