Author(s): Pinheiro, Ana Raquel Da Costa
Date: 2010
Persistent ID: http://hdl.handle.net/10362/9856
Origin: Repositório Institucional da UNL
Subject(s): Corruption; Stock market; Country level
Author(s): Pinheiro, Ana Raquel Da Costa
Date: 2010
Persistent ID: http://hdl.handle.net/10362/9856
Origin: Repositório Institucional da UNL
Subject(s): Corruption; Stock market; Country level
A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics
We estimate the effect of corruption on the stock markets returns using as controls gross domestic product growth, inflation, unemployment growth, monetary base growth and institutional variables. The results show that in more developed countries corruption is inversely related to the stock market returns. In developing economies, on the other hand, there is empirical evidence supporting the second-best theory: higher levels of corruption impact positively on the stock markets returns. Furthermore, while per capita gross national income cannot account for corruption coefficients on the stock market, inflation seems to be positively related to the latter.