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Estimating illicit financial flows is crucial for increasing transparency and fighting corruption at the regional level. This study aims to develop a comprehensive methodology for assessing both hidden and overt illicit financial flows arising from the fraudulent activities of local authorities. The proposed methodology involves modelling and estimating the volume of illicit financial capital based on the convergence of elements of descriptive and canonical analysis, as well as the Minkowski metric. The scientific and methodological approach considers 30 relevant indicators that allow for the most complete assessment of illicit financial flows mediated by public officials. The algorithm of the developed methodology provides for the following steps: (1) formation of a data sample of 30 factors; (2) division of factors into four groups by means of logical analysis: the first group – factors for assessing the loss of financial resources from implicit illegal financial flows; the second group - factors for assessing the loss of financial resources from explicit illegal financial flows; the third group – factors for assessing the probability of accumulation of implicit illegal capital flows; the fourth group – factors for assessing the probability of accumulation of implicit illegal capital flows; (3) checking the data for multicollinearity; (4) determining the presence of intergroup relationships and the direction of influence for the formed groups of factors based on canonical analysis; (5) normalizing the input statistical database; (6) optimizing the number of relevant factors by means of factor analysis, principal component analysis; (7) construction of an integral indicator, based on the Minkowski metric; (8) construction and graphical visualization of the rating of quantitative categories of illicit financial flows by the level of the integral indicator; (9) formalization of qualitative categories of the level of illicit financial capital based on the Harrington scale for assessing illicit financial flows.

This work studies the effects that fiscal rules have on the probability of a sudden stop of net financial flows using data from 96 countries for the period 1985–2016. The estimates of several probit models show that fiscal rules could lower the probability of a sudden stop if they are formally enforced. Enforcement of supranational debt rules is important in lowering the likelihood of a country going through a sudden stop. I find that enforcement of supranational debt rules makes the countries that adhere to supranational debt rules less vulnerable to sudden stops by roughly 3.33 to 4.07 percentage points depending on the specifications. This could be due to an increase in the credibility of the country in the eyes of investors following the stronger commitment of the governments to adhere to these rules. These effects have been estimated using different specifications and models. The results are robust. On the other hand, I do not find enough statistically significant evidence regarding the effects of monitoring and well-defined escape clauses. The results about fiscal rules without taking these mechanisms into account indicate that fiscal rules on their own do not decrease the probability of a sudden stop. I find evidence that improvements in the current account balance, economic growth and institutional quality make a country less vulnerable to sudden stops, while a greater credit level, trade openness, and short term external debt increase the likelihood of a crisis. These estimates are in line with the sudden stop literature.

There is a growing consensus that the presence of illegal and harmful cross-border financial flows is one of the factors impeding economic and human development. In recent years, a new conceptual framework for describing these “illicit” financial flows (IFFs) has emerged that combines issues ranging from cross-border money laundering to tax evasion. This article summarizes and clarifies recent empirical work in this area. Three types of studies are considered and critiqued: (i) methods of measuring IFFs, (ii) constructed risk indicators, and (iii) forensic studies that aim to uncover instances where illicit flows have occurred. The article discusses the limitations of all three approaches and proposes ways in which the research agenda on IFFs could be reasonably advanced, given the hidden nature of the subject.

This article examines illicit financial flows (IFFs) perpetuated in financial statements to develop a framework to curb IFFs. IFFs create opacity, impeding economic progress through investment deterrents and financial uncertainty. Through a comprehensive literature review and the synthesis of sets of qualitative propositions, the researchers previously developed a conceptual framework to address IFFs, and the purpose of the present article is to strengthen and validate the framework among stakeholders in the financial and audit sectors. Following a mixed inductive and deductive research approach and a qualitative methodological choice, the researchers conducted interviews among practitioners to enhance the framework, followed by a focus group to validate the framework. IFF challenges that emerged are tax evasion, for example, investments in untraceable offshore accounts, harming the economy, and bitcoins not being subject to regulation everywhere in the world and being used by cryptocurrency criminals to transfer IFFs to nations with lax regulations. Internationally, IFF risks are also determined by geographical position, trade links, and porous borders among countries that emerged as further challenges, calling for entities to execute existing policies, improve tax enforcement methods, apply cross-border coordination, and practice financial reporting transparency aimed at combatting IFF practices. On the strength of these, the industry surveys significantly enhanced the conceptual framework.

