The Impact of Corruption on Commercial Banks’ Credit Risk

This research explores the influence of country wide corruption on the commercial banks’ credit risk. It applies the quantile regression (QR) estimation method for a panel data of 191 commercial banks from 18 MENAP nations, between the years 2011-2018. The research finding indicates that corruption significantly exacerbates the problem of bad loans of commercial banks. Furthermore, the QR results reveal that corruption does not affect all commercial banks at the same level. Commercial banks in higher quantiles (i.e. higher credit risk banks) appear to be affected more than the ones in lower quantiles (i.e. lower credit risk banks). Commercial banks with a high credit risk tend to be more vulnerable to corruption than commercial banks with low credit risk.