BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 4/2011:
Financial settlement modes and corruption: Evidence from developed nations
Aaron Mehrotra ()
and Rajeev K. Goel
Abstract: Using recent pooled data from several developed nations,
the paper uniquely examines whether the composition of payment instruments
has a bearing on the prevalence of corruption in a country. Our results
suggest that the choice of instruments matters. Paper credit transfer
transactions are consistently associated with corrupt activities, while
credit card transactions tend to reduce them. Cheques generally increase
corruption, the results with respect to nonpaper credit transfers are
mixed, while direct debits fail to show significant effects on corruption.
These findings hold for alternative corruption measures and when allowance
is made for endogeneity of payment instruments.
Keywords: corruption; cheques; credit card; cash; direct debit; payment instruments; (follow links to similar papers)
JEL-Codes: F30; G30; H30; K40; (follow links to similar papers)
22 pages, April 28, 2011
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