The paper deals to the critical analysis of the social account model’s implementation on regional level. The analysis is realized on two steps. The first consists of literature review regarding Czamanski’s model. The second is focused on the analysis of the updated regional accounting model. The analysis covers the theoretical and practical approaches and points out the model’s strengths and weaknesses. Finally, the model can be used as a good investigation instrument in order to quantify the regional economic progress and welfare.

Purpose The purpose of this paper is to analyze the financial friction effect of non-performing loans (NPLs) on financial intermediation (FI) through empirical evidence from the Brazilian experience. Design/methodology/approach The authors develop a new variable, financial intermediation flow and a new indicator, FI, both measures of FI. To empirically test FI, the authors use a dynamic panel data framework that draws on 101 banks (December 2000 to December 2015). Findings An increase in NPL reduces FI. Thus, NPL amplifies financial friction in FI. This result holds in different time frames, such as the pre-crisis period, the crisis period and the post-crisis period. Practical implications The FI measure developed in this study offers the policymakers a possibility to monitor financial stability. Originality/value This study adds to this debate by proposing a measure of FI derived from financial flows. This measure allows one to estimate the role of NPL as a financial friction that can pose a threat to financial stability.

The liberalization of capital flows is generally associated with prospects of higher growth. However, in developing countries, opening the capital account may also facilitate the flow of capital out of the country through illicit financial flows (IFFs). Given that IFFs drain the scarce public resources available to finance the provision of public goods and services, the extent of illicit capital flows from developing countries is serious cause for concern. In this context, as a first step in analysing the social costs of IFFs in developing countries, this article studied the relationship between IFFs and infant immunization coverage rates. Data for 56 low- and middle-income countries for the period 2002–13 were used in the empirical analysis. The main result was that the relative level of IFFs to total trade negatively impacted vaccination coverage but only in the case of countries with very high levels of perceived corruption. In this case, the total effect of an annual 1 p.p. increase in the ratio of IFFs to total trade was to reduce the level of vaccination coverage rates over the coming years by 0.19 p.p. Given that there was an annual average of 18 million infants in this cluster of 25 countries, this result suggests that at least 34 000 children may not receive this basic health care intervention in the future as a consequence of this increase in IFFs in any particular year. La libéralisation des flux de capitaux est généralement associée à des perspectives de croissance plus élevée. Cependant, dans les pays en développement, l’ouverture du compte de capital peut également faciliter la circulation des capitaux hors du pays par le biais des flux financiers illicites (FFI). Étant donné que les flux financiers illicites drainent les maigres ressources publiques disponibles pour financer la fourniture de biens et de services publics, l’ampleur des flux de capitaux illicites en provenance des pays en développement est très préoccupante. Dans ce contexte, comme première étape de l’analyse des coûts sociaux des FFI dans les pays en développement, le présent article a étudié la relation entre les FFI et les taux de couverture vaccinale des nourrissons. Les données de 56 pays à revenu faible ou intermédiaire pour la période 2002-2013 ont été utilisées dans le cadre d’une analyse empirique. Le résultat principal montre que le niveau relatif des FFI par rapport au total des échanges a eu un impact négatif sur la couverture vaccinale, mais seulement dans le cas des pays où la corruption perçue est très élevée. Dans ce cas, l’incidence totale d’une augmentation de 1 p.p. du ratio des FFI par rapport au total des échanges commerciaux a été de réduire de 0,19 p.p. le taux de couverture vaccinale au cours des années suivantes. Étant donné la moyenne annuelle de 18 millions de nouveau-nés dans ce groupe de 25 pays, ce résultat suggère qu’à l’avenir, au moins 34 000 enfants pourraient ne plus bénéficier de cette intervention de base en raison de cette augmentation des FFI au cours d’une année donnée. 资金流动自由化通常伴随增长加快的预期。但在发展中国家, 开放资本账户也可能助长非法资金流动（IFFs）形式的资金 外流。IFFs使得用于公共产品和服务的公共资源更加稀缺, 因 此发展中国家的的非法资金流动规模是一个严峻问题。作为 了解发展中国家IFFs社会成本的第一步, 本文研究IFFs和婴儿 免疫接种覆盖率的关系。采用20022013年56个中低收入国家 的数据进行实证分析。结果显示, IFFs相对于总贸易额的水平 对免疫覆盖率有负面影响, 但仅限于腐败程度非常严重的国 家。在这些国家, 当年IFFs对总贸易额的比值每增加1 p.p., 下 一年度免疫覆盖率就会降低0.19 p.p.。该组25个国家中每年 平均有1800万婴儿, 据此推算, 未来每年至少有34000名儿童 由于IFFs增长而不能得到基本卫生服务。 La liberación de los flujos de capital es generalmente asociada con perspectivas de mayor crecimiento. Sin embargo, en los países en desarrollo, la apertura de la cuenta de capital también puede facilitar el flujo de capital fuera del país a través de flujos financieros ilícitos (FFIs). Dado que los FFIs drenan los escasos recursos públicos disponibles para financiar la provisión de bienes y servicios públicos, el alcance de los flujos ilícitos de capital desde los países en desarrollo es una seria causa de preocupación. En este contexto, como un primer paso en el análisis de los costos sociales de los FFIs en los países en desarrollo, este artículo estudió la relación entre los FFIs y las tasas de cobertura de inmunización infantil. Los datos para 56 países de ingresos bajos y medios para el período 2002-13 fueron usados en el análisis empírico. El principal resultado fue que el nivel relativo de los FFIs en el comercio total impactó negativamente la cobertura de vacunación, pero solo en el caso de países con niveles muy altos de corrupción percibida. En este caso, el efecto total de un aumento anual de 1 p.p. en la proporción de los FFIs en el comercio total fue una reducción en el nivel de las tasas de cobertura de vacunación en los siguientes años de 0.19 p.p. Dado que había un promedio anual de 18 millones de niños en este grupo de 25 países, este resultado sugiere que por lo menos 34,000 niños podrían no recibir esta intervención básica de atención de la salud en el futuro como consecuencia de este aumento de los FFIs en un año determinado.

