The moderating role of institutional and credit constraints on the nexus between bribery and policy consistency

ABSTRACT

This article is the first to examine whether bribery hurts or promotes policy consistency for firms confronting institutional and credit constraints by using World Bank Enterprise Surveys covering 104 developing countries from 2002 to 2006. By using the questionnaire that is only available in the 2002-2006 survey, policy consistency is measured by firms’ perception of the degree of consistency in officials’ interpretation of the law. Bribery reduces the consistency of policy implementation. The adverse impact of bribery on policy consistency is evident only in lower-income countries. Furthermore, these effects become more significant for firms facing institutional and credit constraints.

KEYWORDS:

• Bribery
• rent-seeking bribery
• greasing bribery
• policy consistency
• institutional constraints

JEL CLASSIFICATION:

• O12
• O17

Disclosure statement

No potential conflict of interest was reported by the authors.

Data availability statement

Data available on request due to privacy/ethical restrictions

Notes

1. The winsorize approach allowed us to deal with the issues caused by outliers by replacing the value smaller than 1^st percentile by the 1^st percentile, and the value higher than 99^th percentile by the 99^th percentile.

2. During the survey, firms were asked to show their perception of corruption prevalence in the country and the industry where they operate.

Additional information

Funding

This paper was support by National Economics University, 207 Giai Phong, Hanoi, Vietnam.