Financial Inclusion, Institutions and Tax Revenue Performance in Middle East and North African (MENA) Countries

Document Type : Research Paper

Authors

1 Department of Economics, Faculty of Social Sciences, University of Ilorin, Ilorin Nigeria.

2 School of Business and Economics, Universiti Brunei Darusalam, Brunei Darusalam.

3 Department of Economics, Faculty of Social Sciences, University of Ilorin, Ilorin, Nigeria and Department of Economics, Ladoke Akintola University of Technology, Ogbomoso, Nigeria.

Abstract

Many countries in Middle East and North Africa (MENA) are struggling with common problems, particularly of low tax revenue performance, financial exclusion and poor governance institutional quality. Despite persistence of these challenges, empirical studies on the impact of financial inclusion and institutional quality on tax revenue performance with exclusive focus on MENA countries are not common in the literature. Using a panel data set of 11 MENA countries for the period spanning from 2004 to 2022 and a dynamic panel model and system GMM estimation techniques, this study examined the impact of financial inclusion and governance institutional quality on tax revenue performance. The findings revealed that financial inclusion has a positive and significant impact on tax revenue performance. However, the positive marginal effect of financial inclusion on tax revenue performance tends to diminish with improvement in the governance institutional quality. The study concludes that improving institutional quality, particularly those that will enhance political stability and reduce incidences of violence will help in unlocking tax revenue potentials of MENA countries. This is particularly important in countries where problems of poor institutional quality are more serious. Overall, the study offers useful insights for policymakers interested in maximising the potential benefits of financial inclusion in improving tax revenue performance.

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History

  • Receive Date: 01 January 2026
  • Revise Date: 01 July 2026
  • Accept Date: 24 August 2026

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