It is increasingly recognized that good understanding on the corruption-related causes and remedies of the modern fiscal crisis would bolster informed decisions and key governance standards. Many of the governance weaknesses have been exacerbated by ingrained fiscal indiscipline and lack of effective bureaucratic provisions. These concerns necessitate ongoing research efforts aimed at galvanizing the best compilation of perspectives on the role of public institutions in debt accumulation process. Hence, this study examines the long run and short run effect of corruption on public debt in Nigeria over the period of 1996 to 2017 using ARDL bound test to cointegration analysis. Empirical evidence reveals that both corruption index and control of corruption have an insignificant adverse effect on public debt in the long run, but with a significant influence in the short run. Considering the long-term implication, current anti-corruption efforts might be ineffective in enhancing strategic monitoring and sustainable fiscal standards. Nonetheless, it is emphasized that effective corruption control measures could mitigate spiralling incidence of government debt. Further findings indicate that there exists bi-directional causality between corruption index and public debt, whereas none is found between control of corruption and public debt. The study suggests that strong corruption-based control mechanisms are fundamentals to decreasing fiscal deficits and debt reduction. Overall, a significant insight distills from the study is that the goal of attaining global financial stability and fiscal sustainability through sound regulatory framework has embodied the provisions that enhance corruption-reducing measures and institutional standards to curb persistent debt accumulation.
On the evolution of corruption patterns in the post-communist countries