Publication Date

2024

Document Type

Dissertation/Thesis

First Advisor

Ryu, Duchwan

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Statistics and Actuarial Science

Abstract

In this paper, I conduct the first empirical analysis to examine the impact of bureaucratic corruption on small business financial constraints in Nigeria. This study is also the first to compare the average treatment effect (ATE) with the local average treatment effect (LATE) framework to account for potential variations in treatment effects for small Nigerian firms with less than 100 employees. Using the bivariate probit method and two binary instruments, I find that corruption significantly increases the likelihood of financial constraints for a typical micro, small, and medium enterprise (MSME) by approximately 64 to 68 percentage points. When I use the instrumental variable method to estimate the LATE, I find that the effect is even higher, ranging from 83 to 88 percentage points for a representative MSME facing challenges with tax administration and obtaining business licenses and permits. The propensity score matching technique is used to create a comparable treatment and control group, and the LASSO regression to perform variable selection. This study emphasizes the significant obstacle that corruption poses to Nigerian small firms' financial access, even after accounting for selection bias using propensity score matching. There is also a need for regulatory fixes to address multiple and illegal taxes, and to simplify the process of obtaining business licenses and permits.

Extent

49 pages

Language

en

Publisher

Northern Illinois University

Rights Statement

In Copyright

Rights Statement 2

NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.

Media Type

Text

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