The present study attempts to investigate whether shadow economy and the tourism sector are related. In the European countries, Schneider reported that 20 to 25 per cent of the shadow economy is represented in the tourism-related industries – wholesale and retail, automotive and motorcycle sales and maintenance; transportation, storage and communications; and hotels and restaurants. For the tourism sector, the services given by operators (unregistered and/or underreporting) operate in the shadow economy will ultimately wiped off the map of high quality tourist destinations and destroyed the development of the tourism industry itself. This study examines the short-run and long-run relationships between international tourism receipts and shadow economy for 149 countries over the period 1995-2008. We use a generalized one-step error-correction model (ECM) in combination with a system Generalized Method of Moments (GMM) to explore the long-run relationship between these two variables. Our results suggest that tourism receipts and shadow economy are cointegrated. This implies that shadow economy and the tourism industry worldwide are related in the long-run. The long-run elasticities indicate a negative impact of the shadow economy on the tourism sector suggesting that increase in shadow economy activities will adversely affecting the tourism industry.

The purpose of the present study is to determine whether there is long-run relationship between crime rates and unemployment rate in Malaysia for the period 1973 to 2003. The autoregressive distributed lag bounds testing procedure was employed as the main tool to infer cointegration or the long-run relationship between unemployment and the crime rates. The results indicate that the unemployment rate, and crime rates: total crime rate, violent crime (murder, robbery, and assault), and property crime (daylight burglary, night burglary, and motorcycle theft) are cointegrated. The estimated long-run coeffi cients suggest that unemployment rate has negative effect on violent crime, murder, robbery, assault, and motorcycle theft. The paper shows that jobless population in Malaysia as a result of recession tend to remain in or near homes and neighborhoods and this likely will reduce the occurrence of crime.

In the present study we estimate the size of the shadow economy for Malaysia using the modified-cash-deposit-ratio (MCDR) approach. Subsequently, we relate shadow economy with its determinants such as national income, government spending, stock market development, misery index and tax burden. Our emphasis in this study is on the role of Islamic stock market in mitigating shadow economy in Malaysia. We consider Bursa Malaysia as an Islamic stock market as more than 70% of the companies listed in the Bursa Malaysia stock indices are Sharia-compliant. Our results clearly suggest that there is a role for Islamic stock market in reducing the size of shadow economy in Malaysia.

Tourism is an important sector that contributes to government revenues, national income, foreign exchange earnings as well as provides job and business opportunities for many nations. In 2013, international tourist arrivals reached a record 1.1 billion worldwide, with USD1.2 billion in international tourism receipts. At the same time, the shadow economy in the tourism sector also flourished. In the European countries, Schneider reported that 20% to 25% of the shadow economy is represented by tourism-related industries, wholesale and retail, automotive and motorcycle sales and maintenance; transportation, storage and communications; and hotels and restaurants. Services given by these operators (unregistered and/or underreported) will ultimately be wiped off the map of high-quality tourist destinations and destroy the development of the tourism industry itself. This study examines the short-run and long-run dynamics between international tourist's arrival and shadow economy for 141 countries over the period 1995-2008. We used an error-correction model (ECM) combined with a system Generalized Method of Moments (GMM) to explore the long-run relationship between these two variables. Our results suggest that tourists' arrival and shadow economy are cointegrated. The long-run coefficients indicate a negative impact of the shadow economy on the tourism sector. This implies that the shadow economy plays a significant role in the global tourism industry.

Poverty alleviation is at the top of the Millennium Development Goals' (MDGs) list of eight goals. In the year 2000, nearly all heads of states and governments met and reaffirmed their faith in the United Nations (UN) as necessary foundations of a more peaceful, prosperous and just world. At this meeting, the MDGs were adopted which the first goal is eradicate extreme poverty and hunger. The question of how to finance poverty reduction measures has been a major concern for policy makers and international organizations for many years. Although it is useful to focus on the quantity and quality of foreign aid and development assistance of donor communities, it is not the solution. In the long term, countries can only prevail against their dependency on foreign aids when they are able to move enough domestic resources to guarantee universal access to essential public goods and services.

The slides highlight the research questions on: 1) would the presence of Islamic finance be associated with lower shadow economy; 2) are Islamic finance and the financial development complementary in reducing the shadow economy sector?

The purpose of this paper is to relate the quality of governance with crime in Malaysia. The study also identifies the best good governance tool to fight against crime in Malaysia. The study uses time-series data on crime rates and six measures of governance: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption. In this study the authors employed the popular autoregressive distributed lagged modeling approach to estimate the long-run model of crime and governance. The authors test the hypothesis that good governance lowers crime rates (total crime, violent and property crimes). The results suggest a negative relationship between crime rates and good governance in Malaysia. This suggests that good governance reduces crime rates in Malaysia. The limitations of this study is the short time-series used in the analysis which is from 1996 to 2009. This study provides evidence that the practice of good governance, for example, lower corruption, good policing and judicial system can mitigate crime in Malaysia. The implementation of good governance will protect property right of individuals, business sector and the society as a whole, and this will enhance prosperity of a nation. This study provide the first empirical evidence that linking between crime and good governance in Malaysia.

