Economic Freedom, Globalization, and the Shadow Economy in the European Union Transition Economies: a Panel Cointegration Analysis

Bayar, Yılmaz; Öztürk, Ömer Faruk

doi:10.15388/omee.2019.10.19

Cited by 15 publications

(21 citation statements)

References 38 publications

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“…Furthermore, they also show that banking sector development is an important determinant of shadow economy. This result supports the submission of Bayar and Ozturk (2019) for the case of central European countries. Canh and Thanh (2020) confirm that financial development reduces the size of shadow economy in 114 countries (Njangang et al , 2020).…”

Section: Literature Reviewsupporting

confidence: 87%

“…As they operate in informal setting, individuals enjoy tax evasion and avoidance, reduction in transaction cost, social security spending and other costs, which may result from the regulations in the formal economic settings but missing cheaper formal financing and the possibility of lowering efficient productivity (Medina and Schneider, 2018; Bayar and Ozturk, 2019). Higher size of shadow economy may further bring burden to the society.…”

Section: Introductionmentioning

confidence: 99%

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Shadow economy in Africa: how relevant is financial inclusion?

Ajide

2021

JFRC

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Purpose This study aims to investigate the possible relationship between financial inclusion and shadow economy in selected African countries. Design/methodology/approach The study uses panel data estimation technique and Toda and Yamamoto causality approach. The data of selected African counties over a period of 2005–2015 are sourced from World Bank Development Indicators, International Monetary Fund International Financial statistics database and International Country Risk Guide. Findings The results show that financial inclusion reduces the size of shadow economy. The causality results show that there is a unidirectional causality moving from financial inclusion to shadow economy. The results demonstrate that a country with lower level of corruption and higher level of growth can benefit more in reducing the size of shadow economy through financial inclusion. Originality/value This study provides the first evidence of the link between financial inclusion and shadow economy from the Sub-Saharan Africa perspective. The study suggests that financial inclusion may be useful in affecting the size of shadow economy in Africa.

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Section: Literature Reviewsupporting

confidence: 87%

Section: Introductionmentioning

confidence: 99%

Shadow economy in Africa: how relevant is financial inclusion?

Ajide

2021

JFRC

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“…Economic freedom is a composite index of government integrity, legal system and property rights, sound money, free trade, and regulation (Bayar and € Oztürk, 2019). Miller et al (2020) classified economic freedom into four boards categorized viz.…”

Section: Economic Freedomsmentioning

confidence: 99%

Public policies and tax evasion: evidence from SAARC countries

Islam

Rashid

Hossain

et al. 2020

Heliyon

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In compliance with the socioeconomic theory, the study has strived to investigate the impact of economic and non-economic public policies on tax evasion using panel data of 7 SAARC countries covering the period from 1998 to 2015. The study has applied the ordinary least square with fixed effect and random effect models to analyze the data assembled. The result of the study implies that the higher the degree of economic freedoms, the lower the tax evasion. More specifically, the government policies about property rights, monetary freedom, fiscal freedom and investment freedom have a negative influence on taxpayers' choices of tax evasion while financial freedom result shows a positive effect on tax evasion. Additionally, there is a negative impact of public sector governance and religiosity on tax evasion, which implies the higher the public sector governance and the higher the religious faith amid the people, the lower the degree of tax evasion. The findings of the study are supposed to offer the governments, tax authorities, and research scholars the valuable insights into public policies for reducing the tax evasion to a significant extent.

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“…Many papers aim to analyse the determinants of the SE in transition economies (Luong et al, 2020;Bayar & Ozturk, 2016;Bayar et al, 2018;Stepanova et al, 2018;Bayar & Ozturk, 2019;Bejakovic, 2015). Bayar et al (2018) conclude that reducing corruption and establishing the rule of law tend to reduce the size of the SE in the EU transition economies in the long run.…”

Section: Literature Reviewmentioning

confidence: 99%

Factors of the Shadow Economy in Market and Transition Economies during the Post-Crisis Period: is there a Difference?

Fedajev

Veličković

Nikolić

et al. 2022

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The shadow economy (SE) is a global phenomenon that affects every country. However, its forms and mechanisms may differ depending on a country's socio-economic characteristics. The major characteristic is a country’s economic system. Hence, market and transition economies can be affected differently. Given that the size of the SE directly affects the level of tax revenue, it is particularly important to investigate the factors of the SE during the post-crisis period, when policymakers need sufficient budgetary funds to implement anti-crisis measures. In that sense, this paper aims to identify the differences in the factors that boosted the SE in 17 market and 19 transition economies in Europe between 2009-2014. The research is based on the PLS-SEM method. A country’s wealth and development, market openness, tax system and political environment are employed as the major SE factors. These factors are the most common in previous literature when investigating the issues of the shadow economy and are most appropriate for this research. The results suggest that particular factors of the SE differently affect market and transition economies. In transition economies, a favourable political environment, greater wealth and development, as well as a lower tax burden contribute to a smaller size of the SE, whereas greater market openness and a higher tax burden lead to a larger size of the SE. The links between market openness, tax system and the SE are not, however, statistically significant. Like transition economies, market economies are characterized by the positive impact of political environment and wealth and development when combating the SE. Unlike in transition economies, the size of the SE in market economies is reduced by a high tax burden and greater market openness. In the latter case, there is only one statistically insignificant path coefficient – it represents the relationship between the SE and market openness. The Multi-Group Analysis (MGA) method was employed to compare the path coefficients estimated for the country groups under consideration. The results indicate that the only difference in the path coefficients representing the relationship between market openness and the SE is not statistically significant. Based on the research results, some recommendations for policymakers in transition and market economies are provided in the conclusion.

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Economic Freedom, Globalization, and the Shadow Economy in the European Union Transition Economies: a Panel Cointegration Analysis

Cited by 15 publications

References 38 publications

Shadow economy in Africa: how relevant is financial inclusion?

Shadow economy in Africa: how relevant is financial inclusion?

Public policies and tax evasion: evidence from SAARC countries

Factors of the Shadow Economy in Market and Transition Economies during the Post-Crisis Period: is there a Difference?

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