Financial Deepening and Corruption in Selected Southeast Asian Countries

A Comparison with South Asia

in European Journal of East Asian Studies
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Since the 1980s, Southeast Asian countries have deregulated their financial market sector. Numerous studies on financial market deregulation and corruption levels have argued about positive and negative links between corruption and financial deregulation in many countries. These conflicting results have motivated us to examine the impact of financial market deregulation, which leads to financial deepening, on corruption in Southeast Asian countries. We employ panel data analysis to explore whether financial deepening has a positive impact on corruption levels. Using data for 17 years, we empirically tested the relationship between financial deepening and corruption levels and found a significantly negative relationship between these two factors. When comparing our results with the South Asian region where the level of corruption is higher, we do not find any significant differences.

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Figures
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    Figure 1

    Level of corruption in selected ASEAN member countriesSource: World Bank

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    Figure 2

    Level of corruption in selected South Asian countriesSource: World Bank

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