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Examining Different Factors of Income Tax Non-Compliance in a Small Sample in Bangladesh

Abstract

Income tax non-compliance is worldwide delinquent and with the small volume of income tax collection Bangladesh has been facing its demerits for a long time. There is still a gap to measure income tax non-compliance behaviour in a micro direct approach. This study uses EVSCALE instrument to calculate the individual income tax non-compliance as a latent variable. The instrument consists of 15 items in Likert scale to measure the non-compliance behaviour of a person. The objective of this study is to identify the determinants of income tax non-compliance and key factors of EVSCALE in Bangladesh. The study collected opinions of taxpayers by primary data collection following a convenient sampling method. Logit regression analysis finds out that log monthly income, tax morale, tax education and occupation significantly influence income tax non-compliance. Exploratory factor analysis identifies six key factors that have consistency and shared variance. However, Cronbach’s alpha shows that five key factors have high reliability among six factors. According to rules of thumb, this study suggests that EVSCALE instrument needs modification by adding more items. This study argues that increasing participation in taxation system is a feasible policy for government instead of increasing tax rate.

Open access
The Reaction of Stock Markets in the Gulf Cooperation Council Countries to Economic Policy Uncertainty in the United States

Abstract

This study investigates if the changes in economic policy uncertainty in the U.S. can explain the returns on stock markets of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The study also examines how the stock market returns of the six GCC countries respond to the changes in economic policy uncertainty in the U.S. The results demonstrate that changes in economic policy uncertainty in the U.S. are not significantly linked with the returns on all the stock markets except Oman stock market, which shows a statistical significant negative relationship with the changes in economic policy uncertainty in the U.S. Controlling for the effects of the U.S. stock market and oil price, returns on all the six GCC markets including Oman show insignificant coefficients. The returns on all the stock markets do not respond to the changes in economic policy uncertainty. The results of Granger causality tests show that the changes in economic policy uncertainty in the U.S. do not cause the returns of all the six GCC stock markets.

Open access
Domestic Debt and Economic Growth in Nigeria: An ARDL Bounds Test Approach

Abstract

The study examines the long-run relationship between domestic debt and the fiscal policy of economic growth in Nigeria in the period from 1981 to 2013 owing to government reforms in the financial system, particularly due to the establishment of the Debt Management Office (DMO) in 2000 and a new fully funded pension fund scheme, both of which resulted in a resurgence of the debt market. The issue that is often raised is the doubt regarding the stability of the debt and its likely implications for the economy, as well as the unpleasant consequences for the government embarking on consolidation. The study employs the autoregressive distributed lag (ARDL) approach and the bounds test as proposed by Narayan (2005), anchored on the perspective of the endogenous growth theory. The results reveal that although overall the adverse negative domestic debt hurts the economy, it has a positive effect on the total aggregate government revenue and economic growth in Nigeria in the research period. Furthermore, the paper develops a system to assess the speed of the adjustment mechanism coefficient in an error correction model (ECM).

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External Debt Financing and Public Capital Investment in Nigeria: A Critical Evaluation

Abstract

This study considers the consequences of external loan on capital investment in Nigeria. Data for the study have been collected from the World Bank and Central Bank of Nigeria Statistical Bulletin, 2018 edition. The variables on which data are sourced include government capital expenditure, external debt accumulation, debt servicing cost, inflation rate, and exchange rate. Government capital expenditure is the dependent variable, while external debt accumulation and debt servicing cost are the key independent variables. Inflation and exchange rates are used as the moderating variables. The scope of the study covers the period from 1996 to 2018 and the data are analysed using the ordinary least squares multiple regression method. The regression results indicate that external debt has a significant negative impact on capital investment while debt servicing cost has a strong and significant positive effect on capital investment. Under this circumstance, the controlling variables are not significant in influencing capital investment. Hence, the study suggests more focus on profitable capital investments if external borrowing must be embarked upon. The need for the development of untapped natural resources, establishment of industries and revival of abandoned industries to boost debt repayment has been emphasized. The study also strongly recommends that the existing governments (state and federal) should endeavour to complete capital projects of past administrations in order to drive the economy and to avoid wastage of financial resources including the borrowed funds.

Open access
Government Spending and Non-Oil Economic Growth in the UAE

Abstract

The present paper studies empirically the relationship between government spending and non-oil economic growth in the UAE for the last four decades by using the vector autoregression (VAR) approach. The findings of the study suggest that the implementation of expansionary policy, through the intensification of current and development public expenditures, induces an increase in the non-oil economic growth during the subsequent periods of the government spending shock. Thus, the implementation of expansionary government spending stimulates the UAE economy, especially during recession periods. The study suggests that policymakers should concentrate their spending on the right projects, as well as on research and development. Moreover, they should channel their transfers and subsidies to the productive sectors, and they should ensure that higher productivity in public institutions is in conjunction with the rise in wages and salaries to achieve sustainable economic growth.

