Bank ownership structure, lending corruption and the regulatory environment

Thierno Barry, Laetitia Lepetit, Frank Strobel

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16 Citations (Scopus)
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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.
Original languageEnglish
Pages (from-to)732–751
Number of pages20
JournalJournal of Comparative Economics
Volume44
Issue number3
Early online date29 Aug 2015
DOIs
Publication statusPublished - Aug 2016

Keywords

  • bank lending
  • corruption
  • ownership structure
  • regulatory environment
  • economic development

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