Search results

Despite the vulnerability of rapidly developing and emerging market economies, researchers have paid less attention to the determination of the size of money laundering (ML) in these economies, including the United Arab Emirates (the UAE). Therefore, this paper aims to estimate the magnitude of ML in the UAE between 1975 and 2020 based on the currency demand approach (CDA).

The study uses the Gregory–Hansen cointegration technique alongside the autoregressive distributed lag bounds testing procedure to estimate the CDA model.

The results illustrate that an amount equivalent to about 19.034% of the GDP is laundered in the UAE between 1975 and 2020, on average, with the value lying between 15.129% and 23.121%. In addition, the results demonstrate the importance of the real estate market, gold trade, remittance channels and the size of the underground economy in facilitating the laundering of illicit funds in the country.

To the best of the authors’ knowledge, the study is the pioneering attempt at estimating the amount of illicit funds laundered in the UAE. Besides, the adoption of a novel, yet robust, approach based on the modification of the CDA technique also sets the study apart as it ensures a correct, clear, unambiguous and indisputable estimate of the magnitude of ML is obtained. In addition, it is expected that the outcome of the study will expand the frontiers of knowledge among policy makers and relevant agencies and ensure the adoption of the most efficient and effective measures to curb the ML menace in the country.

The specific objective of the study is to investigate the presence of natural rate of crime rates in selected emerging economies by using panel unit roots. The majority of the literature examines the issue using conventional unit root tests in a country-specific context. Meanwhile, there is no panel unit root investigation has been undertaken considering both cross-sectional dependence (CD) and structural changes.

As a result, this study is to fill the aforementioned gap and validate the natural rate of crime rates for 10 countries by using a Fourier panel unit root test. The advantage of the test is that structural shifts are modelled as gradual or smooth changes with a Fourier approximation, and it also accounts cross-sectional dependency. Thus, the Fourier panel unit root test may have better performance in capturing potential changes in the nature of data.

The result of the conventional unit roots test shows evidence of the hysteresis effect in crime, as it stands does not adequately account for smooth transitions or breaks. On contrary, the Fourier panel unit root test confirms the natural rate hypothesis in crime rates. The present results highlight the detrimental effects of crime cannot be abated by short-run deterrence policies.

Contrary to previous studies, the theoretical implications of the study imply that the empirical models consider the dynamic nature of crime rates should account for natural rate properties instead of the hysteresis assumption.

This paper aims to explore the impact of corruption (CP) on income inequality (IN) by considering the size of informal sector (IFS) at different levels of percentiles.

This paper uses a panel quantile regression approach for a sample of 50 developing countries. The study also applies panel co-integration (Kao residual co-integration test) in order to examine the long-run relationship between CP and IN.

This paper using a panel quantile regression approach shows that the high incidence of IFS in an economy marginalizes CP's positive effect because it works as a source of poor peoples' livelihood and skillful individuals. The spread of IFSs in the developing economies may raise earnings among groups and individuals who remain unemployed. Moreover, the results show that CP creates asymmetry in income distribution; fascinatingly, the asymmetric income distribution is high when CP is at higher percentiles.

Due to non-availability of IFS, we restrict our analysis up to 50 developing countries.

CP devastates the effectiveness of institutions over time. Therefore, the government should have to take bold steps to reduce CP in society. Another policy implication of this study is that the government should reduce CP to decrease IN in less developing countries. Moreover, to increase the net base, the authorities need to bring IFS under the umbrella of regulation to avoid inequality in society. In developing economies, a higher part of labor force is related to IFS; therefore, our findings suggest a dire need to reduce labor exploitation in IFS. The policymakers can reduce labor exploitation by reducing the size of IFS, which ultimately reduces IN.

On the basis of the authors’ findings, this paper further suggests that it is mandatory for government to reduce CP in order to reduce IN. Moreover, to reduce IN, one needs to reduce the size of IFS.

This study is unique as it is the first that examined the role of IFS in establishing the effect of CP on IN for developing countries at different percentiles.

The study's objective is to examine the relevance of globalization in affecting the size of the shadow economy in selected African nations.

To do this, the authors employ the KOF globalization index and implement both static and dynamic common correlated mean group estimators on a panel of 24 African nations from 1995–2017. This technique accommodates the issue of cross-sectional dependence, sample bias and endogenous regressors. Panel threshold analysis is also conducted to establish the nonlinearity between globalization and the shadow economy. To examine the causality between the variables, the study employs Dumitrescu and Hurlin's panel causality test.

The results show that globalization reduces the size of the shadow economy. The results of the nonlinear analysis suggest a U-shaped relationship. Overall globalization has a threshold impact of 48.837%, economic globalization has 45.615% and political globalization has 66.661% while social globalization has a threshold value of 35.744%. The results of the panel causality show that there is a bidirectional causality between the two variables.

The results suggest that the government and other relevant authorities need to introduce capital controls and other policy measures to moderate the degree of social, political and cultural diffusion. Appropriate policies should be formulated to monitor the extent of African economic openness to other continents to maximize the gains from globalization.

Apart from being the first study in the African region that evaluates the relevance of globalization in controlling the shadow economy, it also analyzes the dynamics and threshold analysis between the two variables using advanced panel econometrics which makes the study unique. The study suggests that globalization tools are useful for affecting the size of the shadow economy in Africa. This study provides fresh empirical evidence on the impact of globalization on the shadow economy in the case of Africa.

This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.

This literature review includes both qualitative and quantitative studies, based on the idea that the findings from different research paradigms can shed light on the complex interactions between different financial reporting controls. The authors use a mixed-methods research synthesis and select 64 accounting journal articles to analyze the main proxies for fraud, the stages of the fraud process under investigation and the roles played by auditors and enforcers.

The study highlights heterogeneity with respect to the terms and concepts used to capture the fraud phenomenon, a fragmentation in terms of the measures used in quantitative studies and a low level of detail in the fraud analysis. The review also shows a limited number of case studies and a lack of focus on the interaction and interplay between enforcers and auditors.

This study outlines directions for future accounting research on fraud.

The analysis underscores the need for the academic community, policymakers and practitioners to work together to prevent the destructive economic and social consequences of fraud in an increasingly complex and interconnected environment.

This study differs from previous literature reviews that focus on a single monitoring mechanism or deal with fraud in a broadly manner by discussing how the accounting literature addresses the roles and the complex interplay between enforcers and auditors in the context of accounting fraud.