How bribery distorts firm growth: differences by firm attributes

Murat Seker and Judy Yang

No 6046, Policy Research Working Paper Series from The World Bank

Abstract: How corruption affects economic performance has been studied for over a decade. Yet the lack of detailed firm-level data has limited research regarding who is carrying the real burden of corruption. This study shows that for firms in the Latin America and Caribbean region, bribery significantly distorts firm growth. Firms that pay bribes when conducting business transactions -- such as applying for permits, electricity, or water connections -- have 24 percent lower annual sales growth than firms that do not face such solicitations. Moreover, these distortions are more severe for low-revenue-generating and young firms. Using the instrumental variables method, the authors show that these results are robust to different specifications and the use of different sub-samples.

Keywords: Public Sector Corruption&Anticorruption Measures; E-Business; Microfinance; Corruption&Anticorruption Law; Access to Finance (search for similar items in EconPapers)
Date: 2012-04-01
New Economics Papers: this item is included in nep-ent
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Citations: View citations in EconPapers (8)

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