TY - UNPB
T1 - Financial liberalization and capital flight
T2 - evidence from the African continent
AU - Hermes, Niels
AU - Lensink, Robert
PY - 2014
Y1 - 2014
N2 - During the past decades, many countries experienced considerable capital flight. Residents moved their wealth abroad, using different ways to accumulate foreign assets. Since the 1990s, several of these countries reformed their domestic financial markets in an attempt to improve the functioning of their domestic financial systems and to increase the efficiency of resource allocation—that is, to enhance financial development. In this paper, we examine the relationship between financial liberalization and capital flight, with special emphasis oncountries on the African continent, and carry out an empirical analysis using data for a sample of 18 countries from this region for the period 1973–2005. We find that whereas reforms related to opening up domestic banking markets for new domestic and foreign entrants and bank privatization programs seem to reduce capital flight, policies focusing on liberalizing the capital account increase capital flight.
AB - During the past decades, many countries experienced considerable capital flight. Residents moved their wealth abroad, using different ways to accumulate foreign assets. Since the 1990s, several of these countries reformed their domestic financial markets in an attempt to improve the functioning of their domestic financial systems and to increase the efficiency of resource allocation—that is, to enhance financial development. In this paper, we examine the relationship between financial liberalization and capital flight, with special emphasis oncountries on the African continent, and carry out an empirical analysis using data for a sample of 18 countries from this region for the period 1973–2005. We find that whereas reforms related to opening up domestic banking markets for new domestic and foreign entrants and bank privatization programs seem to reduce capital flight, policies focusing on liberalizing the capital account increase capital flight.
KW - Capital flight; Africa; sub-Saharan Africa; financial liberalization; financial reforms; financial markets
M3 - Working paper
VL - 14031-EEF
T3 - SOM Research Reports
BT - Financial liberalization and capital flight
PB - University of Groningen, SOM research school
CY - Groningen
ER -