This paper examines how political corruption is related to institutional transition. We suggest that the choice executives make when favouring private patronage over public goods provision, has ramifications for the stability of the political system. We argue that widespread private distribution in the public sphere strengthens the incumbent position, block the opposition’s access to power and alleviate popular pressure on the elite to concede democracy. Using a multinomial logit model, we estimate the probabilities of institutional change towards democracy and towards autocracy relative to no change, as functions of corruption and a set of control variables. Corroborating the above argument we find that corruption substantially reduces the likelihood of transition towards democracy and makes autocratic and inconsistent polities more persistent to change. We also estimate a Markov chain model that takes into account the reciprocal relationship between democracy and corruption. We find that democracy reduces corruption in high-income countries, but not in low- and middle-income countries. For all other income and institutional type combinations, the effect of corruption on political system seems stronger than the impact of system on levels of corruption.