Anti-corruption Campaign and Investment Growth
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| Title | Anti-corruption Campaign and Investment Growth
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| Author | Cheryl Long and Xiaoyong Huang |
| Organization | Wang Yanan Institute for Studies in Economics & School of Economics, Xiamen University; College of Economics and Management, Southwest University |
| Email | cxlong@xmu.edu.cn；xiaoyong_huang@126.com |
| Key Words | Anti-corruption; Fixed Asset Investment; Greasing the Wheel |
| Abstract | Using monthly data of prefectural cities from Jan. 2013 to Aug. 2014, this paper empirically investigates how China’s recent anti-corruption campaign has impacted fixed asset investment growth. We find that the news of a government official being investigated by the CCP’s Central Commission for Discipline Inspection significantly depresses the growth of fixed asset investment with a one-month lag in the city where the official is located. On average, the investment growth rate in the impacted city is lower than other cities by about 3 percentage points. We also find that cities with better institutional environments suffer less from such news than other cities. The results are in support of the hypothesis that in the short run, intensive anti-corruption campaigns may hamper the “greasing-wheel” effects of corruption and thus depress investment growth. Yet improvements on governance quality of local governments can alleviate such short-term negative impact. |
| Serial Number | WP878 |
| Time | 2015-05-22 |
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