The Regulation of Political Finance and Corruption

In this article, authors Avi Ben-Bassat and Momi Dahan use the International Institute for Democracy and Electoral Assistance (IDEA) database on political finance regulations for 82 countries to examine the effect campaign contribution limits have on political corruption.

Upon analyzing the data, after controlling for a standard list of explanatory variables, the authors found that a contribution limits index actually increased corruption. This result remains consistent employing an array of robustness checks intended to minimize the risk of bias due to potential reverse causality and endogeneity. Although the level of perceived corruption is lower in countries with higher indices of public funding and transparency requirements, these effects are rarely significant. Interestingly, the authors demonstrate that a mix of more generous public funding and less stringent regulations of private contributions is associated with lower corruption.

Read the full article here.

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