Humane orientation and corruption in bank lending

Abstract

Corruption in bank lending can seriously adversely affect credit allocation. Besides banking factors, national culture can also affect the corruption of bank officials. Prior studies have shown that collectivism increases bank corruption. This paper aims to assess the effects of cultural dimensions, besides collectivism, on the corruption of bank officials. Instead of using Hofstede's cultural data, this paper uses the data from the GLOBE project which is more recent and reports more cultural dimensions than Hofstede’s. Using the data covering more than 3000 firms in 32 countries, this paper finds that humane orientation increases the corruption of bank officials. The effect of humane orientation on the corruption of bank officials is not only statistically significant but also economically relevant. The magnitude of its effect is relatively comparable to that of collectivism.