The asymmetric influence of corruption on financial development: fresh evidence from BRICS economies
ISSN: 1359-0790
Article publication date: 9 July 2021
Issue publication date: 14 March 2022
Abstract
Purpose
This paper aims to assess the asymmetric impact of corruption on financial development in BRICS economies context.
Design/methodology/approach
The authors have adopted the novel panel non-linear autoregressive distributed lag (PNARDL) model of Shin et al. (2014), covering the period 1991–2018.
Findings
The findings confirm that corruption asymmetrically impacts financial development in BRICS economies. More precisely, long-run negative shocks of the control of corruption index have significant negative impacts on financial development. However, long-run positive shocks of the control of corruption index are insignificant. Moreover, both positive and negative shocks of corruption in short-run results are insignificant. Generally, the findings are robust having carried out several robustness checks and in favor of “sand in the wheels” hypothesis.
Originality/value
This study makes a novel contribution by developing insight on how corruption asymmetrically impacts financial development. To the best of the authors’ knowledge, this is the first attempt to use the PNARDL, which decompose the main independent variable (corruption) into positive and negative shocks. The PNARDL approach is a dynamic robust estimate that controls for the problem of endogeneity, which is a common phenomenon in such studies. Additionally, it is believed that the findings are important for policy makers, scholars and practitioners. Finally, the authors used the most recent available dataset covering the BRICS context.
Keywords
Acknowledgements
The authors are grateful to JFC editor and anonymous reviewers for their valuable comments, which helped improving the overall quality of the manuscript. The authors are also thankful to the IDEM program coordinator and committee for their constructive feedback and recommendations. Last but not least, the authors would like to express their gratitude to Prof. Hedi Ben Haddad for his insightful comments on the empirical section of the paper.
Naif Alsagr, acknowledges his PhD fund from Shaqra University and the Saudi government. He further wishes to thank Prof. Dr Saeed Al-Maliki, Saudi Cultural Attaché in Madrid, Spain, for his unconditional support.
Stefan van Hemmen, acknowledges the funding from the Spanish Ministry of Economy, Industry and Competitiveness,[ECO2017-86305-C4-2-R] and also The Agency for Management of University and Research Grants (Government of Catalonia), [2017SGR1036].
Citation
Alsagr, N. and van Hemmen, S. (2022), "The asymmetric influence of corruption on financial development: fresh evidence from BRICS economies", Journal of Financial Crime, Vol. 29 No. 2, pp. 665-679. https://doi.org/10.1108/JFC-03-2021-0062
Publisher
:Emerald Publishing Limited
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