
Abstract
In many developing countries, we observe rather high levels of corruption. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. We explain why citizens do not exert enough political pressure to reduce corruption if financial institutions are missing. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. The mode of financing this entry fee determines the distribution of the rents from corruption. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more voters are part of the corrupt system. Thus, the economic system has an effect on political outcomes. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures.
Item Type: | Paper |
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Keywords: | Corruption, Financial Markets, Institutions, Development, Voting |
Faculties: | Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > B5 - Weltwirtschaftliche Integration und die neue Firmenorganisation Economics Economics > Chairs > Seminar for Comparative Economics |
Subjects: | 300 Social sciences > 330 Economics |
JEL Classification: | D73, D72, O17 |
URN: | urn:nbn:de:bvb:19-epub-13416-0 |
Language: | English |
Item ID: | 13416 |
Date Deposited: | 10. Jul 2012, 13:10 |
Last Modified: | 04. Nov 2020, 12:53 |