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How important is the lesson of the correlation between advancing the globalization process and intensifying the money laundering phenomenon?

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  • AL-Kasawnih Akad

    (The Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

It is true that advancing the globalization process generates a numerous negative externality. Such a negative effect is the proliferation of financial transactions carried out at or even beyond the limits of legality and fairness. The author of this study assumes that “the greater the cross-border financial flows, the greater the money-laundering operations and negative impact on the behavior of the economic actors”. The truism related to this correlation must be deeply understood and the lessons to be delivered must be learned in time. Hidden economy is perceived as all incomes generated in legitimate way but not disclosed to tax administrations, as well as activities such as drug trafficking, gambling, smuggling and others. What distinguishes our study is Quantitative and analytical analysis and to draw conclusions based on those results, through the adoption of a digital index on economic globalization, and the adoption of another numerical indicator of money laundering with its components and weights as well. Additionally, a statistical analysis of the relationship between economic globalization and money laundering will be based on “Pearson correlation coefficient” as we are going to adopt one variable (Economic Globalization) as an independent variable and other variable (Money Laundering) as a dependent variable. The KOF index of globalization will be adopted here, and the selected countries as a study samples will be given a ranking from 1 to 15 according to their degree of economic globalization. Results of my research shows that a negative weak relationship correlation between the degree of the economic globalization of the state and the phenomenon of money laundering which is represented by the size of the hidden economy, which means that the increase of the value for the independent variable (economic globalization) leads to the decline of the value for the dependent variable (money laundering).

Suggested Citation

  • AL-Kasawnih Akad, 2019. "How important is the lesson of the correlation between advancing the globalization process and intensifying the money laundering phenomenon?," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 13(1), pages 1267-1276, May.
    • Handle: RePEc:vrs:poicbe:v:13:y:2019:i:1:p:1267-1276:n:112
    DOI: 10.2478/picbe-2019-0112
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    References listed on IDEAS

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    1. Leandro Medina & Mr. Friedrich Schneider, 2018. "Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?," IMF Working Papers 2018/017, International Monetary Fund.
    2. Friedrich SCHNEIDER, 2016. "Estimating the Size of the Shadow Economy: Methods, Problems and Open Questions," Turkish Economic Review, KSP Journals, vol. 3(2), pages 256-280, June.
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