The Impact of Money Laundering on Economic Development in Sub-Saharan Africa

Abstract

This study aimed to examine the impact of money laundering on economic development in Sub-Saharan Africa. The Basel Index, levels of corruption, the strength of legal rights, the depth of credit information, the informal economy, and foreign direct investment were the main independent variables used to measure money laundering in the study. The tests carried out as part of this research indicated a negative relationship between economic development and each of the independent variables, the Basel Anti Money Laundering Index, and the Informal Economy. On the other hand, there is an insignificant relationship between economic development and the strength of Legal Rights. Also, a positive relationship exists between each of the corruption scores, the Depth of Credit Information, and Foreign Direct Investment. This was supported by the Generalized Method of Moments (GMM) in addition to Pooled Ordinary Least Squares (POLS) and Random Effects (RE) models by two dependent variables: GDP Per Capita and Human Development Index