Impact of Capital Flight on Exchange rate in Nigeria

Johnny, Nelson; Okoyan, Krokeme; Markjarkson, Dumani; Timipere, Ekokeme Tamaroukro

doi:10.6007/ijarafms/v8-i1/3794

Cited by 9 publications

(8 citation statements)

References 3 publications

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“…However, this is not statistically significant in the fixed model. This result is not consistent with the findings of ahead and Nelson et al (2018), who found a positive and significant relationship between capital flight and exchange rate. Economic growth is not statistically significant and has a negative impact on capital flight in the three models.…”

Section: Resultscontrasting

confidence: 99%

Capital flight and extent of corruption control in the least corrupt African countries

Pacific

Mbai-Akem

2019

IGDR

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PurposeThe purpose of this paper is to investigate the effect of corruption control on capital flight in the least corrupt African countries.Design/methodology/approachUsing panel data covering the period of 1996-2010.FindingsThe results show that the extent of corruption, the total natural resources rent are statistically significant and affect positively the capital across the pooled, random and fixed effects. Inflation and economic growth are also found to have a negative impact on capital flight. Moreover, the exchange rate has a negative and significant effect on capital flight.Practical implicationsThe findings of this study suggest that the extent of corruption control by responsible institutions can be considered as one of the most effective weapons in the fight against capital flight in the least corrupt African countries.Social implicationsThe paper recommends to the government of the least corrupt countries in Africa to create an enabling political and economic environment for investor’s attractiveness. This, in turn, will reduce the occurrence of capital flight and lead to the sustainable development.Originality/valueThe findings of this study suggest that the extent of corruption control by responsible institutions can be considered as one of the most effective weapons in the fight against capital flight in the least corrupt African countries. The paper recommends to the government of the least corrupt countries in Africa to create an enabling political and economic environment for investor’s attractiveness. This, in turn, will reduce the occurrence of capital flight and lead to the sustainable development.

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Section: Resultscontrasting

confidence: 99%

Capital flight and extent of corruption control in the least corrupt African countries

Pacific

Mbai-Akem

2019

IGDR

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“…Also, a positive relationship exists between exchange rate and GDI. Furthermore, Nelson et al (2018) examined the impact of capital flight on exchange rate in Nigeria from 1990 to 2014 using OLS techniques on the following variables: capital flight, real exchange rate, foreign direct investment, current balance, foreign borrowing, and external reserves. Results revealed that there is a negative relationship between capital flight and exchange rate.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Furthermore, capital transferred abroad from a host country cannot in any way contribute to domestic investment and other productive activities. It is still unknown whether the significantly lower levels of investment with corresponding multiplier consequences on other aspects of the economy, including the growing rate of unemployment, social unrest, hunger and starvation, and general economic recession in the country, are mainly a result of capital flight (Nelson, et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Capital Flight and Economic Development: Evidence from Nigeria

Akinwale¹

2020

Management and Economics Research Journal

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This study examined the nexus between capital flight and economic development in Nigeria. The null hypothesis was that capital flight has no significant relationship with economic development in Nigeria. The study used the auto regressive distributed lag (ARDL) method on data obtained from the Central Bank of Nigeria and the World Bank, for the period 1986–2018, to examine the relationship between capital flight and economic development in Nigeria. The study examined the unit root problem and cointegrating properties of the data. The unit root problem was tested for by using the augmented Dickey–Fuller (ADF) and Phillips–Perron (PP) tests. Findings from ARDL showed an inverse relationship exists between capital flight, real exchange rate, and economic development. This implies that the variables contributed significantly to reduce economic development within the study period. However, a positive relationship existed between economic development and adult literacy rate in Nigeria. By implication, improvements made in providing quality and affordable education tend to have a positive impact on economic development in Nigeria. The study concluded that economic development is strongly influenced by capital flight, real exchange, and adult literacy rates in Nigeria. The study, therefore, recommends that government policies to curb capital flight should be introduced and monitored so as to lead to economic development in Nigeria.

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“…They affirm that factors such as political instability, looted funds, foreign education, and foreign medical tourism are the major causes of capital flight in Nigeria. In another dimension, but closely related to Nigeriaspecific studies, Nelson et al (2018) report that capital flight has an insignificant negative interaction with capital flight in Nigeria between 1990 to 2014, while Effiom et al (2020) find evidence of a negative and significant impact of capital flight on domestic investment in Nigeria. In particular, their study documents a more severe long-run impact of capital flight on domestic investment than capital flight's short-run impact.…”

Section: Literature Reviewmentioning

confidence: 93%

Fighting capital flight in Nigeria: have we considered global uncertainties and exchange rate volatilities? Fresh insights via quantile ARDL model

Uche

Effiom

2021

SN Bus Econ

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This study aims to fill the observed gap in the literature related to capital flight and its determinants. Following this observation, the main objective of the current effort is to unravel the potential influence of global economic policy uncertainties and exchange rate deviations on capital flight. Annual time series data between 1970 and 2015 were used for empirical investigations through the application of the newly introduced quantile autoregressive distributed lag model. Following this extensive investigation, the following evidence emerged. A long-run relationship exists between global economic uncertainties, exchange rate volatilities, and capital flight in Nigeria. Second, we discover that the effects of exchange rate volatility and global uncertainty are sensitive to different quantiles of capital flight distributions. Third, capital flight shows strong evidence of hysteresis in all quantiles. This makes capital flight a systemic problem as past capital flight induces more capital flight. In addition, we found evidence of long-run distributional asymmetric effects between the past values of capital flight and that of economic growth on capital flight. In addition, exchange rate and GDP, rather than global uncertainty are the major determinants of capital flight in Nigeria in terms of their significant positive long-term impacts on capital flight in all quantiles of capital flight distributions. Therefore, if the fight against capital migration must be won in Nigeria and other countries facing similar challenges, stabilization of the exchange rate, among other things is paramount. In addition, due to the presence of distributional asymmetric effects, a one-size-fits all policy may not be helpful. The overall findings have strong policy implications for the fight against capital flight.

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Impact of Capital Flight on Exchange rate in Nigeria

Cited by 9 publications

References 3 publications

Capital flight and extent of corruption control in the least corrupt African countries

Capital flight and extent of corruption control in the least corrupt African countries

Capital Flight and Economic Development: Evidence from Nigeria

Fighting capital flight in Nigeria: have we considered global uncertainties and exchange rate volatilities? Fresh insights via quantile ARDL model

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