A nexus between corruption, money laundering (ML) and inflation: evidence from South Asian countries

Abstract

PurposeMany 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 financial performance has been the focus of various research. The present study aims to investigate the relationship between ML, corruption and inflation.Design/methodology/approachThis study used the panel data of five South 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.FindingsThis study discovered that corruption and ML have a significant and positive link with inflation in five South Asian nations using the corruption perception index and the anti-money laundering (AML) index.Practical implicationsThis research advises that government authorities strengthen anti-corruption and AML laws enforcement.Originality/valueTo the best of the authors’ knowledge, this is the first paper that explains the linkage between corruption, ML and inflation in five south Asian nations.