Does Corruption Hurt Employment Growth of Financially Constrained Firms More?

Amin, Mohammad ; Soh, Yew Chong

World Bank, Washington, DC

关键词: CORRUPTION;    ACCESS TO FINANCE;    EMPLOYMENT;    FIRM PERFORMANCE;    FINANCIAL CONSTRAINTS;   

DOI  :  10.1596/1813-9450-9286
RP-ID  :  WPS9286

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Payments of bribes and the expensesincurred on rent-seeking activities impose a significantfinancial burden on private firms, which is compounded whenthey do not have enough funds of their own or find it costlyto borrow externally. This paper hypothesizes that financialconstraints magnify the harmful effects of corruption. Itapplies this idea to the impact of corruption on employmentgrowth among private firms. Using firm-level survey data for109 countries, the analysis finds that corruption has a muchlarger negative impact on employment growth for firms thatare financially constrained compared with firms that are notfinancially constrained. For the baseline specification, aone standard deviation increase in the bribery rate bringsabout a decline in the annual growth rate of employment offinancially constrained firms that is 2.3 percent greaterthan that for firms that are not financially constrained.This is a large difference given that the mean employmentgrowth is about 5.1 percent. The results show thatcorruption "sands the wheel" at high levels offinancial constraint and "greases the wheels" ofan otherwise slow bureaucracy at low levels of financial constraint.