Figure 1. Hypothesized model explaining the level of corruption in financial service firms in emerging countries.
they rewrite the bureaucrats’ incentive scheme. A heterodox perspective could predict that financial
service firms may adopt a corrupt behavior in front of an increase in competition. Many emerging countries have been characterized by a lack of competition. This is especially true of former communist countries. Therefore, for the first time in the liberalization process when competition intensity increases, firms in emerging countries may try to secure rents with corrupt government officials. In the second phase, competition increases will lead to a decline of corruption. Considering the scope of this research concerning emerging countries, the competitive isomorphism perspective leads to our first
hypothesis:
H1: A positive relationship exists between the intensity of the competition for financial institutions and the level of corruption.