BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 18/2008:
How corruption affects bank lending in Russia
Laurent Weill ()
Abstract: The aim of this study is to investigate the impact of
corruption on bank lending in Russia. This issue is of major interest in
order to understand the causes of financial underdevelopment and the
effects of corruption in Russia. We use regional measures of corruption and
bank-level data to perform this investigation. Our main estimations show
that corruption hampers bank lending in Russia. We investigate whether this
negative role of corruption is influenced by the degree of bank risk
aversion, but find no effect. The detrimental effect of corruption is only
observed for loans to households and firms, in opposition to loans to
government. Additional controls confirm the detrimental impact of
corruption on bank lending. Therefore, our results provide motivations to
fight corruption to favor bank lending in Russia.
Keywords: corruption; bank; Russia; financial development; economic transition; (follow links to similar papers)
JEL-Codes: G20; K40; P20; (follow links to similar papers)
33 pages, November 21, 2008
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