Value Creation in the Foreign Finance Supply Chain: The Corruption-Investment Interaction.

Document Type : Original Article

Authors

1 Associate Professor of the Department of Economics, Naragh Branch, Islamic Azad University, Naragh, Iran

2 Associate Professor of Finance, Busch School of Business, The Catholic University of America, Washington DC 20064

Abstract

The aim of the research was to examine the impact of corruption on foreign investment in value creation in the financial supply chain. The research method is based on paradigmatic goals of the positive type, based on the objective, applied, based on the nature of the data, quantitative, and in terms of the method of data collection, documentary or library. For the practical and experimental test of the investment regression model derived from an open economic model and the endogenous growth model with international capital mobility, 88 countries for the period of 2013 to 2022 were considered as a research sample with the GMM estimator. Corruption in an open economy by deviating the flow and mobility of international investment, reduces the efficiency/rate of return on Foreign investment and increases its risk and weakens Foreign investment activities. Therefore, the interaction between corruption and Foreign investment is negative and significant and confirms the notion that less invested countries are more exposed to the bad effects of corruption. Because developed countries with more access to international financing are less susceptible to the harmful effects of corruption than emerging economies. Therefore, it is expected that countries with low levels of Foreign investment will have significant and significant effects of corruption, documenting the increase of uncertainty and instability. Corruption practices are formed in the absence of scientific and transparent economic principles and structures and foreign investment. Corruption can disrupt the external financing supply chain by increasing transaction costs (e.g., bribes for loan approvals), distorting capital allocation, and eroding trust among stakeholders. Transparent systems, such as blockchain, can mitigate corruption by providing verifiable, tamper-proof records of financial transactions, reducing opportunities for fraud or favoritism. External financing supports investment by providing capital for operational expansion, technology adoption, or inventory management.

Keywords

References

References
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Strategic Value Chain Management
Volume 2, Issue 2 - Serial Number 5
Research papers
August 2025
Pages 53-83

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History

  • Receive Date: 10 August 2025
  • Revise Date: 05 September 2025
  • Accept Date: 23 September 2025
  • Publish Date: 23 July 2025

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