Financial inclusion and underground economy nexus in West Africa: Evidence from dynamic heterogeneous panel techniques

Gamal, Awadh Ahmed Mohammed

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Type :	Article
Subject :	H Social Sciences (General)
ISBN :	1573-9414
Main Author :	Gamal, Awadh Ahmed Mohammed
Title :	Financial inclusion and underground economy nexus in West Africa: Evidence from dynamic heterogeneous panel techniques
Hits :	79

Place of Production :	Tanjung Malim
Publisher :	Fakulti Pengurusan & Ekonomi
Year of Publication :	2024
Notes :	Economic Change and Restructuring
Corporate Name :	Universiti Pendidikan Sultan Idris
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Abstract : Universiti Pendidikan Sultan Idris

We employ dynamic heterogeneous panel estimation techniques which include Dynamic Fixed Effects, Mean Group, and Pooled Mean Group estimators to explore the underground economy (UE) and financial inclusion (FI) relation for ten West African nations during the 2004–2021 period. Applying Pedroni cointegration test, the results present evidence of a long-term relation between UE and FI (alongside corruption, inflation rate, money supply, agricultural output, and trade). The results of panel estimation portray a long-term significant positive influence of FI on UE, but a short-term significant negative relation between FI and UE. In addition, corruption, money supply, and international trade have a long-term significant negative influence on UE, while inflation supports long-term expansion of UE. Also, a short-term significant negative relation exists between inflation (and trade) and UE, while a short-term significant positive relation is found between money supply and UE. The results of Dumitrescu–Hurlin causality test signal a one-way causality from FI to UE. Therefore, policies geared toward enhancing FI, reducing corruption and money supply, and improving international trade are recommended to reduce UE. © 2024, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.

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