Article: Financial deepening and fiscal capacity: new empirical evidence from the association of Southeast Asian nations Journal: International Journal of Economics and Business Research (IJEBR) 2026 Vol.30 No.1 pp.48 - 66 Abstract: The current study examines the long-term effects of financial sector development (FSD) on the amount of tax collected (TAX). The study uses annual panel data from eight ASEAN nations between 2000 and 2023. The analysis was conducted by using the CS-ARDL model, and robustness was performed by alternative estimation techniques, i.e., FMOLS and DOLS estimators. The findings demonstrate that the growth of the financial sector has a long-term, statistically significant, and favourable impact on the mobilisation of tax revenue. By expanding the tax base, increasing activity in the formal sector, and decreasing opportunities for evasion, a healthy financial system increases tax collection. While inflation has a negative effect on fiscal performance, economic growth, sound governance, and FDI inflows positively contribute to revenue. The results imply that ASEAN governments ought to incorporate financial development tactics like enhancing credit availability, growing digital finance, and fortifying banking establishments into their more comprehensive budgetary plans. Inderscience Publishers - linking academia, business and industry through research

Title: Financial deepening and fiscal capacity: new empirical evidence from the association of Southeast Asian nations

Authors: Mosab I. Tabash; Umar Farooq; Ghaleb A. Elrefae; Silvi Asna Prestianawati; Abdelhafid Belarbi

Addresses: College of Business, Al Ain University, Al Ain, UAE ' School of Economics and Finance, Xian Jiaotong University, China ' College of Business, Al Ain University, Al Ain, UAE ' Faculty of Economics and Business, Universitas Brawijaya, East Java, Malang City, Indonesia ' College of Business, Al Ain University, Al Ain, UAE

Abstract: The current study examines the long-term effects of financial sector development (FSD) on the amount of tax collected (TAX). The study uses annual panel data from eight ASEAN nations between 2000 and 2023. The analysis was conducted by using the CS-ARDL model, and robustness was performed by alternative estimation techniques, i.e., FMOLS and DOLS estimators. The findings demonstrate that the growth of the financial sector has a long-term, statistically significant, and favourable impact on the mobilisation of tax revenue. By expanding the tax base, increasing activity in the formal sector, and decreasing opportunities for evasion, a healthy financial system increases tax collection. While inflation has a negative effect on fiscal performance, economic growth, sound governance, and FDI inflows positively contribute to revenue. The results imply that ASEAN governments ought to incorporate financial development tactics like enhancing credit availability, growing digital finance, and fortifying banking establishments into their more comprehensive budgetary plans.

Keywords: ASEAN; CS-ARDL; fiscal policy; financial sector development; FSD; fiscal revenue.

DOI: 10.1504/IJEBR.2026.151765

International Journal of Economics and Business Research, 2026 Vol.30 No.1, pp.48 - 66

Received: 03 Nov 2025
Accepted: 31 Dec 2025
Published online: 18 Feb 2026 *

Title: Financial deepening and fiscal capacity: new empirical evidence from the association of Southeast Asian nations

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