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Financial development and tax revenue in developing countries: investigating the international trade channel

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  • Sèna Kimm Gnangnon

    (World Trade Organization)

Abstract

This study examines the effect of financial development on non-resource tax revenue performance in developing countries through the international trade channel. The empirical analysis has relied on a sample of 104 developing countries over the period 1980–2014, and used the two-step system Generalized Methods of Moments (GMM) approach. Results show that financial development exerts a positive effect on non-resource tax revenue performance. Interestingly, this positive effect takes place through a higher trade openness, a greater export product diversification and a higher share of manufactured exports in total export products. The analysis, therefore, highlights some avenues through which deepening domestic financial markets can affect tax revenue performance in developing countries.

Suggested Citation

  • Sèna Kimm Gnangnon, 2022. "Financial development and tax revenue in developing countries: investigating the international trade channel," SN Business & Economics, Springer, vol. 2(1), pages 1-26, January.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:1:d:10.1007_s43546-021-00176-0
    DOI: 10.1007/s43546-021-00176-0
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    More about this item

    Keywords

    Non-resource tax revenue; Financial development; Trade openness; Export product diversification; Manufacturing exports;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

    Statistics

    Access and download statistics

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