The present paper addresses the question whether the less developed states, namely; Kedah, Kelantan, Pahang, Perlis, Sabah, Sarawak and Terengganu are converging with the richer state of Selangor, using unit root test and cointegration approach to test for income convergence for the period 1970-2013. We tested convergence on per capita real GDP for the states involved and the results suggest that the less developed states have been converging to the state of Selangor for the period under study. We also identify two convergence clubs among the states. In this respect, the state government has an important role to play in enhancing growth by continuously providing stable economic environment for investment and other productive economic activities. Without the Five-Year Malaysia Plans, this convergence phenomenon could not have been achieved in Malaysia. To ensure further convergence can take place at a faster rate in the future, government efforts and policies to foster narrowing states' income disparity has to be enforced further.

Theory argues that as long as the shadow economy is of sufficient size, the leakage or loss of tax revenue through tax evasion will also be substantial. In this chapter, we provide new estimates of the size of the shadow economy in Malaysia for the period 1971-2013. Further, we relate the shadow economy to its determinants as measured by the misery index. This chapter reveals that the relationship between the shadow economy and financial development in Malaysia exhibits an inverted U-shaped curve. The chapter concludes that the Malaysian government should embark on programs that can reduce the size of the shadow economy, relying on its dual banking system of Islamic and conventional banks.

The purpose of this study is to re-estimates the size of shadow economy in Malaysia and investigates the role play by the financial sector development in mitigating the size of shadow economy. Our results suggest that individual income tax burden has an impact on shadow economy in Malaysia; indicating that lower personal tax rate discourages people from participating in the shadow economy in Malaysia. On the other hand, increase in national income and government consumption also reduce shadow economy; while increase in misery increases shadow economy in Malaysia. One policy implication from this study is that the Malaysian government should embark on programs that can reduce the size of the shadow economy by removing barriers for easy access to the credit market and further reform of the financial sector should be the focus.

This paper explores the link between the shadow economy and financial sector development in Malaysia for the period 1971-2013. We calculate the size of the shadow economy by using the modified-cash-deposits-ratio approach recently developed by Pickhardt and Sardia (2011). We investigate the contention made by Blackburn et al. (2012) that financial sector development can mitigate shadow economy, higher level of financial sector development lead to lower level of shadow economy. Our results show that there is a non-linear long-run relationship between shadow economy and financial sector development in Malaysia, an inverted-U shape curve, suggesting that at lower (higher) level of financial sector development commensurate with higher (lower) level of the shadow economy. One policy implication from this study is that the financial sector can play an important role in reducing shadow economy by improving the accessibility to financing and to the credit market.

The estimated total tax evasion as reported by the Tax Justice Network in 2011 is in the excess of USD3.1 trillion or about 5.1% of world's GDP. Tax evasion is a crime and tax revenue losses have negative consequences to the government ability to fueled economic growth by providing enough public infrastructure and other services. In this study we have estimated the share of tax evasion to the official economy for five ASEAN economies, namely; Indonesia, Malaysia, the Philippines, Singapore and Thailand for the period 1980-2013. Tax evasion was calculated from the estimated size of the shadow economy using the modified-cash-deposits-ratio (MCDR) approach suggested by Pickhardt and Sardia (2011). We investigate the contention made by Blackburn et al. (2012) and Bose et al. (2012) that financial development can mitigate tax evasion - higher level of financial development lead to lower level of tax evasion. Employing the pooled mean group estimator (PMG), our results show that there is a non-linear long-run relationship between tax evasion and financial development in ASEAN-5 economies, an inverted U-shaped curve, suggesting that at lower (higher) level of financial development commensurate with higher (lower) level of tax evasion. One policy implication from this study is that the financial sector in ASEAN-5 economies can play an important role in reducing tax evasion by improving the accessibility to financing and to the credit market.

Tax evasion is a crime. Recent estimates registered the loss of tax revenue amounting to USD3.1 trillion or 5.1% of world's GDP. Tax revenue losses have negative consequences to the government ability to fuelled economic growth by providing enough public infrastructure and other services. In this study we have estimated the share of shadow economy to the official economy for five ASEAN economies, namely; Indonesia, Malaysia, the Philippines, Singapore and Thailand for the period 1980-2013 using the MIMIC model. The indexes of the shadow economy from the MIMIC model were then used to calculate the loss in tax revenue as a result of the presence of the shadow economy. We then test the hypothesis that the level of economic development and tax burden play an important role in mitigating tax evasion. Our results indicate that increasing economic development and tax burden in all five ASEAN economies Malaysia increased tax evasion for the period 1980 to 2013.