Inequality in low- and middle-income countries: Does fiscal policy matter?

2025-01-06T11:51:26-06:00

The main purpose of this article was to examine the link between tax revenue and income distribution in low- and middle-income countries. Reducing inequality is a central policy objective under the Sustainable Development Goals (SDGs). However, these countries deeply entrench inequality, and progress towards achieving optimal equality levels remains slow. The study, utilizing the system’s generalized method of moments, investigates the correlation between tax revenue and income inequality in a panel of African countries from 2010 to 2021. The findings indicate that for the countries in this study, an increase in tax revenue is associated with a rise in income inequality. Consequently, higher tax revenues tend to widen income disparities in the countries studied. Policymakers often employ various economic instruments to achieve equitable income distribution, with tax revenue being a critical tool for this purpose. However, the study reveals that increases in tax revenue do not necessarily filter to reduce income inequalities. Other factors, such as corruption control and regulatory quality, significantly influence the redistributive effects of tax revenue. These findings provide important insights for policymakers, highlighting the need for comprehensive strategies that address these additional factors to effectively reduce income inequality.

The effects of technology investment on financial stability: Evidence from commercial banks in Vietnam

2025-01-14T05:14:48-06:00

This study examines the effects of technology investments on financial stability at commercial banks in Vietnam. Financial services provided by banks are vital to the growth and development of the Vietnamese economy. Due to competitive constraints and the need to keep up with fast-moving FinTech startups, Vietnamese banks have made digital transformation a top strategic goal. Therefore, the study aims to investigate the impact of technology investment on the financial stability of commercial banks in Vietnam from 2012 to 2023. The research used financial data from 26 joint-stock commercial banks and panel data analysis with the ordinary least squares (OLS), fixed effect model (FEM), random effects model (REM), and generalized method of moments (GMM) to look into the link between bank stability and technology spending. The findings reveal that while technology investment significantly enhances operational efficiency and market competitiveness, it poses risks, particularly during the initial stages of digital transformation. The results show a significant negative effect of technology investment on financial stability, highlighting the need for strategic planning and robust regulatory frameworks. These insights provide valuable recommendations for bank management and policymakers to balance technological advancements with financial stability, especially in economic disruptions like the COVID-19 pandemic. Finally, the practical implications help commercial banks strive to increase asset size and expand operations to strengthen financial capacity, increase brand recognition, create solid customer trust, improve competitiveness, and bring high profits.

The Economics and Finance Letters

Inequality in low- and middle-income countries: Does fiscal policy matter?

The effects of technology investment on financial stability: Evidence from commercial banks in Vietnam