The impact of shadow economy on capital flight: An African evidence

Thang Doan and Giang Mai ()
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Giang Mai: Banking Academy of Vietnam

Economics Bulletin, 2025, vol. 45, issue 4, 2080 - 2087

Abstract: This study explores the impact of the shadow economy on capital flight by using African panel data from 1993 to 2018. While controlling for other driving force of capital flight, our estimate shows that the shadow economy has a positive effect on capital flight. This effect becomes more pronounced when controlling endogeneity problem and in the post-2008 financial crisis. As a result, this study proposes policy recommendations focused on reducing the scale of the informal economy by implementing stringent regulatory measures aimed at minimizing capital flight.

Keywords: Shadow economy; Capital flight; African; Panel data (search for similar items in EconPapers)
JEL-codes: E2 E3 (search for similar items in EconPapers)
Date: 2025-12-30
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