Fintech-Tax Revenue Nexus in Sub-Saharan Africa: Does the Moderating Role of Institutional Quality Matter?

Student: Prisca Chiamaka Okocha-ojeah (Thesis, 2025)
Department of Economics
PAN-ATLANTIC UNIVERSITY, KM 52 LEKKI-EPE EXPRESSWAY, IBEJU-LEKKI, LAGOS STATE.

Abstract

This study investigates the impact of financial technology (fintech) on tax revenue generation in Sub-Saharan Africa, and examines how institutional quality moderates this relationship. Using a balanced panel dataset from 10 African countries between 2013 and 2021, the study employs taxto-GDP ratio as the dependent variable, with fintech proxied by credit flows from fintech and big tech firms, and institutional quality measured by political stability. The study applies a fixed-effect generalized least squares (FE-GLS) estimation method to address heteroscedasticity and unobserved heterogeneity across countries. The findings reveal that fintech significantly increases tax revenue, while institutional quality has a positive moderating effect on this relationship. These results highlight the critical role of governance in maximizing the fiscal benefits of digital finance. The study recommends that governments strengthen institutional frameworks, promote regulatory reforms, and integrate digital infrastructure to the tax administration and collection process in order to harness fintech’s full potential for sustainable revenue generation.

Keywords
Tax Revenue Financial Technology Institutional Quality Political Stability Fixed Effect Generalized Least Squares (FE-GLS)
Filters
Institutions