The Financial and Economic Implications of Underground Economy: The Nigerian Perspective

Omodero, Cordelia Onyinyechi

doi:10.2478/ajis-2019-0027

Cited by 6 publications

(6 citation statements)

References 28 publications

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“…Using a different approach but obtained similar results, also a study by Omodero (2019) explored the impact of shadow economy from 1991-2018. The study employed Ordinary least squares (OLS) technique to examine the impact of earned and lost tax revenue on Nigeria's GDP.…”

Section: The Theoretical and Empirical Literaturementioning

confidence: 87%

Institutional Quality, Financial Inclusion and Shadow Economy in Nigeria (1991-2020): An Ardl Approach

Akintunde

Aribatise²

2022

FJSS

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The study examined the dynamic link between institutional quality, financial inclusion and the informal economy in Nigeria. These were with the view to examining the institutional influence of financial inclusion on the development of informal economy. Annual data covering the period 1991 to 2020 were used for the study. The study made use of Autoregressive Distributed Lag (ARDL) as the technique of estimation.The study found a long run association between the variables and also reveal that financial inclusion and institutional quality directly has a negative but significant effect on shadow economy in Nigeria. This reveals that the development of financial sector as well as quality institutions aids formal sector participation as against the informal sector thus a decrease in shadow economy size in Nigeria. The effect of the interaction of financial inclusion and quality of institution on shadow economy is also found to be positive and significant meaning that weak institution quality has its toll effect on financial inclusion and which result to growth in informal economy in Nigeria. The study concludes that quality of institution in Nigeria is weak and must be improved to favorably promote financial inclusion and successfully mitigate the effect of shadow economy in Nigeria. Therefore, reforms and policies that are required to improve transparency and accountability at all levels of governance as well as improvement in financial system are hereby recommended for policy makers.

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Section: The Theoretical and Empirical Literaturementioning

confidence: 87%

Institutional Quality, Financial Inclusion and Shadow Economy in Nigeria (1991-2020): An Ardl Approach

Akintunde

Aribatise²

2022

FJSS

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“…Additionally, Ref. [69] observed the need to have legal codes formalised for enhanced taxation, and the elimination of unlawful activities in Nigeria's informal sector. On the other hand, Ref.…”

Section: Rq 3: What Are the Policy Incentives Of The Governments In The Two Countries That Target The Informal Sector?mentioning

confidence: 99%

“…Financial and technical assistance and training for informal sector practitioners [73] 2 Formalisation of larger informal shops and encourage them to relocate to "high street". This makes them compliant with formal sector regulations [59] Support and encourage small size informal micro-and survivalist businesses to increase earnings and stay in townships [59] Legal codes formalised to informal sector providers for taxation avoidance [69] 3…”

Section: Rq 3: What Are the Policy Incentives Of The Governments In The Two Countries That Target The Informal Sector?mentioning

confidence: 99%

The Informal Sector and Economic Growth of South Africa and Nigeria: A Comparative Systematic Review

Etim

Daramola

2020

Journal of Open Innovation: Technology, Market, and Complexity

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The informal sector is an integral part of several sub-Saharan African (SSA) countries and plays a key role in the economic growth of these countries. This article used a comparative systematic review to explore the factors that act as drivers to informality in South Africa (SA) and Nigeria, the challenges that impede the growth dynamics of the informal sector, the dominant subsectors, and policy initiatives targeting informal sector providers. A systematic search of Google Scholar, Scopus, ResearchGate was performed together with secondary data collated from grey literature. Using Boolean string search protocols facilitated the elucidation of research questions (RQs) raised in this study. An inclusion and exclusion criteria became necessary for rigour, comprehensiveness and limitation of publication bias. The data collated from thirty-one (31) primary studies (17 for SA and 14 for Nigeria) revealed that unemployment, income disparity among citizens, excessive tax burdens, excessive bureaucratic hurdles from government, inflationary tendencies, poor corruption control, GDP per capita, and lack of social protection survival tendencies all act as drivers to the informal sector in SA and Nigeria. Several challenges are given for both economies and policy incentives that might help sustain and improve the informal sector in these two countries.

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“…Nevertheless, it is worthy to note that tax revenue in an unindustrialized state such as Nigeria is fraught with tax avoidance and evasions due to a high rate of underground economic activities [13] of which VAT is not an exemption. Majorly, the informal economy forms a significant aspect of Nigeria's economy.…”

Section: Introductionmentioning

confidence: 99%

The Consequences of Indirect Taxation on Consumption in Nigeria

Omodero

2020

Journal of Open Innovation: Technology, Market, and Complexity

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This research tests the consequences of Nigeria’s indirect taxes on consumption. There are two reasons why the government imposes taxes on goods and services in Nigeria. The primary purpose is to produce income for the smooth running of the administration. Another silent reason is to discourage the ingestion of prohibited products and services, and that is through customs and excise duties (CED). This study assesses both Value Added Tax (VAT) and CED to determine their effects on consumption using various econometric tools, such as trend analysis, pairwise Granger causality tests, unrestricted co-integration rank test, least squares technique, and data that cover the period from 2005 to 2019. The results indicate that VAT insignificantly but positively influences consumption, while CED has a considerable auspicious influence on use. This result shows that VAT imposition on merchandises and services is discouraging the absorption of specific foodstuffs and services and allowing the operation of informal economic activities to thrive in Nigeria. However, CED charges do not reduce the use of certain illegal products purposely taxed to discourage their consumption. This study recommends a reduction in the prices of food items and services to enable consumers to increase their patronage, while the products that attract CED but are harmful should be banned entirely. Thus, offenders should be allowed to face the wrath of the law.

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The Financial and Economic Implications of Underground Economy: The Nigerian Perspective

Cited by 6 publications

References 28 publications

Institutional Quality, Financial Inclusion and Shadow Economy in Nigeria (1991-2020): An Ardl Approach

Institutional Quality, Financial Inclusion and Shadow Economy in Nigeria (1991-2020): An Ardl Approach

The Informal Sector and Economic Growth of South Africa and Nigeria: A Comparative Systematic Review

The Consequences of Indirect Taxation on Consumption in Nigeria

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