Description: Deals and Delays : Firm-level Evidence on Corruption and Policy Implementation Times

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Deals and Delays : Firm-level Evidence on Corruption and Policy Implementation Times

This paper examines whether demands for bribes for particular government services are associated with expedited or delayed policy implementation. The "grease the wheels" hypothesis, which contends that bribes act as speed money, implies t...

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Bibliographic Details
Main Authors:	Freund, Caroline, Hallward-Driemeier, Mary, Rijkers, Bob
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCESS TO FINANCE ACCOUNTING AUCTION BIDDING BRIBE BRIBERY BRIBES BRIBING BUSINESS CLIMATE BUSINESS ENVIRONMENT BUSINESS INDICATORS BUSINESS REGULATION CAPITAL INVESTMENT CAPITAL STOCK COMMERCE CORRUPT CORRUPT PRACTICES CORRUPTION CUSTOMS CUSTOMS CLEARANCE CUSTOMS CLEARANCES DISCRIMINATION DOMAINS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ELECTRICITY EMPLOYMENT EMPLOYMENT GROWTH ENTERPRISE SURVEYS ENTREPRENEUR ENTREPRENEURS ENTREPRENEURSHIP FIRM SIZE GENDER GOVERNMENT CONTRACT GOVERNMENT OFFICIALS GOVERNMENT SERVICE GOVERNMENT SERVICES GROUP OF FIRMS INSPECTIONS INTERNATIONAL BANK INTERNATIONAL BUSINESS JOB CREATION LICENSE LICENSES LIEN OPEN ACCESS PENALTY PHONE PHONE CONNECTION PRIVATE INFORMATION PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PRODUCTIVITY PUBLIC OFFICIALS RED TAPE REGULATORY BURDENS REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS RESULT RESULTS SALES GROWTH SMALL FIRMS TARGETS TAXATION TRANSACTION TRANSACTION COSTS USES WEB
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19736799/deals-delays-firm-level-evidence-corruption-policy-implementation-times http://hdl.handle.net/10986/19375

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Summary:	This paper examines whether demands for bribes for particular government services are associated with expedited or delayed policy implementation. The "grease the wheels" hypothesis, which contends that bribes act as speed money, implies three testable predictions. First, on average, bribe requests should be negatively correlated with wait times. Second, this relationship should vary across firms, with those with the highest opportunity cost of waiting being more likely to pay and face shorter delays. Third, the role of grease should vary across countries, with benefits larger where regulatory burdens are greatest. The data are inconsistent with all three predictions. According to the preferred specifications, ceteris paribus, firms confronted with demands for bribes take approximately 1.5 times longer to get a construction permit, operating license, or electrical connection than firms that did not have to pay bribes and, respectively, 1.2 and 1.4 times longer to clear customs when exporting and importing. The results are robust to controlling for firm fixed effects and at odds with the notion that corruption enhances efficiency.