Introduction
1.1 Background to the Study
According to (Ajilore, 2010) capital flight refers to any illicit movement of capital away from a domestic to a foreign economy. (Ndikumana and Boyce, 2002) also defined capital flight as residents’ capital outflows, excluding recorded investment abroad.(Schneider , 2003) defines it as that part of outflow of resident capital that is motivated by economic and political uncertainty. This implies that such political uncertainty will involve likely change of government or governmental policies as denoted by country instability and all forms of minor and major changes in the political circumstance of the country.
According to (Noor et al,2015), the movement of capital from domestic to foreign economy could be normal or economically good if it is of capital export or foreign direct investment. These flows of capital abroad, which are subjected to regulation and do not endanger national economy, would foster economic growth of a nation. However, the illicit movement of capital away from domestic to foreign economy would worsen the capital scarcity problem especially in emerging economies; thus, contributing to economic contraction as well as collapse of the financial markets.
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