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Does inclusive financial development matter for firms’ tax evasion? Evidence from developing countries

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  • Ahamed, M. Mostak

Abstract

We find that firms in developing countries with more inclusive financial sector evade taxes to a lesser extent. This effect is stronger for the countries with stronger legal rights and a smaller share of the informal economy. The results suggest that the growing public policy emphasis on achieving inclusive financial development may also help reduce tax evasion in developing countries.

Suggested Citation

  • Ahamed, M. Mostak, 2016. "Does inclusive financial development matter for firms’ tax evasion? Evidence from developing countries," Economics Letters, Elsevier, vol. 149(C), pages 15-19.
  • Handle: RePEc:eee:ecolet:v:149:y:2016:i:c:p:15-19
    DOI: 10.1016/j.econlet.2016.10.003
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    References listed on IDEAS

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    1. Allen, Franklin & Demirguc-Kunt, Asli & Klapper, Leora & Martinez Peria, Maria Soledad, 2016. "The foundations of financial inclusion: Understanding ownership and use of formal accounts," Journal of Financial Intermediation, Elsevier, vol. 27(C), pages 1-30.
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    More about this item

    Keywords

    Financial inclusion; Financial outreach: corporate tax evasion; Informal economy; Institutional environment;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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