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Article
Publication date: 2 August 2022

Yajie Bai and Maoguo Wu

Extensive macro- and micro-economics research has been conducted on China's tax reform, which replaced business tax with value-added tax (VAT). However, existing studies have not…

Abstract

Purpose

Extensive macro- and micro-economics research has been conducted on China's tax reform, which replaced business tax with value-added tax (VAT). However, existing studies have not clarified the reform's impact on firm-level investment decisions. Hence, this study explored the effect of replacing business tax with VAT on firms' investment efficiency.

Design/methodology/approach

The study used 2010–2018 data from China's A-share listed companies and a difference-in-differences (DID) model to explore the effect of the reform on firm-level investment decisions.

Findings

The authors found that China's tax reform has improved investment efficiency in underinvested firms, increased liquidity and decreased the level of reliance on external financing. The tax reform had a greater effect on investment efficiency in firms with lower liquidity and higher external financing reliance. Its effect was also more significant among non-state-owned and small companies.

Originality/value

This study fills the aforementioned research gap by exploring the effects of China's tax reform, thus providing a theoretical reference and a basis for policymaking.

Details

International Journal of Emerging Markets, vol. 19 no. 3
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 10 August 2023

Mahmoud Ahmad Mahmoud, Umar Habibu Umar, Muhammad Bilyaminu Ado and Tasiu Tijjani Kademi

The purpose of this study is to extend the extant literature on the relationship between financial risk tolerance (FRT), awareness of Islamic financial principles (AWIF) and…

Abstract

Purpose

The purpose of this study is to extend the extant literature on the relationship between financial risk tolerance (FRT), awareness of Islamic financial principles (AWIF) and positive financial behaviour (FB) on financial satisfaction (FS) of micro, small and medium enterprise (MSME) owners by principally investigating the mediating effect of access to Islamic financing (AIF) on these relationships.

Design/methodology/approach

A quantitative survey method of data collection through a self-administered questionnaire. The sample of 384 MSME owners was selected in which 208 questionnaires were retrieved and analysed using the partial least square structural equation modelling (SEM).

Findings

The result shows that the relationships between FRT and AIF as well as FB and AIF are not significant. However, the AWIF–AIF relationship was found to be positively significant. Moreover, only the mediating effect of AIF on the AWIF–FS relationship was established.

Practical implications

The result implies that AIF could strongly influence the FS of MSME owners, and the AWIF–FS relationship is better explained with sufficient AIF. However, AIF could not mediate the relationships between FRT–FS and FB–FS. Therefore, policymakers and MSME owners should emphasize on AWIF and AIF to enhance FS.

Originality/value

This study pioneers the examination of the mediating influence of AIF on FRT, AWIF, FB and FS of MSME owners in a single framework. Despite the importance of MSME owners on economic sustainability, literature on MSME owners' FS is lacking expressly among developing countries, particularly in Nigeria. This study also revealed new theoretical and practical knowledge by illuminating the mediating effect of AIF on AWIF–FS relationship.

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