Impact of Political Stability and Corruption on Money Laundering in Developing Nations
DOI:
https://doi.org/10.3456/bhvcra45Keywords:
Developing Countries, Governance, Illicit Financial Outflows, Institutions, Money LaunderingAbstract
The main aim of this study is to analyze the factors influencing money laundering in developing nations and to assess the role of governance institutions in mitigating it. The research employs Ordinary Least Squares (OLS) and Feasible Generalized Least Squares (FGLS) techniques to evaluate how governance indicators such as political stability and control of corruption along with economic variables including foreign direct investment (FDI), official development assistance (ODA), GDP growth rate, and inflation, impact the extent of money laundering across 127 developing countries during the period 2004 to 2024. The results reveal that a 1% improvement in political stability and control of corruption can decrease money laundering by approximately 36.4 million dollars. Drawing from these findings, the study also proposes key policy measures aimed at reducing illicit financial outflows and strengthening governance frameworks in developing economies.
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