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Corruption, Gender and Credit Constraints: Evidence from South Asian SMEs

Author

Listed:
  • Nirosha Hewa Wellalage

    (The University of Waikato)

  • Stuart Locke

    (The University of Waikato)

  • Helen Samujh

    (The University of Waikato)

Abstract

This paper provides analyses of the effect of corruption in South Asia on (1) credit access for small- and medium-size enterprises (SMEs), and (2) credit constraints faced by female-owned and male-owned SMEs. By addressing potential endogeneity and reverse causality of corruption and credit constraints via instrumental variables, this study reports that corruption has a detrimental effect on credit access. Specifically, corruption increases the probability of SMEs credit constraints by 7.63%. However, gender differences emerge, indicating that bribery is slightly more effective when used by female SME owners. When male-owned SMEs pay bribes, they are on average 0.61% more credit-constrained than their counterparts. For female-owned SMEs paying bribes, they are on average 0.78% more likely to be less credit-constrained compared to female SME owners who do not pay bribes. Overall, bribery is not very effective in achieving the desired outcome and attitudes towards bribery as unethical may be more a question of culture than of gender.

Suggested Citation

  • Nirosha Hewa Wellalage & Stuart Locke & Helen Samujh, 2019. "Corruption, Gender and Credit Constraints: Evidence from South Asian SMEs," Journal of Business Ethics, Springer, vol. 159(1), pages 267-280, September.
    • Handle: RePEc:kap:jbuset:v:159:y:2019:i:1:d:10.1007_s10551-018-3793-6
    DOI: 10.1007/s10551-018-3793-6
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    More about this item

    Keywords

    Gender; Corruption; Bribes; SME; Credit access; South Asia;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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