A nexus between corruption, money laundering (ML) and inflation: evidence from South Asian countries
| DOI | https://doi.org/10.1108/JMLC-09-2021-0096 |
| Published date | 04 November 2021 |
| Date | 04 November 2021 |
| Pages | 730-741 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Ijaz Hussain Shah,Kinza Aish |
A nexus between corruption,
money laundering (ML) and
inflation: evidence from South
Asian countries
Ijaz Hussain Shah
Department of Management Sciences, Superior University Lahore,
Lahore, Pakistan, and
Kinza Aish
Department of Management Sciences, COMSATS University Islamabad,
Sahiwal Campus, Sahiwal, Pakistan
Abstract
Purpose –Many studies of corruption and money laundering (ML) have been conducted throughout the
previous few decades. The impact of corruption and ML on economic growth, banking performance and
corporate financialperformance has been the focus of variousresearch. The present study aims to investigate
the relationshipbetween ML, corruption and inflation.
Design/methodology/approach –This study used the panel data of fiveSouth Asian countries from
2013 to 2019 (Pakistan, India,Bangladesh, Sri Lanka and Nepal). Further, fixed effect (FE) and random effect
(RE) econometric regression models are used to analyze the data. Additionally, generalized methods of
moment (GMM)technique is used to check the results robustness.
Findings –This study discovered that corruption and MLhave a significant and positive link with inflation in
five South Asiannations using the corruption perception index and the anti-money laundering (AML) index.
Practical implications –This research advises that government authorities strengthen anti-corruption
and AML laws enforcement.
Originality/value –To the best of the authors’knowledge, thisis the first paper that explains the linkage
between corruption,ML and inflation in five south Asian nations.
Keywords Inflation, Panel data, Corruption, Money laundering
Paper type Research paper
Introduction
Previous research has provided a variety of views on corruption. The notion of corruption is
still up for debate among academics (Mikkelsen, 2013). Corruption has typically been defined as
the loss of integrity in the performance of official functions (Theobald, 1990). As a result,
bribery-influenced public officials are frequently connected with the term “corruption.”
However, it is becoming more widely understood that corruption may affect both public and
private individuals and that it can go beyond bribes (Bhargava, 2005;Ng, 2006). Money
laundering (ML) and corruption are not similar, yet they are inexorably linked. Bribery is the
most common kind of corruption that also involves ML. It is used to make it easier for criminals
to get their money into the banking system. International agencies such as the Financial Action
JEL classification –C33, D73, E31, E62
JMLC
25,4
730
Journalof Money Laundering
Control
Vol.25 No. 4, 2022
pp. 730-741
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2021-0096
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