We examine the relation between bureaucratic corruption and firm performance in CEE countries. We show that divergent consequences of corruption found in previous studies can be explained by the specifics of the local bribery environment in which firms operate.A higher mean bribery is associated with lower firm performance, while higher dispersion of individual firm bribes appears to facilitate it. We also conduct a detailed analysis by firm sector and size, and countries' institutional environments.

This study examines how bribery influences bank debt ratios for a large sample of firms in 14 transition countries. We combine information on bribery practices from the BEEPS survey with firm-level accounting data from the Amadeus database. Bribery is measured by the frequency of extra unofficial payments to officials to "get things done". We find that bribery is positively related to firms' total bank debt ratios, which provides evidence that bribing bank officials facilitates firms' access to bank loans. This impact varies with the maturity of the bank debt, as bribery contributes to higher short-term bank debt ratios but lower long-term bank debt ratios. Finally, we find that the institutional characteristics of the banking industry influence the relation between bribery and firms' bank debt ratios. Higher levels of financial development constrain the positive effects of bribery, whereas larger market shares of state-owned banks have the opposite effect. The presence of foreign banks also affects the impact of bribery, although this effect depends on the maturity of firms' bank debt.

Using cross-country data on e-government systems, this paper analyzes whether e-filing of taxes and e-procurement implementation improves the capacity of governments to raise and spend fiscal resources through lowering tax compliance costs, improving tax collection and public procurement competitiveness, and reducing corruption. Adopting e-filing systems reduces tax compliance costs as measured by the time to prepare and pay taxes, the likelihood and frequency of firms being visited by a tax official, and the perception of tax administration as an obstacle to firms’ operation and growth. E-filing is also associated with a moderate increase in the income tax revenue to GDP ratio. The results for e-procurement are weaker, with the number of firms securing or attempting to secure a government contract increasing only in countries with higher levels of development and better institutions. There is no strong relationship between e-government and corruption.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.