Abstract

This paper explores the impact of corruption on both the banking sector and economic growth; we determine the impact using aggregate data from the World Bank covering 120 countries over the period 2004–2017. The results of 3SLS regressions show that the relationship between corruption and the ratio of nonperforming loans was positive, thus deteriorating the soundness of the banking system. In this study, we also find evidence that banking system is a channel that transfers the impact of corruption on economic growth: Corruption leads to higher levels of nonperforming loans in the banking sector; as a result, it decreases economic growth. The findings survive a battery of robustness tests, including alternative corruption measurement and System Generalized Method of Moments regression for dynamic models with an interaction term.

Details

Title
Corruption, nonperforming loans, and economic growth: International evidence
Author
Tran Hung Son 1 ; Nguyen Thanh Liem 1 ; Nguyen, Vinh Khuong 1 

1  University of Economics and Law, Ho Chi Minh City, Vietnam; Vietnam National University, Ho Chi Minh City, Vietnam 
Publication year
2020
Publication date
Jan 2020
Publisher
Taylor & Francis Ltd.
e-ISSN
23311975
Source type
Scholarly Journal
Language of publication
English
DOI
https://doi.org/10.1080/23311975.2020.1735691
ProQuest document ID
2485461634
Copyright
© 2020 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. This work is licensed under the Creative Commons Attribution License http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.