Research in Finance Series:Financial Institutions
Post by MSF Chula at Saturday, 26 August 2017 05:43 PM

“Disguised Corruption: Evidence from Consumer Credit in China”

by Professor Sumit Agarwal

Professor of Finance and Real Estate, Low Tuck Kwong Professor and Deputy Head (Research) of the Department of Real Estate, NUS Business School


Friday, October 10th, 2014;   Time 10:30 a.m. – 11:30 a.m.

Room 1104, 11th floor, Mahitaladhibesra Building


ABSTRACT: We investigate a disguised form of corruption using a unique and comprehensive sample of credit card data in China. We document that bureaucrats—defined as those working in the government—receive 12% higher credit lines than non-bureaucrats with similar income and demographics. Despite the higher credit lines, bureaucrats’ credit card accounts experience a higher delinquency rate and a higher likelihood of reinstatement indicating their debt being forgiven by the bank. The effect of greater credit lines and higher delinquency and reinstatement rates associated with bureaucrats is stronger among bureaucrats with a higher hierarchy rank and in more corruptive areas. Last, we provide evidence that the bank branches with a higher bureaucrat credit line premium receive more deposits from the local government. Non-bureaucrat consumers in those areas with a higher bureaucrat credit line premium, on the other hand, receive significantly lower credit lines compared to non-bureaucrats in less corrupt branches.

Last updated at Saturday, 26 August 2017 09:39 PM