Impact of digitalization on revenue generation and transparency within local government frameworks

The increasing adoption of digitalization in local government frameworks has transformed governance processes, particularly in revenue generation and transparency. However, the extent to which digitalization enhances these governance outcomes remains underexplored, especially in developing economies like Ghana. This study investigates the relationship between digitalization, revenue generation, and transparency, highlighting the mediating role of institutional quality and economic conditions. The study aims to assess the impact of digitalization on revenue generation and transparency in Ghana’s local government frameworks. It further examines how institutional quality, political stability, and economic development shape these relationships. A quantitative research approach was employed using secondary data from 2010 to 2022, sourced from the World Bank, the Bank of Ghana, and international governance indices. The study applied panel data regression models, stationarity tests, multicollinearity analysis, and heteroskedasticity checks to ensure robust statistical analysis. The results indicate that digitalization significantly improves revenue generation, albeit with moderate significance. Moreover, digitalization strongly enhances transparency, with institutional quality playing a crucial role. However, economic development negatively affects revenue generation, suggesting a shift in tax policy and compliance dynamics. Policymakers should expand digital tax administration, integrate blockchain and AI-driven financial oversight, and enhance institutional quality to maximize digitalization’s benefits. Future research should focus on comparative studies across developing economies and sector-specific digitalization impacts.