Bank Ownership Structure, Lending Corruption and the Regulatory Environment

45 Pages Posted: 12 Mar 2015 Last revised: 4 Sep 2015

See all articles by Thierno Barry

Thierno Barry

Université de Limoges, LAPE

Laetitia Lepetit

University of Limoges - Laboratoire d'Analyse et de Prospectives Économiques (LAPE)

Frank Strobel

University of Birmingham - Department of Economics

Date Written: August 3, 2015

Abstract

We empirically examine whether bank lending corruption is influenced by the ownership structure of banks, a country's regulatory environment and its level of economic development. We find that corruption in lending is higher when state-owned banks or family-owned banks provide a higher proportion of credit to the economy, in both developed and developing countries. A stronger regulatory environment, either through a stronger supervisory regime or a higher quality of external audits, helps to curtail bank lending corruption if induced by family-controlled ownership, but not if induced by state-controlled ownership. We further find that controlled-ownership of banks by other banks contributes to reduce corruption in lending; the same applies to widely-held ownership of banks, but only for developed countries.

Keywords: bank lending, corruption, ownership structure, regulatory environment, economic development

JEL Classification: D73, G21, G28, O16

Suggested Citation

Barry, Thierno and Lepetit, Laetitia and Strobel, Frank, Bank Ownership Structure, Lending Corruption and the Regulatory Environment (August 3, 2015). Journal of Comparative Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2574816 or http://dx.doi.org/10.2139/ssrn.2574816

Thierno Barry

Université de Limoges, LAPE ( email )

5 rue Félix Eboué
BP 3127
Limoges Cedex 1, 87031
France

Laetitia Lepetit (Contact Author)

University of Limoges - Laboratoire d'Analyse et de Prospectives Économiques (LAPE) ( email )

5 rue Felix Eboue
BP 3127
Limoges Cedex 1, 87031
France
+33555149213 (Phone)

HOME PAGE: http://www.unilim.fr/lape/

Frank Strobel

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

HOME PAGE: http://www.economics.bham.ac.uk

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