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Abstract

The study investigated the extent to which information and communication technology adoption influence illicit financial flows in Nigeria and the mediating role of institutional quality in the relationship between information and communication technology adoption and illicit financial flows in Nigeria. The study adopted the Autoregressive Distributive Lag Model to analyze data sourced from Global Financial Integrity (2024) and World Bank (2024) database between 2000 to 2023. Using internet users per 1000 population, mobile subscription per 100 subscribers and telephone subscription per 100 subscribers as proxies for information and communication technology adoption, the study found that all proxies for Information and communication technology adoption to a large extent influence illicit financial flows in Nigeria. Further, a strong institutional framework enables information and communication technology adoption curb illicit financial flows while a weak institutional framework facilitates illicit financial flows. Therefore, policy makers should focus on harnessing maximally the positive effects of technology (increased monitoring and transparency) while regulating its possible negative outcomes such as capital flight, cybercrime and so on. Also, in Nigeria, corruption is a key driver of illicit financial flows and as such strong institutional frameworks are needed to enhance accountability and transparency. Meanwhile, gross domestic product growth rate is less directly related to illicit financial flows, suggesting that it is not sufficient on its own to address illicit financial flows while inflation rate is directly related to illicit financial flows and as such should be managed properly.