Will money talk? Firm bribery and credit access

By Shusen Qi

Corruption constitutes a major obstacle to productivity and growth. Using data from the Business Environment and Enterprise Performance Survey (BEEPS) and Banking Environment and Performance Survey (BEPS), this paper examines to what extent corruption limits firms’ access to credit. It finds that credit access is more constrained for firms that bribe more frequently, and that this detrimental effect is mainly driven by supply-side rather than by demand-side factors and that it is more pronounced when there are fewer foreign banks in the vicinity of the firm. These findings highlight the importance of combating corruption to restore the credit market and trigger economic growth.