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Effects of financial inclusion on tax revenue mobilization: Evidence from WAEMU countries

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  • Milly Chepkorir Chebochok
  • Nimonka Bayale

Abstract

Financial inclusion remains at the heart of governments concerns. By creating favorable conditions for access to a diversified range of adapted financial products and services at affordable costs for the populations, financial inclusion generates important opportunities that could lead to increased tax revenue mobilization. This paper analyzes the effects of financial inclusion on tax revenue mobilization, using panel data from West African Economic and Monetary Union (WAEMU) countries over the period 2006–2019. The findings suggest that financial inclusion positively and significantly influences government's tax revenue. Moreover, by looking at the effects of disaggregated financial inclusion dimensions (access, use, and affordability) on various components of tax revenue, we find that the estimated coefficients on the subcomponents of financial inclusion are statistically significant. Results also indicate that the magnitude of effect of financial inclusion is higher on indirect taxes compared to direct tax revenues. This research recommends that policy‐makers should prioritize financial inclusion in their policies and development agenda through National Financial Inclusion Strategies (NFIS) because it can increase countries' resource mobilization and help them to build fiscal resilience.

Suggested Citation

  • Milly Chepkorir Chebochok & Nimonka Bayale, 2023. "Effects of financial inclusion on tax revenue mobilization: Evidence from WAEMU countries," African Development Review, African Development Bank, vol. 35(2), pages 226-238, June.
    • Handle: RePEc:bla:afrdev:v:35:y:2023:i:2:p:226-238
    DOI: 10.1111/1467-8268.12702
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    Cited by:

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    2. Mamadou Bah, 2024. "Tax revenue mobilization and institutional quality in sub‐Saharan Africa: An empirical investigation," African Development Review, African Development Bank, vol. 36(2), pages 201-221, June.
    3. Nimonka Bayale & Babatunde Mohamed Sanny Gado & Niim‐Bénoua Nahum Sambieni & Komla Kuma Esobiyu Tchala, 2024. "Dépenses militaires et croissance économique dans l'UEMOA: une analyse des effets de seuil et des canaux de transmission," African Development Review, African Development Bank, vol. 36(1), pages 41-54, March.

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