Tax, investment, institutional and social channels of economic shadowing: Challenges for macro-financial stability and good governance

This paper aims to examine the impact of Good Corporate Governance (GCG) practice on bank stability and performance. Governance is measured using the GCG rating that covers eleven aspects. The authors apply instrumental regression to link governance to performance and stability. The study covers a sample of 150 banks. The result shows that bank stability can mediate bank governance and bank performance. On the determinant of bank performance, it can be concluded that the GCG rating is positive and directly influences bank performance. Bank stability is also positive for bank performance indicating the indirect contribution of the GCG rating to bank performance. NPL, LDR, CAR and bank’s size (LASSET) are all negative and significant. The aim of this paper is to provide strong empirical evidence on the importance of governance and stability for performance. The limitations of this paper are the size of the sample and that it only covers public banks which are theoretically required to apply better governance in all aspects of their business by the Capital Market Authority.

The purpose of this paper is to present the results of a meta-analysis of the relationship between determinant factors and tax evasion based on deterrence approach. Using the meta-analysis method, each statistical result of empirical studies is converted into r-pearson as standardized effect size, and then synthesized into a mean effect size in order to increase power and to resolve uncertainty. Theoretically, increasing audit, tax rate and tax penalty will decrease tax evasion. However, the results show that only tax rate has a significant impact on tax evasion. Synthesizing totally 478 outcomes from articles published between 1978 and 2018, there is a robust conclusion that decreasing tax rate is an effective tool in combating tax evasion. On the other hand, audit and penalty are not significant in influencing tax evasion. In addition, the results of heterogeneity analysis suggest that national culture and income level of the country are useful in explaining the impact of audit, tax rate and tax penalty on tax evasion. These findings should be of interest to policymakers. First, instead of sacrificing more resources in conducting audit or imposing more penalty, tax authorities should consider setting the tax rate as low as possible to diminish tax evasion. Second, considering that culture and income level influence the impact of audit and penalty on tax evasion, policymakers should consider national cultural values and income level condition when designing audit techniques and setting penalty structures.

The article offers an investigation of the level of the shadow economy in Ukraine in the period 2007–2016, the structure of the shadow (“grey”) economy in the sectoral section, Ukraine’s place in world rankings in terms of economic freedom, corruption, favorable business conditions, and competitiveness. The main reasons of high level of shadow sector of the national economy are considered, and several measures regarding the reduction of the shadow economy in Ukraine and improvement of its economic situation are presented.