Financial development and tax revenue in developing countries: investigating the international trade channel
Sèna Kimm Gnangnon ()
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Sèna Kimm Gnangnon: World Trade Organization
SN Business & Economics, 2022, vol. 2, issue 1, 1-26
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.
Keywords: Non-resource tax revenue; Financial development; Trade openness; Export product diversification; Manufacturing exports (search for similar items in EconPapers)
JEL-codes: F14 G20 H20 (search for similar items in EconPapers)
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