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The effect of corruption on bank profitability

Segun Thompson Bolarinwa (Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria)
Funmi Soetan (Department of Economics, Obafemi Awolowo University Faculty of Social Sciences, Ile-Ife, Nigeria)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 2 July 2019

Abstract

Purpose

This paper aims to investigate the effect of corruption on bank profitability.

Design/methodology/approach

The paper adopts panel cointegration, differenced generalized method of moments (GMM) and system GMM.

Findings

The empirical results show that corruption is important in explaining the profitability of commercial banks in both developed and emerging countries. While it has mixed effects in emerging countries, only positive effect is validated in developed countries.

Research limitations/implications

Macroeconomic measures of corruption are adopted in the study.

Originality/value

The paper contributes to the literature on corruption and bank profitability by reporting evidence from both developed and developing countries. Existing papers have only concentrated on developing countries.

Keywords

Citation

Bolarinwa, S.T. and Soetan, F. (2019), "The effect of corruption on bank profitability", Journal of Financial Crime, Vol. 26 No. 3, pp. 753-773. https://doi.org/10.1108/JFC-09-2018-0102

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited