Open AccessDo Financial Sector Activities Affect Tax Revenue in Pakistan?
Author(s) -
Naeem Akram
Publication year - 2016
Publication title -
the lahore journal of economics
Language(s) - English
Resource type - Journals
eISSN - 1811-5446
pISSN - 1811-5438
DOI - 10.35536/lje.2016.v21.i2.a6
Subject(s) - tax revenue , revenue , nexus (standard) , financial system , business , finance , monetary economics , economics , tax credit , capitalization , public economics , linguistics , philosophy , computer science , embedded system
By mobilizing savings, financial markets play a crucial role in economic development. Given that the literature does not fully explore the nexus between financial activities and tax revenue, this study attempts to analyze the role of financial markets in generating tax revenue in Pakistan, using time series data for the period 1975–2014. It finds that, in the long run, the number of bank branches and market capitalization have a positive and significant impact on tax revenue. While credit to the private sector has a bidirectional relationship with tax revenue, public sector credit has an insignificant impact. In the short run, only the number of bank branches and market capitalization have a significant impact on tax revenue.