How Bribery Distorts Firm Growth [electronic resource] : Differences by Firm Attributes / Murat Seker
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TextPublication details: Washington, D.C., The World Bank, 2012Description: 1 online resource (42 p.)Subject(s): Access to Finance | Bribery | Corruption | Corruption & Anticorruption Law | E-Business | Finance and Financial Sector Development | Firm growth | Microfinance | Private Sector Development | Public Sector Corruption & Anticorruption Measures | Latin America and Caribbean RegionAdditional physical formats: Murat Seker.: How Bribery Distorts Firm Growth.Online resources: Click here to access online 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.
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.
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