THE DEFINITION OF DIGITAL SHADOW ECONOMY REMEIKIENE, Rita; GASPARENIENE, Ligita; SCHNEIDER, Friedrich Georg
Technological and economic development of economy,
03/2018, Letnik:
24, Številka:
2
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Considering the lack of the scientific studies on the selected topic, the authors of this article raise the aim to set up the definition of digital shadow economy and identify its distinctive ...features and channels. Thus far, the studies on illegal digital activities have covered ambiguous interpretations of digital shadow economy that incorporated both criminal and economic aspects of the activities performed. The results of the empirical research have enabled to formulate the definition of digital shadow economy that refers to illegal activities, such as digital service provision and sales of goods/services online, when operating exceptionally in digital space, the entities violate the existent legal norms and regulations with a pursuit of illegal mutual interest and material benefits. The newly formulated definition of digital shadow economy has served as a corner-stone for identification of the distinctive features and channels of this phenomenon. Hence, the results of the research may make a significant and weighty contribution to the development of the theory of economics and may raise the awareness of what the phenomenon of digital shadow economy implies.
Are cooperative and commercial banks equally effective in reducing the shadow economy? Although theory and evidence indicate that the expansion of the financial system reduces the size of the shadow ...economy, little is known on the role played by cooperative and commercial banks in shaping the size of the shadow economy. We address this issue using data from 42 developed and developing countries over the 2006–2017 period. For our empirical purposes, Generalized Least Squares (GLS) and Instrumental Variable (IV) estimators have been employed. Evidence indicates that cooperative banks significantly reduce the size of the shadow economy. On the contrary, commercial banks are shown to increase the shadow economy. Consistent with previous literature, while for cooperative banks increased financial outreach encourages small firms to enter the formal sector, thereby reducing the size of the shadow economy, the expansion of commercial banks exacerbates the latter by tightening credit constraints for small firms.
•Do cooperative and commercial banks equally affect the shadow economy?•We address this issue using data from 42 countries over the 2006–2017 period.•Cooperative banks significantly reduce the size of the shadow economy.•The expansion of commercial banks is shown to exacerbate the shadow economy.•Cooperative banks favor the transition to the formal sector for small size agents.
This paper uses a multivariate analysis to examine how countries’ tax morale and institutional quality affect the shadow economy. The literature strongly emphasizes the quantitative importance of ...these factors in understanding the level of and changes in the shadow economy. Newly available data sources offer the unique opportunity to further illuminate a topic that has received increased attention. After controlling for a variety of potential factors, we find strong support that a higher tax morale and a higher institutional quality lead to a smaller shadow economy.
The purpose of this article is to define the concept of digital shadow economy and identify its determinants and channels from consumers’ position. In order to fulfil the defined purpose, the method ...of snowball sampling was employed. The results of the research revealed that consumers interpret digital shadow economy as an illegal operation in the Internet space, which generates illegal money flows for commodity/service providers or purchasers, and deprives legal traders/service providers from the revenue that could be officially accounted, calculated and declared. E-shops, social networks and websites are the channels, most commonly engaged for acquisition of goods/services in digital space; the categories of goods/services acquired by these channels include clothing and footwear, trips and entertainment, cosmetics and perfume. Purification of the concept of digital shadow economy from consumers’ position allowed to define the concept of digital shadow economy, which is a significant contribution to the evolution of the theory of digital shadow economy, and can enable to develop an instrument for measuring the scopes of digital shadow economy in further research.
•The relationship between corruption, the shadow economy, and public debt is investigated.•Results suggest that an increase in corruption leads to an increase in public debt.•An increase in the size ...of the shadow economy leads to an increase in public debt.•A larger shadow economy compounds the positive influence of corruption on public debt.
This paper investigates the relationship between corruption, the shadow economy, and public debt. It additionally examines whether the shadow economy increases the adverse effects of corruption on public debt. The model is empirically tested for 126 countries over 1996–2012. Using Ordinary Least Squares (OLS), Fixed effects, system generalized method of moments (GMM) and instrumental variable estimation, and two measures of corruption—the Transparency International Corruption Perceptions Index and the Kaufmann et al. Corruption Index—results confirm that increased corruption and a larger shadow economy lead to an increase in public debt. Results additionally indicate that the shadow economy magnifies the effect of corruption on public debt suggesting that they act as complements. Results also suggest that a larger shadow economy reduces tax revenues and thus increases public debt, similarly, higher government expenditure enhances the effects of corruption on government debt. Hence reducing corruption should be a primary policy goal of governments. Given the complementarity detected between corruption and the shadow economy, reducing corruption would also lead to a fall in the size of the shadow economy and public debt. Reducing corruption will also minimize the adverse effects of corruption on government debt through government expenditure.
This paper presents estimations of the shadow economies for 162 countries, including developing, Eastern European, Central Asian, and high income OECD countries over 1999 to 2006/2007. According to ...our estimations, the weighted average size of the shadow economy (as a percentage of 'official' GDP) in Sub-Saharan Africa is 37.6%, in Europe and Central Asia (mostly transition countries) 36.4% and in high income OECD countries 13.4%. We find that an increased burden of taxation (direct and indirect ones), combined with (labour market) regulations and the quality of public goods and services as well as the state of the 'official' economy are the driving forces of the shadow economy.
