Benefit or burden? An exploratory analysis of the impact of anti‐money laundering regulations on sustainable development in developing economies

Abstract

Over the years, efforts have been put in place to address money laundering activities including financial crime and illicit funding controls. These efforts have been recognized to promote financial integrity and effective governance systems. They have been further adjudged by the United Nations' sustainable development (Goal‐16) with a major concern to achieve peaceful, just and inclusive development. Previous studies reveal that money laundering activities have major implications for economic growth. However, little is known about the main implications of anti‐money laundering (AML) regulations on sustainable development. On this note, this study contributes to the ongoing debate by investigating the relationship between AML regulations and sustainable development in 72 developing economies, consisting 29 upper middle income, 33 low middle income and 10 low income countries. Using instrumental variable generalized method of moment (IV‐GMM), panel quantile estimation technique and dynamic panel threshold analysis, the findings are as follows. First, AML regulations promote sustainable development. Second, the panel quantile regression reveals that countries with moderate AML regulations attain higher sustainable development than those with excessive regulations. Further results on regional analysis show that AML regulations are more effective in Latin America, South Asia, Europe & Central Asia and Middle East & North Africa than in Sub‐Saharan Africa and East Asia & Pacific. These results are robust and stable after conducting a number of robustness analyses. The study suggests that effective AML regulations should be moderate and well‐implemented to further improve economic, social and environmental sustainability in developing countries.

Globalization and shadow economy: a panel analysis for Africa

“…The literature on shadow economy has mainly focused on its determinants such as income per capita and institutional factors (Tanzi, 1982(Tanzi, , 1999Friedman et al, 2000;Schneider and Enste, 2000;Choi and Thum, 2005;Canh et al, 2020a;Ajide and Ojeyinka, 2023). Though role of globalization in an economy has been well discussed in the literature, the relationship between REPS 9,2 globalization and the shadow economy is relatively scanty.…”

“…, 2000; Schneider and Enste, 2000; Choi and Thum, 2005; Canh et al. , 2020a; Ajide and Ojeyinka, 2023). Though role of globalization in an economy has been well discussed in the literature, the relationship between globalization and the shadow economy is relatively scanty.…”

Environmental effect of Chinese FDI in Africa: Evidence from pooled mean group

“…Studies further prove that the relationship between CO 2 emission and FDI is inverted U-shaped associations (Pazienza, 2019) while Abdouli and Hammami (2018) predict pollution halo impact of FDI in emerging economies. Furthermore, the STIRPAT (Stochastic Impacts by Regression on Population, Affluence, and Technology)'s framework has also been widely used by scholars to analyse the implications of technological spill over effect of FDI on the environment (Ajide & Ojeyinka, 2024;Dada et al, 2023). This model predicts the interaction of environmental factors on three important pillars: technology, population and prosperity.…”