Firm growth and corruption: Empirical evidence from Vietnam

Jie Bai, Seema Jayachandran*, Edmund J. Malesky, Benjamin A. Olken

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

21 Scopus citations

Abstract

This article tests whether firm growth reduces corruption, using data from over 10,000 Vietnamese firms. We employ instrumental variables based on growth in a firm’s industry in other provinces within Vietnam and in China. We find that firm growth reduces bribes as a share of revenues. We propose a mechanism for this effect whereby government officials’ decisions about bribes are modulated by inter-jurisdictional competition. This mechanism also implies that growth reduces bribery more for more mobile firms; consistent with this prediction, we find a larger effect for firms with transferable rights to their land or operations in multiple provinces.

Original languageEnglish (US)
Pages (from-to)651-677
Number of pages27
JournalEconomic Journal
Volume129
Issue number618
DOIs
StatePublished - 2019

ASJC Scopus subject areas

  • Economics and Econometrics

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