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

Author

Listed:
  • Thang Ngoc Doan

    (Banking Academy of Vietnam)

  • Giang Huong Mai

    (Banking Academy of Vietnam)

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.

Suggested Citation

  • Thang Ngoc Doan & Giang Huong Mai, 2025. "The impact of shadow economy on capital flight: An African evidence," Economics Bulletin, AccessEcon, vol. 45(4), pages 2080-2087.
    • Handle: RePEc:ebl:ecbull:eb-24-00326
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    File URL: http://www.accessecon.com/Pubs/EB/2025/Volume45/EB-25-V45-I4-P180.pdf
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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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