Financial settlement modes and corruption : evidence from developed nations

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Title: Financial settlement modes and corruption : evidence from developed nations
Author: Goel, Rajeev K. ; Mehrotra, Aaron
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 4/2011
Year of publication: 2011
Publication date: 27.4.2011
Published in: Published in Applied Financial Economics Volume 22, Issue 11, 2012 as "Financial Payment Instruments and Corruption"
Pages: 22 s.
Keywords: maksuvälineet; vaikutukset; korruptio; kansainvälinen; maksukortit; Bofit-kokoelma; maksutavat; luottokortit; tilisiirrot; sekit
Abstract: Using recent pooled data from several developed nations, the paper uniquely examines whether the composition of payment instruments has a bearing on the prevalence of corruption in a country. Our results suggest that the choice of instruments matters. Paper credit transfer transactions are consis-tently associated with corrupt activities, while credit card transactions tend to reduce them. Cheques generally increase corruption, the results with respect to nonpaper credit transfers are mixed, while direct debits fail to show significant effects on corruption. These findings hold for alternative corruption measures and when allowance is made for endogeneity of payment instruments. Keywords: Corruption; Cheques; Credit card; Cash; Direct debit; Payment instruments JEL classification codes: K4; G3; H3; F3

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