Policy Writing

Featured as a guest writer for the American University’s policy writing series, focusing on gender equality and anti-corruption efforts

Why Not Tackle Corruption Through Gender Equality? SME Case in Mongolia

In October 2018, a group of Mongolian investigative journalists revealed corruption cases related to the Small Medium Size Enterprises (SME) Support Fund in Mongolia. The SME fund was established in the mid-2000s and it is one of 29 special funds that are financed from the central government budget.[1]

The SME fund provides access to credit for new entrepreneurs at subsidized interest rates of 3 percent with extended periods of repayment. It was not meant for large corporation owners, parliamentarians, and bureaucrats to take out billions of MNT tugriks (up to MNT 2 billion—roughly USD 780,000) for their own and/or their family members’ businesses.[2]

Unfortunately, members of parliament and politicians converted their privileged access to information into a license to steal from public funds. After five months since the SME scandal was disclosed in Mongolia, there have been no prosecutions due to parliamentary immunity. In addition, this scam has been obscured by a wave of new political scandals. While the country’s anti-corruption agency is investigating the SME case, public transparency is still missing.

Let’s take a closer look at this photo of public leaders who took out SME loans unethically and illegally. Just from this poster, you can notice that all but two are men. Is this a coincidence or does it imply a relationship between gender imbalance in political leadership and corruption?

Public leaders who took out SME loans unethically and illegally.  Just from this poster, you can notice that all but two are men. Is this a coincidence or does it imply a relationship between gender imbalance in political leadership and corruption? 

[3] There is strong global evidence on the positive relationship between women in political power and low corruption. A cross-country analysis of over 125 countries found that corruption is lower in countries where a greater share of parliamentarians is women.[4] This finding is strongly aligned with the World Bank’s research, which concluded that a higher proportion of women in parliamentary seats was correlated with lower levels of corruption.[5] These findings suggest that having women in political leadership could effectively reduce corruption. This research also hints at how an increased number of women in politics reflects a strong democracy. Therefore, the more democratic a country is, the lower the corruption levels are.[6]

Moreover, by being in politics, women have more say in policies that directly affect women and are different from those favored by men.[7] For example, women in local government in India have been reported to allocate a greater share of the budget to public goods such as health and education, suggesting that they are more likely to push a policy agenda that benefits effective public service delivery. Women are also more concerned about whether the subsidies were actually provided to the targeted group without corruption. [8]

Another reason why women could reduce corruption is that women, on average, are more risk-averse than men, and are therefore less likely to be involved in bribery. [9] Corruption is a criminal activity, thus corrupt officials risk bearing legal and political consequences, which particularly holds true in societies where strict punishments and exposure of corruption exist.[10] Additionally, women in politics are often held to a higher standard of scrutiny, which can translate to them facing more severe consequences for violating norms, compared to their male colleagues.

It is important to note that not all women are risk-averse. Additional research also found that male risk-taking tends to increase under stress, while female risk-taking tends to decrease.[11] Given the stressful nature of politics, this implies that when men and women work together, they could make smarter decisions than either gender seems to do alone in political leadership.

Some argue that women and men are equally corrupt or could be if offered same opportunities. In fact, researchers warn that their research results do not necessarily mean that women are inherently less corrupt.[12] But even if we consider men and women in politics are equally corrupt, there seems to be different levels of intensity in corruption. According to the World Bank’s research in Tajikistan, when women engage in corruption, they are significantly less demanding about the amount they extract. In Mongolia’s SME case, the loan amounts by women parliamentarians are almost 90 percent lower than the amounts taken by their male counterparts. [13]

If we look at the following graph of male and female politicians who took loans from the Mongolian SME fund and the size of the loan they took, we can see gender-based differences. There are 22 politicians who are involved, from which four (18.1 percent) are women. On average, the sum of loans women took is less than six times than the sum taken by men.

Graph of male and female politicians who took loans from the Mongolian SME fund and the size of the loan they took

This analysis suggests that even in the case where men and women politicians are equally corrupt, women are less likely to take large amounts. In Mongolia, only 17 percent of the current parliament’s seats are taken by women, which places the country below the world average of 21.9 percent.[14] The fact that women take smaller bribes and are fewer in public office therefore implies that the impact of women’s corruption could be lower than men’s.

Given the existing evidence and Mongolia’s SME case analysis, we are further convinced that due to women’s policy preferences, risk-averse tendency, and lower intensity in corruption, gender equality in governance will reduce corruption effectively. Additionally, the higher presence of women in politics could further strengthen the quality of democracy, which in turn reduces corruption as well. The SME case triggers an important call-to-action for Mongolians to demand stricter anti-corruption policies and accountability measures from the government.  We are hopeful that Mongolia will see gender equality in governance as the nation continues to shape the growth of its democracy. This is relevant to other developing democracies as well, therefore we call researchers and students to analyze corruption cases from a gender perspective in different contexts.

Otgontugs Banzragch is a Professor at National University of Mongolia in Economics Department. She is currently spearheading the initiative to teach Gender Economics course for the first time in Mongolia. She has been actively fighting political corruption in Mongolia, especially the recent Small-Medium-Enterprise fund corruption case. Follow her at @ob2133.

Rentsenkhand “Handaa” Enkh-Amgalan is a master’s candidate in Public Administration at New York University’s Robert F. Wagner Graduate School of Public Service, specializing in International Development. While in graduate school, she worked at the World Bank’s Africa Gender Innovation Lab, supporting randomized controlled trials to identify what works best in addressing gender gaps. Follow her at @Handaa_Rea.

[1] https://thediplomat.com/2018/11/small-and-medium-sized-outrage-building-over-corruption-in-mongolia/

[2] https://thediplomat.com/2018/11/small-and-medium-sized-outrage-building-over-corruption-in-mongolia/

[3] https://medee.mn/

[4] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2434912

[5] http://siteresources.worldbank.org/INTGENDER/Resources/wp4.pdf

[6] https://www.jstor.org/stable/3598207?seq=1#page_scan_tab_contents

[7] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2434912

[8] https://economics.mit.edu/files/792

[9] https://www.aeaweb.org/articles?id=10.1257/aer.89.2.381

[10] https://www.u4.no/publications/close-the-political-gender-gap-to-reduce-corruption

[11] https://journals.sagepub.com/doi/abs/10.1177/0963721411429452

[12] https://ssrn.com/abstract=2434912  

[13] https://elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-4555

[14] http://archive.ipu.org/wmn-e/classif.htm

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