Does Greater Regulatory Burden Lead to More Corruption? Evidence Using Firm-Level Survey Data for Developing Countries
Regulation often creates opportunities for public officials to extract bribes. If this is true, deregulation offers a simple way to combat corruption. However, empirical evidence on the corruption and regulation nexus is limited. Further, the corru...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/296861582037503905/Does-Greater-Regulatory-Burden-Lead-to-More-Corruption-Evidence-Using-Firm-Level-Survey-Data-for-Developing-Countries http://hdl.handle.net/10986/33354 |
| Summary: | Regulation often creates opportunities
for public officials to extract bribes. If this is true,
deregulation offers a simple way to combat corruption.
However, empirical evidence on the corruption and regulation
nexus is limited. Further, the corruption indices used are
based on experts' opinions, which may suffer from
perception bias. The present paper attempts to address these
shortcomings using firm-level survey data for 131 mostly
developing countries on the experiences of the firms with
bribery and regulatory burden. Exploiting within-country and
industry-level variation in regulatory burden, the analysis
finds a large, positive effect of regulatory burden on
corruption. For the baseline results, the bribery rate is
higher by about 0.03 percentage point for each percentage
point increase in the regulatory burden. The finding is
robust to several endogeneity checks. |
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