- Iliya Silas Yerima1, Dr. Channaganu Paramaiah2
- DOI: 10.5281/zenodo.21283512
- GAS Journal of Economics and Business Management (GASJEBM)
Purpose: This study analyzes how financial instability
and institutional quality influence tax revenue mobilization in African
oil-exporting countries. It aims to establish whether strong institutional
frameworks can insulate the adverse fiscal implications of financial sector
volatility.
Design/methodology/approach: Using yearly panel
data from 2000 to 2023, the study employs the Cross-Sectionally Augmented
Autoregressive Distributed Lag (CS-ARDL) approach, which is capable of
accounting for cross-country dependence, slope heterogeneity, and mixed
integration orders. The model combines key macroeconomic and fiscal indicators
in order to generate robust and reliable estimation.
Findings: The findings indicate that financial
instability reduces tax revenue mobilization but institutional quality enhances
fiscal efficiency. However, instability compromises the benefits of robust
institutions. Economic growth and government expenditure boost revenues,
whereas oil rents have feeble implications, emphasizing the fiscal vulnerability
of resource-rich economies.
Practical implications: The findings
highlight the need for comprehensive fiscal and financial reforms. Policymakers
must strengthen regulation of the financial system towards containing
instability, encourage institutional responsibility to enhance compliance and
disclosure, and undertake diversification of revenues that reduce dependence on
oil revenues. These measures are needed to achieve fiscal resilience and
sustainable long-term revenues in economies based on resources.
Originality/value: This article adds a
new empirical contribution to the extant literature in examining simultaneously
financial instability, institutional quality, and tax revenue performance for
African oil exporters. Guided by a CS-ARDL model with an interactive framework,
this article addresses cross-sectional dependence and dynamic heterogeneity to
offer robust, policy-driven results on fiscal sustainability.
Keywords: Financial Instability, Institutional
Quality, Tax Revenue Mobilization, CS-ARDL.
