Political Stability and Financial Crime: An Empirical Inquiry into Their Relationship

Abstract

This study focused on ‘investigating the relationship between political stability and financial crime’. One research question and one hypothesis guided the study. Works of literature pertinent to the study were reviewed. The population of 214 World Bank member countries as of the year 2021 also represents the sample. However, it was further stripped to 155 countries due to the absence of data for variables in some countries, which was refined by removing those countries from the sample. Data for the study were collected from the World Bank Governance (WGI) and Development Indicators (WDI). The level of financial crime data was mirrored using the control of corruption data. The year 2021, the most recent year available on the World Bank indicator database, was explored because the researcher sampled the total population, focusing on the global countries rather than comparing time series. The data were analysed, and all the results were computed using the R-studio. The results were tested using the regression analysis, including the t-test and the correlation coefficients, which were tested at a 0.05 level of significance to ensure solid evidence. This study found that political stability, with a negative coefficient, reduces financial crime, though not significantly, therefore, political stability was found not to have a statistically significant influence on financial crime. This study recommends that since political stability was found to have only a marginal and statistically insignificant impact on reducing financial crime in 2021, it should not be relied on in isolation. Instead, it should be integrated into broader, multi-dimensional strategies that include stronger institutions, effective law enforcement, and robust regulatory frameworks.