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Is bank lending corruption self-regulatory? A note

Author

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  • Erotokritos Varelas

    (Department of Economics, University of Macedonia)

Abstract

This short article puts forward the possibility that bank-client corruption tends to raise lending rates. If it does and if bank-official corruption counteracts this tendency, bank lending corruption might be seen as a self-regulatory phenomenon, having little if none at all influence on the real economy. An anti-lending-corruption policy is deemed to be necessary only under a zero-lower -bound associated monetary policy and in any case, it should treat the two types of banking-sector corruption symmetrically. The negative effects of bank sector fraud on economic growth should be related to the large volume of cybercrime and money laundering rather than to fraud surrounding bank lending.

Suggested Citation

  • Erotokritos Varelas, 2017. "Is bank lending corruption self-regulatory? A note," Discussion Paper Series 2017_03, Department of Economics, University of Macedonia, revised Mar 2017.
    • Handle: RePEc:mcd:mcddps:2017_03
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    File URL: http://aphrodite.uom.gr/econwp/pdf/dp032017.pdf
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    References listed on IDEAS

    as
    1. Park, Junghee, 2012. "Corruption, soundness of the banking sector, and economic growth: A cross-country study," Journal of International Money and Finance, Elsevier, vol. 31(5), pages 907-929.
    2. Laurent Weill, 2011. "Does corruption hamper bank lending? Macro and micro evidence," Empirical Economics, Springer, vol. 41(1), pages 25-42, August.
    3. Gerasimos T. Soldatos, 2016. "Is the Bureaucrat the Main Responsible for Corruption?," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 12(2), pages 12-18, December.
    4. Raphael Solomon, 2005. "Pocket Banks and Out-of-Pocket Losses: Links between Corruption and Contagion," Staff Working Papers 05-23, Bank of Canada.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bank lending corruption; Bank non-lending fraud; Economic activity.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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