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Title:The Political Economy of Corruption and and the Role of Financial Institutions PDF Logo
Authors:Hainz, Christa
Boerner, Kira
Issue Date:2005
Series/Report no.:Proceedings of the German Development Economics Conference, Kiel 2005 / Verein für Socialpolitik, Research Committee Development Economics 6
Abstract:In transition and developing countries, we observe rather high levels of corruption even they have democratic political systems. This is surprising from a political economy perspective, as a majority of the people generally suffers from high corruption levels. Our model based on the fact that corrupt officials 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 more corruption as more voters are 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:D72
O17
D73
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2005 (Kiel)

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