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Corruption, political stability and illicit financial outflows in Sub-Saharan Africa

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  • Orkoh, Emmanuel
  • Claassen, Carike
  • Blaauw, Derick

Abstract

This paper examines the effect of corruption control and political stability on illicit financial outflows in Sub-Saharan Africa. We use a balanced panel data from the World Bank, United Nations Conference on Trade and Development and Global Financial Integrity on Sub-Saharan African countries covering the period 2005-2014. Our regression estimates reveal that a unit increase in political stability and corruption control reduce illicit financial outflow due to misinvoicing in merchandise trade by an average of US$ 20.5 million and US$ 44.3 million respectively. The results also show that high trade rating, financial sector rating and exchange rates reduce illicit financial outflows while an increase in foreign direct investment and inflation increase illicit financial outflow. We recommend that governments in Sub-Saharan Africa countries must ensure that institutions responsible for fighting corruption and enhancing stable governance are well empowered and given the needed resources to work effectively to reduce corruption to the barest minimum.

Suggested Citation

  • Orkoh, Emmanuel & Claassen, Carike & Blaauw, Derick, 2017. "Corruption, political stability and illicit financial outflows in Sub-Saharan Africa," EconStor Preprints 182082, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:182082
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    File URL: https://www.econstor.eu/bitstream/10419/182082/1/ILICITFFPAPER_IntroductionLitReviewCC%20-%2014%20August%202017.pdf
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    References listed on IDEAS

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    Cited by:

    1. YENLIDE, Tchablemane, 2021. "Corruption et sorties illicites de capitaux dans les pays de l’Afrique subsaharienne: La démocratie compte-elle vraiment? [Corruption and Illicit Capital Outflows in Sub-Saharan Africa: Does Democr," MPRA Paper 110750, University Library of Munich, Germany.

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    More about this item

    Keywords

    Corruption; political stability; illicit financial outflow; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • G3 - Financial Economics - - Corporate Finance and Governance

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