Assessing the growth effect of illicit financial flows in an emerging economy: the case of Nigeria

Oluseyi Omosuyi and Joshua Afolabi

International Journal of Business and Emerging Markets, 2024, vol. 16, issue 2, 155-169

Abstract: Illicit financial flow (IFF) has been identified as a form of leakage across world economies. However, empirical investigation on its growth effect is yet to be explored in Nigeria, the country with the highest volume of IFF in Africa. Thus, this study examined the growth effect of IFF in Nigeria using annual data covering 1981-2021. The dynamic ordinary least square (DOLS) estimator was employed to analyse relevant data sourced from reputable databases. The fully modified ordinary least square (FMOLS) and canonical cointegrating regression (CCR) estimators were employed for robustness check. The results showed that illicit financial flow has growth-inhibiting effects in Nigeria and is a major drain on the country's financial resources that could have been used for development financing. Thus, the Nigerian Government must devise practical means of stemming the tide of illicit financial flows in Nigeria to foster economic growth and enable the achievement of critical development agendas.

Keywords: illicit financial flow; IFF; economic growth; dynamic ordinary least square; DOLS; Nigeria. (search for similar items in EconPapers)
Date: 2024
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