Foreign direct investment, anti-money laundering regulations and economic growth

Abstract

This study seeks to establish the impact of anti-money laundering (AML) regulations on economic growth as well as how AML regulations influence the foreign direct investment (FDI)-growth nexus for 165 economies across the globe. We employ Prais-Winsten and Hansen (2000) panel threshold regression estimation techniques to test the hypotheses of the study. We use data ranging from 2012 to 2018. We provide evidence that AML regulations generally stimulate growth; however, AML regulations only stimulate growth below the threshold value. Again, although we report that FDI stimulates growth, the growth-enhancing impact of FDI is more pronounced at higher levels of AML regulations.