The Political Economy of Corruption and the Role of Financial Institutions

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2004-19

Classification and Topics

• Classification: Wirtschaft ; Bureaucracy; Administrative Processes in Public Organizations; Corruption ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: Corruption ; Financial Markets ; Institutions ; Development ; Voting

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Börner, Kira ; Hainz, Christa
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
• (where): München
• (when): 2004

Further information

• DOI: doi:10.5282/ubm/epub.411
• Handle: http://hdl.handle.net/10419/104142
• URN: urn:nbn:de:bvb:19-epub-411-6
• Last update: 10.03.2025, 11:42 AM CET