FINANCIAL DEVELOPMENT AND SHADOW ECONOMY IN AFRICA: EVIDENCE FROM PANEL QUANTILE REGRESSION

[...]despite the role of financial development in curbing the activities in the shadow economy, the scope and precise direction of causality in this relationship have not been sufficiently explored in the literature especially for African countries where policy is usually clumsy and there are not enough impetus for financial development. [...]the objectives of our study is three-fold. [...]we provided the 1 https://blogs.afdb.org/afdb-championing-inclusive-growth-across-africa/post/recognizing-africas-infor mal-sector-11645 rationale for the interactive impact of institutional quality, following the weak institutional framework of most of the countries in the region. [...]despite the controversies in empirical literature on shadow economy, one fact is clear; that most activities in the shadow economy would have been taxed if they were detected and captured in official records. [...]since the earlier 1990s, several studies have been conducted to understand the nature and determinants of the shadow economy and its interaction with financial development in promoting or impeding economic growth. A similar study by Gharleghi and Jahanshashi (2020) found that financial sector reforms helped to reduce the size of the shadow economy in 29 countries, for the period 1975 - 2015. [...]a study by Berdiev