The asymmetric influence of corruption on financial development: fresh evidence from BRICS economies

Published date09 July 2021
Date09 July 2021
Subject MatterAccounting & finance,Financial risk/company failure,Financial crime
AuthorNaif Alsagr,Stefan van Hemmen
The asymmetric inf‌luence of
corruption on f‌inancial
development: fresh evidence from
BRICS economies
Naif Alsagr
Department of Business, Autonomous University of Barcelona, Barcelona, Spain
and Department of Business, Shaqra University, Saudi Arabia, and
Stefan van Hemmen
Department of Business, Centre for Entrepreneurship and Social Innovation
Research, Autonomous University of Barcelona, Barcelona, Spain
Purpose This paper aims to assess the asymmetric impact of corruption on f‌inancial development in
BRICS economiescontext.
Design/methodology/approach The authors have adoptedthe novel panel non-linear autoregressive
distributedlag (PNARDL) model of Shin et al. (2014), covering the period 19912018.
Findings The f‌indings conf‌irm that corruptionasymmetrically impacts f‌inancial development in BRICS
economies. More precisely, long-run negative shocks of the control of corruption index have signif‌icant
negative impacts on f‌inancial development. However, long-run positive shocks of thecontrol of corruption
index are insignif‌icant. Moreover, both positive and negative shocks of corruption in short-run results are
insignif‌icant. Generally,the f‌indings are robust having carried out several robustness checks and in favor of
sand in the wheelshypothesis.
Originality/value This study makes a novel contribution by developing insight on how corruption
asymmetrically impacts f‌inancial development. To the best of the authorsknowledge, this is the f‌irst attempt to
use the PNARDL, which decompose the main independentvariable (corruption) into positive and negative shocks.
The PNARDL approach is a dynamic robust estimate that controls for the problem of endogeneity, which is a
common phenomenon in such studies. Additionally,it is believed that the f‌indings are important for policy makers,
scholars and practitioners. Finally, the authors used the most recent available dataset covering the BRICS context.
Keywords Financial development, Corruption, BRICS countries, Asymmetry analysis
Paper type Research paper
JEL classif‌ication D73, C39, G21
The authors are grateful to JFC editor and anonymous reviewers for their valuable comments, which
helped improving the overall quality of the manuscript. The authors are also thankful to the IDEM
program coordinator and committee for their constructive feedback and recommendations. Last but
not least, the authors would like to express their gratitude to Prof. Hedi Ben Haddad for his
insightful comments on the empirical section of the paper.
Naif Alsagr, acknowledges his PhD fund from Shaqra University and the Saudi government. He
further wishes to thank Prof. Dr Saeed Al-Maliki, Saudi Cultural Attaché in Madrid, Spain, for his
unconditional support.
Stefan van Hemmen, acknowledges the funding from the Spanish Ministry of Economy, Industry
and Competitiveness,[ECO2017-86305-C4-2-R] and also The Agency for Management of University
and Research Grants (Government of Catalonia), [2017SGR1036].
inf‌luence of
Journalof Financial Crime
Vol.29 No. 2, 2022
pp. 665-679
© Emerald Publishing Limited
DOI 10.1108/JFC-03-2021-0062
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