The review of modern methodological approaches to assessing the sustainable development of an industrial enterprise revealed the absence of generally accepted integral tools and the connection sustainable development trends with financial flows. To fill this gap this, taking into account the principle of balanced development economic, environmental and social components aimed. The purpose of the study is the development of a financial flow management model for the sustainable development of an industrial enterprise (using the example of a large Russian petrochemical enterprise). To achieve the goal of the purpose, the following methods implemented systematic approach, analysis and synthesis, comparative analysis, analysis of dynamics series, correlation analysis, regression analysis, solving the linear programming problem. As a result of the study, we came to conclusion about the shift of the enterprise's focus on environmental issues; the growth of the integral indicator of sustainable development of an industrial enterprise; the negative impact of credit resources on the aggregate indicator. The novelty of the study lies in the development of a new methodological solution, which is the basis of the financial management model for the sustainable development of the enterprise: it is adequate to the level of microeconomic system; covers three ways of measuring sustainable development and the possibility of choosing the best quality; allows to implement a proactive approach to managing financial flows with the principles of sustainable development of the enterprise (existing approaches either represent only a set of indicators or addressed the diagnosis of a specific subsystem, either do not consider the relationship between financial flows and the aggregated indicator of sustainable development of the enterprise).

This article analysed the relationship between illicit financial flows (IFFs) and human development, as measured with the United Nations Human Development Index (HDI), using data for 56 low- and middle-income countries for the period 2002–2013. The main result was that, in the cluster of the most corrupt countries, the total effect of an annual 10% point increase in the ratio of IFFs to total trade would imply a 21.7 points decrease in the HDI level as a long-run effect. Although apparently small, this estimated long-run effect is three times greater than the annual average increase observed in the HDI over the period for the entire sample of countries.

Foreign financial flows to emerging markets have increasingly become important following the opening of financial markets globally. These financial flows are a function of a country's fundamentals related to future productivity. However, macroeconomic fundamentals cannot explain some of the patterns in these financial flows, especially in emerging markets. In this study, we tested whether investor sentiment can be used as an alternative explanation for the foreign financial flows in South Africa. We employed net foreign purchases of shares and bonds, and we constructed a composite investor sentiment measure using a set of proxies. We then estimated autoregressive distributed lag models - linear and nonlinear - to determine the relationship between sentiment and foreign financial flows in both the long and short run. The results showed that investor sentiment does influence foreign financial flows into South Africa. Therefore, it can be concluded that besides economic performance and stability of a country, it is of crucial importance to improve the perceived outlook for the country as to attract foreign financial flows. This finding is relevant for South Africa as a country that depends significantly on foreign capital flows to fill its widening gap between the savings and the investment needed to support enough economic growth.