LAUSR

Purpose This paper aims to assess the asymmetric impact of corruption on financial development in BRICS economies context. Design/methodology/approach The authors have adopted the novel panel non-linear autoregressive distributed lag (PNARDL) model of Shin et al. (2014), covering the period 1991–2018. Findings The findings confirm that corruption asymmetrically impacts financial development in BRICS economies. More precisely, long-run negative shocks of the control of corruption index have significant negative impacts on financial development. However, long-run positive shocks of the control of corruption index are insignificant. Moreover, both positive and negative shocks of corruption in short-run results are insignificant. Generally, the findings are robust having carried out several robustness checks and in favor of “sand in the wheels” hypothesis. Originality/value This study makes a novel contribution by developing insight on how corruption asymmetrically impacts financial development. To the best of the authors’ knowledge, this is the first attempt to use the PNARDL, which decompose the main independent variable (corruption) into positive and negative shocks. The PNARDL approach is a dynamic robust estimate that controls for the problem of endogeneity, which is a common phenomenon in such studies. Additionally, it is believed that the findings are important for policy makers, scholars and practitioners. Finally, the authors used the most recent available dataset covering the BRICS context.