Does financial system activity affect tax revenue in Malaysia? Bounds testing and causality approach

Journal article


Taha, Roshaiza, Colombage, Sisira, Maslyuk, Svetlana and Nanthakumar, Loganathan. (2013) Does financial system activity affect tax revenue in Malaysia? Bounds testing and causality approach. Journal of Asian Economics. 24, pp. 147 - 157. https://doi.org/10.1016/j.asieco.2012.11.001
AuthorsTaha, Roshaiza, Colombage, Sisira, Maslyuk, Svetlana and Nanthakumar, Loganathan
Abstract

We provide new empirical evidence on the relationship among direct tax revenue and banking and non-banking activities in Malaysia's financial system, utilising monthly data for the period 1997–2008. The existence of the long run equilibrium relationship between tax revenue and the financial system was investigated using the autoregressive distributive lag (ARDL) bounds testing approach to cointegration. We find a long-run equilibrium relationship between the financial system and tax revenue in Malaysia. The short-run dynamic relationship between direct tax revenue and financial system was investigated using the vector error correction model (VECM). The estimated ECTt−1 coefficient indicates a relatively fast speed of adjustment from short-run disequilibrium to long-run equilibrium. The Granger causality tests reveal unidirectional causality running from stock market towards direct tax revenue, indicating that an increase in stock market activities is likely to improve the collection of direct tax revenue. Overall, we show that the impact of the financial system on direct tax revenue is more profound in the short run than in the long run.

Keywordstax revenue; banking sector; bound testing; causality; non-banking sector
Year2013
JournalJournal of Asian Economics
Journal citation24, pp. 147 - 157
PublisherElsevier BV
ISSN1049-0078
Digital Object Identifier (DOI)https://doi.org/10.1016/j.asieco.2012.11.001
Scopus EID2-s2.0-84871654196
Page range147 - 157
Research GroupSchool of Arts
Publisher's version
File Access Level
Controlled
Place of publicationNetherlands
Permalink -

https://acuresearchbank.acu.edu.au/item/87279/does-financial-system-activity-affect-tax-revenue-in-malaysia-bounds-testing-and-causality-approach

Restricted files

Publisher's version

  • 0
    total views
  • 0
    total downloads
  • 0
    views this month
  • 0
    downloads this month
These values are for the period from 19th October 2020, when this repository was created.

Export as

Related outputs

Stock market and tax revenue as determinants of economic growth : Panel data evidence from developing Asia
Colombage, Sisira, Maslyuk, Svetlana and Taha, Roshaiza. (2015) Stock market and tax revenue as determinants of economic growth : Panel data evidence from developing Asia. Journal of Developing Areas. 49(4), pp. 89 - 107.
Renewable electricity generation, CO2 emissions and economic growth: Evidence from middle-income countries in Asia
Maslyuk, Svetlana and Dharmaratna, Dinusha. (2013) Renewable electricity generation, CO2 emissions and economic growth: Evidence from middle-income countries in Asia. Estudios de Economia Aplicada. 31(1), pp. 217 - 244.
Impact of shocks on Australian coal mining
Maslyuk, Svetlana and Dharmaratna, Dinusha. (2013) Impact of shocks on Australian coal mining. In In W. L. Filho and V. Voudouris (Ed.). Global energy policy and security pp. 231 - 255 Springer.
Carbon tax: Economic impact on the Latrobe Valley
Barrett, Mereana, Maslyuk, Svetlana and Pambudi, Daniel. (2012) Carbon tax: Economic impact on the Latrobe Valley. In In N Finch (Ed.). pp. 122 - 140 Palgrave MacMillan.
The financial system and revenue collection in Malaysia: An empirical analysis
Taha, Roshaiza, Colombage, Sisira and Maslyuk, Svetlana. (2010) The financial system and revenue collection in Malaysia: An empirical analysis. The Empirical Economics Letters. 9(11), pp. 1027 - 1032.
Stock market, tax revenue and economic growth :A case-study of Malaysia
Taha, Roshaiza, Colombage, Sisira and Maslyuk, Svetlana. (2010) Stock market, tax revenue and economic growth :A case-study of Malaysia. Australia: IEEE Xplore. pp. 1084 - 1090
Cointegration between oil spot and future prices of the same and different grades in the presence of structural change
Maslyuk, Svetlana and Smyth, Russell. (2009) Cointegration between oil spot and future prices of the same and different grades in the presence of structural change. Energy Policy.
Non-linear unit root properties of crude oil production
Maslyuk, Svetlana and Smyth, Russell. (2009) Non-linear unit root properties of crude oil production. Energy Economics.
Unit root properties of crude oil spot and futures prices
Maslyuk, Svetlana and Smyth, Russell. (2008) Unit root properties of crude oil spot and futures prices. Energy Policy.