EVALUATING THE RELATIONSHIP BETWEEN ANTI-MONEY LAUNDERING POLICIES AND PER CAPITA CONSUMPTION EXPENDITURE - A FRESH INSIDE FROM MIDDLE-INCOME COUNTRIES

Laeeq Razzak Janjua, Erraiteb Meryem and Maryum Sajid Raja
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Laeeq Razzak Janjua: Vistula University- Poland
Erraiteb Meryem: Shandong University, China
Maryum Sajid Raja: Southwest Jiaotong University- China

Journal of Financial and Monetary Economics, 2022, vol. 10, issue 1, 73-83

Abstract: Money laundering appears to be most common types of financial and economic crime. Significant unlawful earnings are produced by criminal activity, and these profits must be covered before they can be reintroduced into the legal, financial system. Money laundering is most prevalent in nations with lax financial sector regulations and controls, as is the case with all forms of economic and financial crime. Foreign direct investment is halted, capital markets are distorted, and their financial institutions' integrity is compromised. Therefore, money laundering (ML) contributes to worldwide poverty for several reasons. This paper aims to examine the relationship between anti-money laundering policies and per capita consumption expenditure used as a proxy for poverty for 46 middle-income countries over the period 2012 to 2021. Using Driscoll-Kraay as a static model estimation and two-step system GMM, dynamic model estimations, the results indicate that anti- money laundering policies decrease the per capita consumption expenditure, thus increasing poverty in middle-income countries. Furthermore, the results also indicate that the economic and FDI inflow positively decrease poverty. In contrast, inflation reduces per capita expenditure as well.

Keywords: Poverty; Economic growth; Anti-money laundering index; social sustainability (search for similar items in EconPapers)
JEL-codes: D6 G28 O19 (search for similar items in EconPapers)
Date: 2022
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