Characterising Corruption by Adopting a Systemic Risk Perspective: Importing Macro Prudential Financial Regulation into the Policy Debate

Abstract

This article aims to theorise corruption from a “macro” perspective. It elaborates upon a range of social sciences literatures, notably from criminology and political sciences, that have discussed various “macro”-level factors contributing to corruption, including market characteristics. Its most distinct contribution to the literature is in importing the concept of “systemic risk” – thus far chiefly examined in the financial regulation literature – to the analysis of corruption. It draws on the financial literature on systemic risk and macro-prudential regulation and supervision. In so doing, it elaborates upon concepts such as “network” and “contagion” as to theorise the effects of corruption on resource allocation. This is supplemented by reference to the legal canon of literature on market regulation.