Singh, Sunny Kumar and Bhattacharya, Kaushik (2015): Does easy availability of cash effect corruption? Evidence from panel of countries.
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Abstract
Using annual panel data of 54 countries for the period 2005-13, we examine whether cash in circulation, both aggregate and large denominated banknotes, affects the level of corruption in a country. Standard panel data models like pooled OLS, random effect and system GMM suggest that the ratios of (i) aggregate currency in circulation to M1 and, (ii) large denominated banknotes to M1 are both statistically significant determinants of corruption. Tests for reverse causality within a panel Granger framework reveal unidirectional causality of the first variable with corruption, but a bi-directional one with the second variable. These findings suggest that the central banks should try to limit the supply of banknotes of large denomination.
Item Type: | MPRA Paper |
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Original Title: | Does easy availability of cash effect corruption? Evidence from panel of countries |
Language: | English |
Keywords: | Control of corruption Index, Cash in circulation, Random effect model, System GMM |
Subjects: | D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies |
Item ID: | 66045 |
Depositing User: | Sunny K Singh |
Date Deposited: | 13 Aug 2015 09:15 |
Last Modified: | 29 Sep 2019 21:07 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/66045 |
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Does easy availability of cash effect corruption? Evidence from panel of countries. (deposited 05 Aug 2015 17:24)
- Does easy availability of cash effect corruption? Evidence from panel of countries. (deposited 11 Nov 2016 12:47)
- Does easy availability of cash effect corruption? Evidence from panel of countries. (deposited 10 Nov 2016 06:50)
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