The relationship between financial services confidence index and tax revenues: The case of Turkey for the period 2012-2024

Financial services and the financial sector play a crucial role in ensuring economic stability, growth, development, and welfare, making them significant components of national economies. The general market confidence and efficiency of the financial sector concern not only individuals and businesses but also the public sector. A well-functioning financial sector that establishes confidence in the markets can support economic development and potentially increase tax revenues. This study primarily investigates the causality relationship between the financial services confidence index and tax revenues. Additionally, the study focuses on the structure of the financial system, the roles of financial service providers, and the macroeconomic effects of tax policies. The Toda Yamamoto Causality Test was applied in the empirical analysis section of the study. The study examines Turkey as a sample country, using monthly data for the period from May 2012 to May 2024. The results of the study indicate a statistically significant causality relationship from the financial services confidence index to tax revenues. These findings show the importance of the confidence factor in the financial sector concerning state tax policies.