Corruption in bank lending to firms : cross-country micro evidence on the beneficial role of competition and information sharing

James BARTH, Chen LIN, Ping LIN, Frank M. SONG

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

129 Citations (Scopus)

Abstract

Building on the important study by Beck, Demirguc-Kunt, and Levine 2006. Bank supervision and corruption in lending. Journal of Monetary Economics 53, 2131-2163], we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus/registries on corruption in bank lending. Using the unique World Bank data set (WBES) covering more than 4,000 firms across 56 countries with information on credit bureaus/registries, assembled by Djankov, McLiesh, and Shleifer 2007. Private credit in 129 countries. Journal of Financial Economics 84, 299-329], and bank regulation data collected by Barth, Caprio, and Levine 2006. Rethinking Bank Regulation: Till Angels Govern. Cambridge University Press, New York] to measure bank competition and information sharing, we find strong evidence that both banking competition and information sharing reduce lending corruption, and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption. We also find that the ownership structure of firms and banks, legal environment, and firm competition all exert significant impacts on lending corruption.
Original languageEnglish
Pages (from-to)361-388
Number of pages28
JournalJournal of Financial Economics
Volume91
Issue number3
DOIs
Publication statusPublished - 28 Feb 2009

Fingerprint

Corruption
Information sharing
Bank lending
Lending
Credit
Registry
Bank regulation
World Bank
Legal environment
Monetary economics
Ownership structure
Banking competition
Bank competition
Bank supervision
Financial economics

Keywords

  • Bank lending
  • Competition
  • Corruption
  • Information sharing

Cite this

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title = "Corruption in bank lending to firms : cross-country micro evidence on the beneficial role of competition and information sharing",
abstract = "Building on the important study by Beck, Demirguc-Kunt, and Levine 2006. Bank supervision and corruption in lending. Journal of Monetary Economics 53, 2131-2163], we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus/registries on corruption in bank lending. Using the unique World Bank data set (WBES) covering more than 4,000 firms across 56 countries with information on credit bureaus/registries, assembled by Djankov, McLiesh, and Shleifer 2007. Private credit in 129 countries. Journal of Financial Economics 84, 299-329], and bank regulation data collected by Barth, Caprio, and Levine 2006. Rethinking Bank Regulation: Till Angels Govern. Cambridge University Press, New York] to measure bank competition and information sharing, we find strong evidence that both banking competition and information sharing reduce lending corruption, and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption. We also find that the ownership structure of firms and banks, legal environment, and firm competition all exert significant impacts on lending corruption.",
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Corruption in bank lending to firms : cross-country micro evidence on the beneficial role of competition and information sharing. / BARTH, James; LIN, Chen; LIN, Ping; SONG, Frank M.

In: Journal of Financial Economics, Vol. 91, No. 3, 28.02.2009, p. 361-388.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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PY - 2009/2/28

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N2 - Building on the important study by Beck, Demirguc-Kunt, and Levine 2006. Bank supervision and corruption in lending. Journal of Monetary Economics 53, 2131-2163], we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus/registries on corruption in bank lending. Using the unique World Bank data set (WBES) covering more than 4,000 firms across 56 countries with information on credit bureaus/registries, assembled by Djankov, McLiesh, and Shleifer 2007. Private credit in 129 countries. Journal of Financial Economics 84, 299-329], and bank regulation data collected by Barth, Caprio, and Levine 2006. Rethinking Bank Regulation: Till Angels Govern. Cambridge University Press, New York] to measure bank competition and information sharing, we find strong evidence that both banking competition and information sharing reduce lending corruption, and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption. We also find that the ownership structure of firms and banks, legal environment, and firm competition all exert significant impacts on lending corruption.

AB - Building on the important study by Beck, Demirguc-Kunt, and Levine 2006. Bank supervision and corruption in lending. Journal of Monetary Economics 53, 2131-2163], we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus/registries on corruption in bank lending. Using the unique World Bank data set (WBES) covering more than 4,000 firms across 56 countries with information on credit bureaus/registries, assembled by Djankov, McLiesh, and Shleifer 2007. Private credit in 129 countries. Journal of Financial Economics 84, 299-329], and bank regulation data collected by Barth, Caprio, and Levine 2006. Rethinking Bank Regulation: Till Angels Govern. Cambridge University Press, New York] to measure bank competition and information sharing, we find strong evidence that both banking competition and information sharing reduce lending corruption, and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption. We also find that the ownership structure of firms and banks, legal environment, and firm competition all exert significant impacts on lending corruption.

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