Bribery solicitations and firm performance in the Latin America and Caribbean region

Type Journal Article - Journal of Comparative Economics
Title Bribery solicitations and firm performance in the Latin America and Caribbean region
Author(s)
Volume 42
Issue 1
Publication (Day/Month/Year) 2014
Page numbers 246-264
URL http://econpapers.repec.org/RePEc:eee:jcecon:v:42:y:2014:i:1:p:246-264
Abstract
This study shows that for firms in the Latin America and Caribbean region, bribery significantly distorts firm growth. Firms that were solicited for bribes when conducting business transactions – such as applying for permits, electricity, or water connections – have 23% lower annual sales growth than firms that do not face such solicitations. Moreover, these distortions are more severe for low-revenue-generating and young firms. Using the instrumental variables method on cross-sectional data as well as evidence from panel data, the authors show that these results are robust to different specifications and the use of different sub-samples.

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