ABSTRACT
Capital is a phenomenon which though unobservable is assumed to be prevalent in developing countries Kenya being among, this study is aimed at Evaluating capital flight volatility on Kenyan domestic investment and also finding out whether real interest rate differential, real exchange rate, foreign direct investment, inflation rate and external debts influence capital flight and also determining the type of relationship that exist between capital flight and domestic investment and finally determining its trend from 2004-2014. The research will be guided by the following research questions:
1. What is the existing relationship between domestic investment and capital flight in Kenya?
2. Does real interest rate differential, real exchange rate, inflation rate, external debt and net foreign direct investment influence capital flight?
3. What is trend of capital flight in Kenya? This research will rely on secondary and also will use both multiple linear regression and least square models as analysis
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In Nigeria (Agu, 2003) carried a research on determinant of capital flight using OLS and he found that the major determinants of capital flight in Nigeria were; parallel market premiums, domestic inflation, availability of capital, competitive economy growth rate and political and ethnic tensions. In his report he also introduced two types of capital flight; legal and illegal capital flight, the report defined legal capital flight as one which follows legal channels as its leaves country economy to foreign economy while illegal evades all legal
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