Open access
Modelling Support Mechanism Impact on Electric Vehicle Registration in Latvia

Abstract

Globalization has led to an increased anthropological impact on the climate, and transport is one of the most greenhouse gas (GHG) intensive sectors that is facilitating it. Transport generated around 14 percent of global GHG emissions in 2010. Transport decarbonization is vital for limiting climate change, and electric vehicle (EV) is one of the solutions. EV prevalence in Latvia after Climate Financial Instrument (CCFI) funding has steadily increased and the average yearly EV growth has remained at 0.09 percent among newly registered light-duty passenger vehicles. The aim of this research is to model the impact of different direct and indirect support mechanisms on EV growth in Latvia taking into account the costs of the given support mechanisms. Accordingly, theoretical literature and research on vehicle decarbonization, EV support mechanisms, and barriers were analyzed. In order to obtain the data related to individual attitude towards EVs and their support policies a survey of different age groups was conducted. Based on the theoretical literature, a model was devised using STELLA software. The model was verified and validated. The results of the model indicate that until 2030 direct subsidies of at least 45 percent will have the largest impact on EV registration, while decreasing VAT by at least 9 percent is the most cost-effective option. The results regarding indirect support mechanisms show that free charging and development of charging infrastructure, as well as improvements to EV related technologies would increase EV registration. However, to ensure sustainable support to EVs it is advisable to combine direct incentives with indirect support mechanisms. Combining different policies lowers incentive costs and increases their efficiency.

Open access
Monetary Policy Spillovers Through Industrial Growth in Nigeria: A Time Series Analysis

Abstract

The study examines the impact of switching from direct to indirect monetary policy on industrial growth in Nigeria, using the annual time series data sourced from the Central Bank of Nigeria’s (CBN) statistical bulletin between 1960 and 2015. The study adopts the Autoregressive Distributed Lag (ARDL) bound testing approach developed by Pesaran, Shin and Smith (2001) for estimating the relevant relationships. The result of the long-run estimates shows that domestic credit, interest rate and trade balance have positive impact on industrial output while money supply, inflation and exchange rate have negative impact on industrial growth. The result of the short-run dynamics shows that change in the previous (one and second lagged) periods of indirect monetary policy (interest rate, money supply, domestic credit and exchange rate) and industrial output were negatively related to change in industrial output. The error correction term indicates the speed of adjustment of equilibrium to their long-run position, which was found to be negative and significant. The study recommends that policy makers use both conventional and non-conventional monetary policies to speed up industrial output growth and enhance economic recovery by manipulating the macro-economic fundamentals.

Open access
Multi-Criteria Decision Analysis of Entrepreneurial Orientation and Business Performance in Nigeria

Abstract

This study advances research on entrepreneurial orientation and business performance by assessing, prioritizing, ranking, and evaluating decision choices among entrepreneurial orientation attributes that influence small and medium scale enterprise performance in Nigeria. Data were gathered through the multi-criteria decision-making (MCDM) tool called analytic hierarchy process (AHP) based questionnaire administered to practicing entrepreneurs in Lagos State, Nigeria. The population of the study consists of all the firms (mainly small and medium scale businesses) registered by Lagos Chamber of Commerce, totalling 1766 at the time of this study. The sample size was calculated through Yamane formula, while entrepreneurs managing the sampled firms were the respondents carefully selected for the study through a random sampling procedure. Data collected were analysed through descriptive statistics and analytic hierarchy process procedures for eliciting the consistency ratio, consistency index, Lambda Max, local and global priority values for an effective policy decision. The priorities were established in line with the AHP framework using pairwise comparisons and judgment of entrepreneurs. The results revealed the preference of entrepreneurial orientation dimension that influenced business performance most based on pairwise experiences and trade-off of different attributes. This study explores the application of AHP methodology for measuring complex entrepreneurial decision-making process for enhancing business performance. Thus, the AHP revealed a potential research method in computing weights and chasing MCDM process.

Open access
New Keynesian Liquidity Trap and Conventional Fiscal Stance: An Estimated DSGE Model

Abstract

The study investigates the effect of New Keynesian liquidity trap on fiscal stance in the United States, United Kingdom and Japan economies. We developed our DSGE model in the context of an optimal and persistent interactive fiscal policy, which allows us to track the transmission channel through which shocks are distributed among real economic variables. The evidence suggests that zero lower bound mitigates the ability of monetary policy to absorb the effect of exogenous shock on the macroeconomic variables while expansionary fiscal policy was able to absorb the shock persistence transmitted from the nominal interest rate.

Open access