Poor lending policies may cause too much capital to be channeled toward low-return projects and insufficient capital to be directed toward the high-return projects needed to propel income and growth.
Moreover, deterioration in banks' balance sheets caused by insider lending or excessive risk-  3  A discussion of how the costs of doing business vary across a number of countries is in World Bank (2005)  4  Research finds that increases in corruption are associated with lower growth (for example, Mauro, 1995).