Bribery And Tax Evasion: Does The Level Of Financial Constraint Matter?
| dc.contributor.author | Oludele Folarin | |
| dc.date.accessioned | 2026-03-18T08:29:13Z | |
| dc.date.available | 2026-03-18T08:29:13Z | |
| dc.date.issued | 2026 | |
| dc.description.abstract | Domestically mobilised resources in African countries are low, and the current levels are inadequate to finance projects required to achieve sustainable development goals by 2030. One of the ways by which African governments could increase domestically mobilised revenue is by reducing tax evasion. This study examines the effect of bribery and credit constraints on tax evasion (both the incidence and extent) by firms in SSA, using data from the World Bank Enterprise Survey (WBES) for 26 countries. Instrumental Variable (IV) Probit regression estimation technique was employed to determine the effect of bribery on the incidence of tax evasion. The Instrumental Tobit regression estimation technique was employed to estimate the effect of bribery on the extent of tax evasion. The results emanating from this study show that tax evasion is higher among firms that pay bribes. Also, the positive effect of bribery on tax evasion holds across the different levels of credit constraints. However, the effect is higher among firms that are fully credit-constrained. The results also show that countries with more robust institutional qualities, such as government effectiveness, the rule of law and control of corruption, had a lesser positive effect of bribery on tax evasion. The study findings reinforce the idea that low tax revenue in African countries is self-inflicted by government actions, resulting in weak civil services and institutions. Also, the study's findings indicate that improvement in access to finance goes beyond its role in enhancing economic growth and poverty reduction to include discouragement of tax evasion behaviour by economic agents. | |
| dc.identifier.uri | https://publication.aercafricalibrary.org/handle/123456789/4096 | |
| dc.publisher | AERC | |
| dc.title | Bribery And Tax Evasion: Does The Level Of Financial Constraint Matter? |