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Title:The political economy of corruption and the role of financial institutions PDF Logo
Authors:Boerner, Kira
Hainz, Christa
Issue Date:2004
Series/Report no.:CESifo working papers 1293
Abstract: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 offcials 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.
Subjects:corruption
financial markets
institutions
development
voting
JEL:O17
D72
D73
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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