Abstract
The study utilised a macro econometric simulation model to investigate the effects of liberalisation policies in the financial sector on capital flight phenomenon in Nigeria. The simulation experiments revealed that an interest rate deregulation policy positively stimulated capital flight and was predominantly inflationary. Relaxations of the required reserve requirements ultimately depressed capital flight, while a change in exchange rate policy produced a dampening effect on capital flight flows. The study concluded that financial liberalisation per se might not be the panacea for stemming capital flight, but rather, deeper and more fundamental changes of the economic and political systems.
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