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The effect of corruption on bank profitability

The effect of corruption on bank profitability PurposeThis paper aims to investigate the effect of corruption on bank profitability.Design/methodology/approachThe paper adopts panel cointegration, differenced generalized method of moments (GMM) and system GMM.FindingsThe empirical results show that corruption is important in explaining the profitability of commercial banks in both developed and emerging countries. While it has mixed effects in emerging countries, only positive effect is validated in developed countries.Research limitations/implicationsMacroeconomic measures of corruption are adopted in the study.Originality/valueThe paper contributes to the literature on corruption and bank profitability by reporting evidence from both developed and developing countries. Existing papers have only concentrated on developing countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Crime Emerald Publishing

The effect of corruption on bank profitability

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1359-0790
DOI
10.1108/JFC-09-2018-0102
Publisher site
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Abstract

PurposeThis paper aims to investigate the effect of corruption on bank profitability.Design/methodology/approachThe paper adopts panel cointegration, differenced generalized method of moments (GMM) and system GMM.FindingsThe empirical results show that corruption is important in explaining the profitability of commercial banks in both developed and emerging countries. While it has mixed effects in emerging countries, only positive effect is validated in developed countries.Research limitations/implicationsMacroeconomic measures of corruption are adopted in the study.Originality/valueThe paper contributes to the literature on corruption and bank profitability by reporting evidence from both developed and developing countries. Existing papers have only concentrated on developing countries.

Journal

Journal of Financial Crime – Emerald Publishing

Published: Jul 2, 2019

References

  • Impact of corruption on bank profitability in Nigeria
  • Determinants of bank profitability before, during, and after the financial crisis
  • Corruption in bank lending: the role of timely loan loss recognition
  • Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations
  • Another look at the instrumental-variable estimation of error components models
  • Impact of corruption on bank profitability: an analysis of Islamic banks