Journal Press India^®

Author Details ( * ) denotes Corresponding author

This study provides strong evidence of the fiscal gains from financial inclusion in Asian economies. A one standard deviation rise in financial inclusion increases the tax-to-GDP ratio by 1.31 percentage points. Digital payments emerge as the key driver, as they create audit trails, lower compliance costs, and reduce evasion. A threshold effect at FII = 0.647 indicates non-linear gains, suggesting that benefits intensify after a critical mass. Interestingly, high-income countries gain more, likely due to stronger institutional capacity or diminishing returns in low-income settings. The 2010–2022 periods captures fintech growth, though regional focus may limit global applicability. Overall, the study highlights the value of aligning financial inclusion with tax reforms. Expanding digital infrastructure can help developing economies boost revenue, improve compliance, and modernize tax systems making financial inclusion a strategic lever for fiscal strengthening.

Keywords

Financial inclusion; Tax-to-GDP ratio; Digital payment; Asian economies; Fiscal policy

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