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Bond Markets Initiation and Tax Revenue Mobilization in Developing Countries

Author

Listed:
  • Weneyam Hippolyte Balima

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Jean-Louis Combes

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Alexandru Minea

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

We analyze the relationship between the introduction of a sovereign bond market (BM) and tax revenue mobilization behavior, using a large sample of 119 developing countries. Propensity Scores Matching estimations reveal that BM participation significantly fosters domestic tax revenue mobilization. Moreover, we find that this favorable effect is sensitive to BM countries' characteristics, namely the stance of monetary and fiscal policies, the exchange rate regime, the level of economic development, and the degree of financial openness and financial development. Finally, our results show that BM participation fosters internal taxes and reduces their instability, compared to international trade taxes. These findings highlight the strength of BM in promoting structural reforms in developing countries, through encouraging them to increase their tax effort and even by contributing to some extent to the fiscal transition process.

Suggested Citation

  • Weneyam Hippolyte Balima & Jean-Louis Combes & Alexandru Minea, 2016. "Bond Markets Initiation and Tax Revenue Mobilization in Developing Countries," Post-Print halshs-01426487, HAL.
    • Handle: RePEc:hal:journl:halshs-01426487
    DOI: 10.1002/soej.12155
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    Cited by:

    1. Balima, Wenéyam Hippolyte & Combes, Jean-Louis & Minea, Alexandru, 2017. "Sovereign debt risk in emerging market economies: Does inflation targeting adoption make any difference?," Journal of International Money and Finance, Elsevier, vol. 70(C), pages 360-377.
    2. Aguima Aime Bernard Lompo, 2024. "How Does Financial Sector Development Improve Tax Revenue Mobilization for Developing Countries?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(1), pages 91-125, March.
    3. Apeti, Ablam Estel & Combes, Jean-Louis & Minea, Alexandru, 2023. "Inflation targeting and the composition of public expenditure: Evidence from developing countries," Journal of Macroeconomics, Elsevier, vol. 76(C).
    4. Apeti, Ablam Estel & Edoh, Eyah Denise, 2023. "Tax revenue and mobile money in developing countries," Journal of Development Economics, Elsevier, vol. 161(C).
    5. Hoang, Thon T.C. & Nguyen, Dung T.K., 2023. "Women’s representation in parliament and tax mobilization," MPRA Paper 118367, University Library of Munich, Germany, revised 24 Aug 2023.
    6. Hippolyte Balima, Wenéyam, 2017. "Do domestic bond markets participation help reduce financial dollarization in developing countries?," Economic Modelling, Elsevier, vol. 66(C), pages 146-155.
    7. Alexandru Minea & René Tapsoba & Patrick Villieu, 2021. "Inflation targeting adoption and institutional quality: Evidence from developing countries," The World Economy, Wiley Blackwell, vol. 44(7), pages 2107-2127, July.

    More about this item

    Keywords

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    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • G1 - Financial Economics - - General Financial Markets
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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