Institutional capacity and corruption: State Courts of Accounts in comparative perspective

Abstract

This paper analyzes the relation between the institutional capacity of the State Courts of Accounts and corruption. Methodologically, we combine descriptive and multivariate statistics to analyze a database compiled from Melo, Pereira and Figueiredo (2009) and Ferraz and Finan (2011). In particular, we use principal component analysis to estimate an indicator of institutional capacity as the percentage of the state budget, budget transparency and seniority of each Court. We also employ a linear ordinary least squares (OLS) model to estimate the effect of institutional capacity on the incidence of corruption. The results suggest that: (1) in comparison, Sao Paulo presents the Court with greater institutional capacity, while Mato Grosso do Sul presents the worst performance; (2) on average, the larger the budget of the Court, the lower the level of transparency and (3) the higher the institutional capacity of the Court, the higher the probability of detecting corruption.