AERC Working Paper Series 2025

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Browsing AERC Working Paper Series 2025 by Author "Bayale, Nimonka"

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    Effects of Financial Inclusion on Tax Revenue Mobilization : Evidence from WAEMU Countries
    (AERC, 2025) Chebochok, Milly Chepkorir; Bayale, Nimonka
    Financial inclusion remains at the heart of government concerns. By creating favorable conditions for access to a diversified range of adapted financial products and services at affordable costs for the population, 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 the government's tax revenue. For example, an increase in one point of the financial inclusion index corresponds to an increase in total tax revenues by 0.63 points. 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 sub-components of financial inclusion are statistically significant. Results also indicate the magnitude of the effect of financial inclusion is higher on indirect taxes compared to direct tax revenues. This research recommends that policymakers 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 build fiscal resilience.