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Article
Corruption in bank lending to firms : cross-country micro evidence on the beneficial role of competition and information sharing
Journal of Financial Economics
  • James R. BARTH, Auburn University, United States
  • Chen LIN, City University of Hong Kong
  • Ping LIN, Lingnan University, Hong Kong
  • Frank M. SONG, University of Hong Kong
Document Type
Journal article
Publication Date
2-28-2009
Keywords
  • Bank lending,
  • Competition,
  • Corruption,
  • Information sharing
Abstract

Building on the important study by Beck, Demirguc-Kunt, and Levine 2006. Bank supervision and corruption in lending. Journal of Monetary Economics 53, 2131-2163], we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus/registries on corruption in bank lending. Using the unique World Bank data set (WBES) covering more than 4,000 firms across 56 countries with information on credit bureaus/registries, assembled by Djankov, McLiesh, and Shleifer 2007. Private credit in 129 countries. Journal of Financial Economics 84, 299-329], and bank regulation data collected by Barth, Caprio, and Levine 2006. Rethinking Bank Regulation: Till Angels Govern. Cambridge University Press, New York] to measure bank competition and information sharing, we find strong evidence that both banking competition and information sharing reduce lending corruption, and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption. We also find that the ownership structure of firms and banks, legal environment, and firm competition all exert significant impacts on lending corruption.

DOI
10.1016/j.jfineco.2008.04.003
Publisher Statement

Copyright © 2008 Elsevier B.V.

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Citation Information
Barth, J. R., Lin, C., Lin, P., & Song, F. M. (2009). Corruption in bank lending to firms: Cross-country micro evidence on the beneficial role of competition and information sharing. Journal of Financial Economics, 91(3), 361-388. doi: 10.1016/j.jfineco.2008.04.003