Faculty Publications

Title

Determinants of capital flight: An econometric case study of Bangladesh

Document Type

Article

Journal/Book/Conference Title

International Review of Applied Economics

Volume

17

Issue

1

First Page

85

Last Page

103

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.

Original Publication Date

1-1-2003

DOI of published version

10.1080/713673164

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