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Do digital payment transactions reduce corruption? Evidence from developing countries

Do digital payment transactions reduce corruption? Evidence from developing countries
Do digital payment transactions reduce corruption? Evidence from developing countries
Extant studies have broadly attributed anti-corruption effects to digitization, although there is a paucity of studies on the role of digital payments in reducing corruption. With the increasing pervasiveness of digital payments and the widespread nature of corruption, particularly in developing countries, it is timely to explore the link between digital payments and corruption. Using a global panel dataset of digital payments and Transparency International’s Corruption Perception Index (CPI), the study explores the relationship between digital payment transactions and corruption in 111 developing countries from 2010 to 2018. Our results, based on a fixed-effects analysis, show that digital transactions reduce corruption. Results remain robust to the use of instrumental variable analysis to alleviate endogeneity concerns. Our finding has implications for curtailing corruption in developing countries.
Corruption, Cross-country analysis, Digital payment, Instrumental variable regression
0736-5853
Setor, Tenace
865b0a50-5691-4553-b55f-ee5c99621535
Senyo, PK
b2150f66-8ef9-48f7-af32-3b055d4fa691
Addo, Atta
f0458963-f8b6-4841-88a1-aeb95a94f430
Setor, Tenace
865b0a50-5691-4553-b55f-ee5c99621535
Senyo, PK
b2150f66-8ef9-48f7-af32-3b055d4fa691
Addo, Atta
f0458963-f8b6-4841-88a1-aeb95a94f430

Setor, Tenace, Senyo, PK and Addo, Atta (2021) Do digital payment transactions reduce corruption? Evidence from developing countries. Telematics and Informatics, 60, [101577]. (doi:10.1016/j.tele.2021.101577).

Record type: Article

Abstract

Extant studies have broadly attributed anti-corruption effects to digitization, although there is a paucity of studies on the role of digital payments in reducing corruption. With the increasing pervasiveness of digital payments and the widespread nature of corruption, particularly in developing countries, it is timely to explore the link between digital payments and corruption. Using a global panel dataset of digital payments and Transparency International’s Corruption Perception Index (CPI), the study explores the relationship between digital payment transactions and corruption in 111 developing countries from 2010 to 2018. Our results, based on a fixed-effects analysis, show that digital transactions reduce corruption. Results remain robust to the use of instrumental variable analysis to alleviate endogeneity concerns. Our finding has implications for curtailing corruption in developing countries.

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Tele2021 - Accepted Manuscript
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Accepted/In Press date: 19 January 2021
e-pub ahead of print date: 30 January 2021
Keywords: Corruption, Cross-country analysis, Digital payment, Instrumental variable regression

Identifiers

Local EPrints ID: 446887
URI: http://eprints.soton.ac.uk/id/eprint/446887
ISSN: 0736-5853
PURE UUID: f72d777c-227d-41e7-85bc-360aaea3548c
ORCID for PK Senyo: ORCID iD orcid.org/0000-0001-7126-3826

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Date deposited: 25 Feb 2021 17:31
Last modified: 28 Apr 2022 02:29

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Contributors

Author: Tenace Setor
Author: PK Senyo ORCID iD
Author: Atta Addo

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