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Evaluating The Heterogeneous Role Of Institutional Quality In Mitigating The Adverse Effects Of Capital Flight On Nigeria’S Economic Growth: Fresh Insights From A Quantile Nonlinear Ardl Framework

Author

Listed:
  • Joseph Chukwudi Odionye
  • Ndukwe O. Dibia
  • Ndubuisi Eme Uguru
  • Ndubuisi Agoh
  • Veronica Adaku Ihezukwu
  • Emeka Atuma
  • Chima Keneth Ifeanyi

Abstract

This study seeks to examine whether institutional quality mitigated the adverse effect of capital flight on economic growth in Nigeria between 1996 and 2022. The study utilised the novel quantile-based nonlinear autoregressive distributed lag (QNARDL) estimation procedure to estimate the size-based and sign-based heterogeneous link between the investigated series. The following outcomes were obtained: First, capital flight substantially reduces economic growth at diverse quantiles. Second, institutional quality significantly affects economic growth positively. Third, the effects of capital flight and institutional quality on growth are sign- and size-dependent, upholding their heterogeneous link. Fourth, while capital flight is detrimental to economic growth, institutional quality mitigates the devastating effect of capital flight on economic growth at diverse quantiles, both in the short run and long run. The study therefore recommends a business-friendly environment and investment- oriented policy to spur investors to massively invest in the country rather than transferring capital to other countries. Furthermore, quality institutions through good governance, political stability, a strong regulatory system, transparency, fighting corruption, and adherence to rules are required to reduce capital flight and thus enhance economic growth.

Suggested Citation

  • Joseph Chukwudi Odionye & Ndukwe O. Dibia & Ndubuisi Eme Uguru & Ndubuisi Agoh & Veronica Adaku Ihezukwu & Emeka Atuma & Chima Keneth Ifeanyi, 2025. "Evaluating The Heterogeneous Role Of Institutional Quality In Mitigating The Adverse Effects Of Capital Flight On Nigeria’S Economic Growth: Fresh Insights From A Quantile Nonlinear Ardl Framework," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 70(244), pages 143-171, January –.
    • Handle: RePEc:beo:journl:v:70:y:2025:i:244:p:143-171
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    Keywords

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    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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