Title
Determinants of capital flight: An econometric case study of Bangladesh
Document Type
Article
Publication Date
1-1-2003
Abstract
While Bangladesh remains steeped in staggering external debt, it is also concurrently witnessing a substantial outflow of domestic capital. This situation raises serious policy concerns for its development prospects. This paper applies the Bounds testing and the Autoregressive Distributed Lag procedures to confirm the existence of a long-run equilibrium relationship between capital flight and its determinants, and to estimate the long-run and short-run behavior of capital flight from Bangladesh. The estimated results suggest that political instability is the single most significant cause of capital flight from Bangladesh, while increases in corporate income taxes, higher real interest rate differentials between the capital-haven countries and Bangladesh, and lower GDP growth rates also significantly contribute to capital flight.
Recommended Citation
Alam, M., & Quazi, R. (2003). Determinants of capital flight: An econometric case study of Bangladesh. Retrieved from https://digitalcommons.pvamu.edu/business-facpubs/8