Is Good Governance the Driving Force Behind Raising Tax Revenues? A Panel Data Analysis

Simge Bereketoğlu () and Mehmet Avcı ()
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Simge Bereketoğlu: Çanakkale Onsekiz Mart University
Mehmet Avcı: Zonguldak Bülent Ecevit University

Bingol University Journal of Economics and Administrative Sciences, 2025, vol. 9, issue 1, 31-43

Abstract: The ability of governments to effectively perform their essential functions primarily depends on their access to adequate revenue sources. This makes the level of tax revenues a critical issue. Then, what determines the level of tax revenue? Responses to this question are typically approached from economic and fiscal perspectives. However, the growing recognition of the impact of institutions on societal welfare today necessitates updating these responses. Institutions can be seen not only as determinants of economic performance but also as factors influencing tax revenues. This study empirically investigates the impact of good governance, a significant aspect of institutional economics, on tax revenues. The central hypothesis is that good governance will enhance tax revenues. In this context, the effect of good governance and its components on tax revenues for 25 countries during the period 1996-2019 was examined using dynamic panel data analysis with the system GMM estimator. As expected, the findings confirm that good governance and its components boost tax revenues. Therefore, countries' efforts to enhance good governance serve as a driving force for increasing tax revenues.

Keywords: Tax revenues; good governance; panel data analysis; system GMM (search for similar items in EconPapers)
JEL-codes: H2 H27 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bgo:journl:v:9:y:2025:i:1:p:31-43

DOI: 10.33399/biibfad.1553353

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