The State Dependent Impact of Bank Exposure on Sovereign Risk

The theoretical literature remains inconclusive on whether changes in bank exposure towards the domestic sovereign have an adverse effect on the sovereign risk position via a diabolic loop in the sovereign-bank nexus or reduce perceived default risk by acting as a disciplinary device for the sovereign. In this paper we empirically analyze the impact of exogenous changes in bank exposure on the risk position of the sovereign within a Markov switching structural vector autoregressive in heteroscedasticity (MSH-SVAR) framework for a set of EMU countries. We add to the methodological literature by allowing for regime dependent shock transmissions according to the volatility state of the financial system. Finding support for both, a stabilizing and a destabilizing effect, we document a clear clustering among the country sample: Rising bank exposure increased default risk for the EMU periphery, but decreased credit risk for the core EMU countries during times of financial stress

Explaining varieties of corruption in the Afghan justice sector

© 2015 Taylor & Francis. Judicial reform in Afghanistan is seriously undermined by systemic corruption that has resulted in low legitimacy of the state and weak rule of law. This article reviews the main shortcomings in the Afghan justice system with reference to 70 interviews conducted in Kabul. Building on legal pluralism and a political economic approach, the shortcomings and causes and consequences of corruption in the Afghan justice sector are highlighted. These range from low pay, resulting in bribery; criminal and political intrusion into the judiciary; non-adherence to meritocracy, with poorly educated judges and prosecutors; and low funding in the judicial sector resulting in weak case tracking and human rights abuses in the countryside. This is followed by sociological approaches: understanding corruption from a non-Western approach and emphasis on religion, morality and ethics in order to curb it

Empirical Research on Sovereign Debt and Default

The long history of sovereign debt and the associated enforcement problem have attracted researchers in many fields. In this paper, we survey empirical work by economists, historians, and political scientists. As we review the empirical literature, we emphasize parallel developments in the theory of sovereign debt. One major theme emerges. Although recent research has sought to balance theoretical and empirical considerations, there remains a gap between theories of sovereign debt and the data used to test them. We recommend a number of steps that researchers can take to improve the correspondence between theory and data

"Feed from the Service": Corruption and Coercion in the State-University Relations in Central Eurasia

Education in Central Eurasia has become one of the industries, most affected by corruption. Corruption in academia, including bribery, extortions, embezzlement, nepotism, fraud, cheating, and plagiarism, is reflected in the region’s media and addressed in few scholarly works. This paper considers corruption in higher education as a product of interrelations between the government and academia. A substantial block of literature considers excessive corruption as an indicator of a weak state. In contrast to standard interpretations, this paper argues that in non-democratic societies corruption is used on a systematic basis as a mechanism of direct and indirect administrative control over higher education institutions. Informal approval of corrupt activities in exchange for loyalty and compliance with the regime may be used in the countries of Central Eurasia for the purposes of political indoctrination. This paper presents the concept of corruption and coercion in the state-university relations in Central Eurasia and outlines the model which incorporates this concept and the “feed from the service” approach. It presents implications of this model for the state-university relations and the national educational systems in Central Eurasia in general and offers some suggestions on curbing corruption

Corruption, public investment and growth

Up to the time when a huge corruption scandal, popularly labeled tangentopoli”(bribe city), brought down the political establishment that had ruled Italy for several decades, that country had reported one of the largest shares of capital spending in GDP among the OECD countries. After the scandal broke out and several prominent individuals were sent to jail, o