Title: A macroeconometric analysis of the effects of financial liberalisation on capital flight in Nigeria

Authors: Anthony Enisan Akinlo, Olubanjo Taiwo Ajilore

Addresses: Centre for Industrial Research and Development, Obafemi Awolowo University, Ile Ife, 220282, Nigeria. ' Department of Economics, Obafemi Awolowo University, Ile Ife, 220282, Nigeria

Abstract: The study utilised a macro econometric simulation model to investigate the effects of liberalisation policies in the financial sector on capital flight phenomenon in Nigeria. The simulation experiments revealed that an interest rate deregulation policy positively stimulated capital flight and was predominantly inflationary. Relaxations of the required reserve requirements ultimately depressed capital flight, while a change in exchange rate policy produced a dampening effect on capital flight flows. The study concluded that financial liberalisation per se might not be the panacea for stemming capital flight, but rather, deeper and more fundamental changes of the economic and political systems.

Keywords: financial liberalisation; capital flight; Nigeria; macroeconometrics; macro econometric simulation; financial sector; interest rates; deregulation policies; inflation; reserve requirements; exchange rates; economics; political systems; business; emerging markets.

DOI: 10.1504/IJBEM.2011.040945

International Journal of Business and Emerging Markets, 2011 Vol.3 No.3, pp.217 - 250

Available online: 27 Jun 2011 *

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