METHOD OF ESTIMATING THE VOLUME OF THE SHADOW ECONOMY V. Yu. Ilin; T. P. Nazarenko; I. V. Suprunova ...
Fìnansovo-kreditna dìâlʹnìstʹ: problemi teorìì̈ ta praktiki (Online),
01/2021, Letnik:
1, Številka:
32
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The shadow economy at the transitional stage of development of Ukraine became an integral part of the economy, began to solve a number of macro and microeconomic problems of the state. Today, the ...shadow economy has a significant impact on all socio-economic processes occurring in the country. But the shadow economy’s share of gross domestic product today is so large that it poses a threat to national security. A significant level of the shadow economy leads to the criminalization of society, the growth of corruption, the formation of an atmosphere of legal nihilism in the state. Tendency to evade taxes causes significant damage to Ukraine’s budget. This, in turn, narrows the transition to a welfare state model, as it reduces resources for infrastructural upgrades, social payments, medical and other social services for the population.
Official estimates of the size of the shadow economy by various government agencies have considerable differences. Inaccurate assessment of the impact of the shadow economy on all spheres of the country’s activity leads to irrelevant assessments of socio-economic processes and their tendencies, miscalculations in the formation of domestic and foreign policy of Ukraine. The shadow economy has been researched by many scholars, but in the considerable number of works on this topic there are no even well-grounded data on the shadow economy. Therefore, the urgent task is to develop an algorithm for estimating the shadow economy. To do this, the article analyzes various terminological approaches to defining the shadow economy and its components. The classification of existing methodological approaches to the identification and assessment of the extent of shadow economic activity is carried out. A mathematically correct method of estimating the size of the shadow economy which is suitable for practical use has been proposed and substantiated. The analysis of the obtained mathematical equation showed that it is possible to formulate mathematically precisely the conditions for a stable level of the shadow economy and the growth of the shadow economy. The estimation of the correlation functional of the shadow economy size became mathematically accurate.
This study examines the influence of financial development (FD), along three dimensions (financial depth, financial access and financial efficiency) in two main sub-sectors (financial institutions ...and financial markets), on the shadow economy’s (SE) size. Several econometric techniques and estimation strategies were applied to a balanced panel data set of a global sample of 114 economies and three sub-samples (low and lower-middle-income economies (LMEs), upper-middle-income economies (UMEs) and high-income economies (HIEs)) for the period 2002–2015. First, nine financial indicators were found to minimise the SE. Interestingly, financial institutions, especially financial institutions’ efficiency, had a more significant effect on the SE than financial markets. Second, there was evidence that the non-linear nexuses between FD and SE were U-shaped for eight of the nine financial indicators, the exception being financial institutions’ efficiency. Third, financial depth and financial access had a positive impact on the SE in the short run, while financial institutions appeared to reduce the SE in the long run. Fourth, the negative effects of FD on the SE were noticeable in LMEs and UMEs and dominant in HIEs in the long run. The non-linear relationships were consistent in UMEs, despite some variations in LMEs and HIEs.
Using stock returns from a sample of 94 countries over the period from 22 January to 24 March 2022, we document a negative relationship between the Ukraine–Russia war and world stock market returns. ...We thus provide the first empirical evidence.
•We provide the first empirical evidence of the effect of the Ukraine–Russia war on world stock market returns.•The war has negatively impacted the world’s stock indices and this effect was more significant after the invasion of Ukraine.•The countries bordering Ukraine and Russia were the most affected, as were the UN countries that condemned the war.
Mounting environmental pressures led China to focus on the effectiveness of the environmental regulation to control pollution. Since the shadow economy, or underground economic activities that are ...not included in official statistics, accounts for an increasing fraction of China's economy, its impacts on environmental quality should be carefully evaluated. In this study, the main research questions are as follows: 1) What is the extent of the effect of environmental regulation on environmental quality? and 2) What are the factors that influence the impact of environmental regulation on environmental pollution? A theoretical model is developed to explain the relationship among the environmental regulation, shadow economy, and environmental quality in China. An empirical analysis is conducted to test the three propositions of the model, thereby examining the explanatory power of the theoretical model. Concretely, using panel data from 30 provinces for the period of 1998–2012, the generalized method of moments (GMM) method is employed to control for potential endogeneity and introduce dynamic effects. The estimation results indicate that stringent environmental regulation and the level of the shadow economy are both positively related to China's environmental pollution; however, the results also indicate that tighter environmental control would help reduce pollution at a given level of the shadow economy. Moreover, an increase in the proportion of corrupt officials may weaken the environmental regulation, which would consequently lead to the increase in illegal production and total pollutant emissions. Besides, many economic and social factors may also affect the environmental quality. For instance, the development of secondary industry contributes toward an increase in pollutant emissions; however, increased research and development (R&D) spending on eco-friendly industrial operations can help to reduce pollution.
•Impact of environmental regulation, shadow economy and corruption on the environment is examined.•A theoretical model is built to explain the relationship.•Three propositions of the theoretical model are empirically tested.•Levels of environmental regulation and shadow economy are positively related with pollution.•Environmental regulation is effective only when shadow economy and corruption are controlled.
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