Corruption, Political Stability and Illicit Financial Outflows in Sub-Saharan Africa

20 Pages Posted: 10 Oct 2018

See all articles by Emmanuel Orkoh

Emmanuel Orkoh

North-West University

Carike Claassen

North-West University

Phillip Frederick Blaauw

North-West University

Date Written: December 17, 2017

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.

Keywords: Corruption, Political Stability, Illicit Financial Outflow, Sub-Saharan Africa

JEL Classification: G11, G18, H26, P34, P45

Suggested Citation

Orkoh, Emmanuel and Claassen, Carike and Blaauw, Phillip Frederick, Corruption, Political Stability and Illicit Financial Outflows in Sub-Saharan Africa (December 17, 2017). Available at SSRN: https://ssrn.com/abstract=3250668 or http://dx.doi.org/10.2139/ssrn.3250668

Emmanuel Orkoh (Contact Author)

North-West University ( email )

Potchefstroom campus
Faculty of Economic and Management Sciences
Potchefstroom, MI North-West 250
South Africa

Carike Claassen

North-West University ( email )

TRADE research focus area
Faculty of Economic and Management Sciences
Potchefstroom, North-West 2250
South Africa

Phillip Frederick Blaauw

North-West University ( email )

TRADE research focus area
Faculty of Economic and Management Sciences
Potchefstroom, North-West 250
South Africa

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