Effects of financial inclusion on tax revenue mobilization: Evidence from WAEMU countries

Abstract

Financial inclusion remains at the heart of governments concerns. By creating favorable conditions for access to a diversified range of adapted financial products and services at affordable costs for the populations, financial inclusion generates important opportunities that could lead to increased tax revenue mobilization. This paper analyzes the effects of financial inclusion on tax revenue mobilization, using panel data from West African Economic and Monetary Union (WAEMU) countries over the period 2006–2019. The findings suggest that financial inclusion positively and significantly influences government's tax revenue. Moreover, by looking at the effects of disaggregated financial inclusion dimensions (access, use, and affordability) on various components of tax revenue, we find that the estimated coefficients on the subcomponents of financial inclusion are statistically significant. Results also indicate that the magnitude of effect of financial inclusion is higher on indirect taxes compared to direct tax revenues. This research recommends that policy‐makers should prioritize financial inclusion in their policies and development agenda through National Financial Inclusion Strategies (NFIS) because it can increase countries' resource mobilization and help them to build fiscal resilience.

Effect of productive capacities on tax revenue mobilization: Evidence from Sub‐Saharan African countries

“…2020), andJebali and Boussida (2020) on the effect of trade openness on TRM; andElgin (2013),Doghmi (2020), IMF (2018a), (2018b),Pessino and Fenochietto (2010) regarding the positive effect of real GDP per capita on TRM. Finally, the negative effect of the informal sector on tax revenues obtained byChebochok and Bayale (2023) andBoitano and Abanto (2019) is confirmed by the results of our study.To understand better the influence of productive capacity on TRM, we use the Generalized Method of Moments (GMM) to T A B L E 1 Definitions and descriptive statistics on variables.…”

“…The determinants considered include GDP per capita in that the fiscal capacity of countries is intrinsically linked to their level of development (Bayale et al, 2022;Chebochok & Bayale, 2023;Crivelli & Gupta, 2014) and trade openness as an increase in the volume of trade would contribute to an increase in tax revenues from customs duties and corporate profits in particular (Gnangnon & Brun, 2018).…”

“…Over the past few decades, the financing of African economies is a topic that has been attracting interested researchers and international organizations. In 2015, the United Nations Conference on Financing for Development held in Addis Ababa emphasized that increasing in tax revenues is a key lever for development in Africa (Bayale et al, 2022;Chebochok & Bayale, 2023). Distinctly, the resources available to the majority of African countries come either from tax revenues support of development partners, foreign direct investments and migrants' remittances.…”

Dépenses militaires et croissance économique dans l'UEMOA: une analyse des effets de seuil et des canaux de transmission

“…Pour évaluer la robustesse des résultats, la technique d'estimation des doubles moindres carrées à variables instrumentales (DMC-VI) est appliquée. L'application de la méthodologie à deux étapes Nakamura et Nakamura (1998) a permis d'identifier les variables endogènes (Chebochok & Bayale, 2023). Une attention particulière a été accordée aux choix des instruments en respectant le principe développé par Roodman (2009) sur le caractère externe de ces instruments.…”

Does financial development really spur industrialization in sub‐Saharan African countries?

“…First, contrary to the economic literature that has mainly focused on developed and developing countries, we focus exclusively on SSA countries. Thus, apart from the work of Lo and Cissokho (2023), the few empirical papers on SSA countries have examined the relation between financial development and investment (Keho, 2023; Kulu, 2023), tax revenue mobilization (Chebochok & Bayale, 2023) and economic development (Ajakaiye & Tarp, 2012). However, these studies have ignored the effect of financial development on industrialization.…”