Does Corruption affect Fatalities from Natural Disasters? The Case of Floods

Abstract: Previous research has identified a positive effect of corruption on the fatalities of earthquakes and natural disasters in general. To test whether this relationship holds for other types of natural disasters, this paper aims to investigate the effect of corruption on flood fatalities using a panel dataset of 1 080 major flood events in 89 countries over a 33-year period. Seeking to provide additional explanatory value of the findings, the paper further investigates the possible transmission mechanism of flood magnitude. The research specification utilises a preliminary regression to account for the endogeneity of corruption before employing its fitted values in the Fixed Effects Poisson model. In contrast to previous findings, the results indicate that corruption has no statistically significant impact on flood fatalities, either directly or indirectly via flood magnitude. The results highlight the need of studying each type of natural disaster individually to identify the factors determining the severity of the resulting consequences for each particular type.