The effect of financial inclusion on tax revenue generation in Ghana

No Thumbnail Available
Journal Title
Journal ISSN
Volume Title
The research study entitled "The Effect of Financial Inclusion on Tax Revenue Generation in Ghana" sought to investigate the impact of four primary financial inclusion indicators on the generation of tax revenue. The selected indicators for analysis were Private Credit to Gross Domestic Product (GDP) ratio by deposit money banks, Deposit Money Banks' Assets to GDP ratio, Liquid Liabilities to GDP ratio, and Central Bank Assets to GDP ratio. The study utilized data spanning from 1992 to 2021 and employed a multiple regression analysis to examine the impact of various variables on the generation of tax revenue. The validity of the regression results was ensured by testing all the assumptions of the model. The study's results indicate that although there existed a favorable association between Private Credit by Deposit Money Banks to GDP, Deposit Money Banks' Assets to GDP, Liquid Liabilities to GDP, and tax revenue generation, these connections did not demonstrate statistical significance. The evidence provided by the researchers was not sufficiently robust to indicate that the aforementioned components of financial inclusion exert a substantial influence on the generation of tax revenue in Ghana. The research revealed a noteworthy inverse correlation between the proportion of Central Bank Assets to Gross Domestic Product and the generation of tax revenue. This implies an inverse relationship between the ratio of Central Bank assets to GDP and the generation of tax revenue. The research suggests that policymakers should endorse measures that foster private credit, fortify financial institutions, enhance liquidity management, and meticulously scrutinize the Central Bank's function to optimize tax revenue generation. The results emphasize the necessity of adopting a comprehensive approach that takes into account multiple aspects of financial inclusion when formulating strategies for generating tax revenue. In summary, the impact of financial inclusion on tax revenue generation in Ghana is inconclusive. However, it is worth noting that the inclusive financial sector has the potential to exert a positive influence on tax revenue generation. It is imperative for policymakers to comprehend these dynamics in order to effectively leverage the advantages of financial inclusion and optimize strategies for generating tax revenue
A thesis submitted to the department of accounting and finance, Kwame Nkrumah university of science and technology, Kumasi in partial fulfilment of the requirements for the award of a master of science degree in accounting and finance