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External Debt, Corruption and Capital Flight in Emerging Economies: A Dynamic GMM Analysis

Author

Listed:
  • Molka Ben Ayed

    (USO - جامعة سوسة = Université de Sousse = University of Sousse)

  • Abderraouf Ben Ahmed Mtiraoui

    (MOFID-Université de Sousse)

  • Anis Bouabid

    (USO - جامعة سوسة = Université de Sousse = University of Sousse)

Abstract

This study investigates the relationship between external debt, corruption, and capital flight in emerging economies over the period 2004-2020. The selected timeframe ensures the availability of consistent data while encompassing both periods of macroeconomic stability and episodes of global financial stress. To address potential endogeneity, unobserved country-specific effects, and the dynamic nature of capital flight, the analysis employs the Arellano-Bond dynamic panel estimator (dynamic panel framework estimated using the Generalized Method of Moments (GMM)). This approach uses lagged levels of the endogenous variables as instruments, allowing for consistent estimation of the impact of external debt and corruption on capital flight. The methodology provides robust evidence on the dynamic interactions between governance quality, external borrowing, and capital outflows in emerging economies.

Suggested Citation

  • Molka Ben Ayed & Abderraouf Ben Ahmed Mtiraoui & Anis Bouabid, 2026. "External Debt, Corruption and Capital Flight in Emerging Economies: A Dynamic GMM Analysis," Post-Print hal-05527841, HAL.
    • Handle: RePEc:hal:journl:hal-05527841
    DOI: 10.55284/mfv1qy13
    Note: View the original document on HAL open archive server: https://hal.science/hal-05527841v1
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    References listed on IDEAS

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    1. Williams, Gwion & Alsakka, Rasha & ap Gwilym, Owain, 2015. "Does sovereign creditworthiness affect bank valuations in emerging markets?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 36(C), pages 113-129.
    2. Ağca, Şenay & Celasun, Oya, 2012. "Sovereign debt and corporate borrowing costs in emerging markets," Journal of International Economics, Elsevier, vol. 88(1), pages 198-208.
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