Journal of Business and Enterprise Development; Vol. 7, (2017), PP 151-180
30 Pages Posted: 17 Jul 2017
Date Written: 2017
The study investigated the short-run and long-run determinants of capital flight in Ghana using the autoregressive distributed lag (ARDL) estimation technique. The long-run and short-run results show that real GDP growth rate, higher domestic real interest rate over foreign interest rate, financial development, good governance and strong property rights reduce capital flight, while external debt to GDP leads to increase in capital flight in Ghana. However, lagged external debt to GDP and lagged financial development had negative and positive effect respectively in the short-run. The study recommends that government should adopt more pro-growth policies and resort to domestic borrowing to reduce external debt. The Central Bank of Ghana should improve on the development of the financial sector and ensure competitive domestic interest rates. It is also recommended that Public Accounts Committee (PAC) in Ghana should continue to ensure accountability and transparency to strengthen the interest of domestic investors.
Keywords: Capital, Portfolio, Autoregressive, distributed, lag
JEL Classification: C32, F21, F 0, G11
Suggested Citation: Suggested Citation
Forson, Richmond and Obeng, Kwasi Camara and Brafu-Insaidoo, William, Determinants of Capital Flight in Ghana (2017). Journal of Business and Enterprise Development; Vol. 7, (2017), PP 151-180 . Available at SSRN: https://ssrn.com/abstract=2999723