Cronyism and Capital Controls: Evidence from Malaysia

Abstract

, and participants at the MIT Macroeconomics lunch, the NBER conference on the Malaysian Currency Crisis, the NBER corporate finance program spring 2001 meeting, and Brigham Young University. We also thank several Malaysian colleagues for sharing their insights off the record. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.

Corruption in Asia: Pervasiveness and arbitrariness

“…This shows that a worldwide cooperation network to combat corruption is in need. Olken (2005a, b) Subsidized rice Bureaucratic corruption Olken (2005a, b) Villages road projects Village-level corruption, kick-backs Japan Duggan and Levitt (2002) Sumo wrestling Collusion Malaysia Johnson and Mitton (2003) Capital control, government subsidy Cronyism, political connections Khan (1998) Patron-client networks Political corruption South Korea Moran (1999) Government-driven industrialization Politician-Chaebol link Khan (1998) Patron-client networks Political corruption Chang (2003) Chaebol's intergroup transactions Tunneling, Pyramid Bae, Kang, and Lim (2002) Mergers by business groups (chaebols) Tunneling Pakistan Khwaja and Mian (2005) Corporate lending Political rents The Philippines Moran (1999) Oligarchic dominance of state and business classes Political economy of corruption Singapore Quah (1989Quah ( , 1995Quah ( , 1999Quah ( , 2002 Public and private sectors Combating corruption Corruption, FDI inflows, and economic growth in Asia Country CPI a (1995 CPI change b (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002) FDI inflows c (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004) GDP growth d (1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)…”

“…In other words, while bribing is not as common as other countries, Malaysia is a country that once an individual or a firm decides to pay bribes, it is not a clear call to whom and how to bribe. For example, Johnson and Mitton (2003) show that while Prime Minister Mahathir Mohamad was on top, Daim Zainudin, a former finance minister, was wielding political power over the firms as well. In addition, after the Asian economic crisis in 1997, Anwar Ibrahim, who was only second to Mahathir in political power, became a political rival to Daim.…”

Does Giving Lead to Getting? Evidence from Chinese Private Enterprises

“…There is also an emerging literature regarding the impact of political connections on enterprise performance (Faccio, 2006;Fisman, 2001;Johnson and Mitton, 2003;Khwaja and Mian, 2005). A general finding of this literature is that politically connected enterprises enjoy better, yet, undeserved treatments from governments or financial institutions than those who do not.…”

Networks and cronyism: A social exchange analysis

“…Although economics and finance scholars have shown a lot more interest in applying the concept of cronyism to a number of corrupt acts (Brick, Palmon, & Wald, 2003;Johnson & Mitton, 2003;Pagano, 2002), we are beginning to see studies in organizational literature that attempt to systematically analyze the concept and discuss its dynamics (Wan, Yiu, Hoskisson, & Kim, 2008). It may be possible to use existing theories to advance thinking in this area.…”