Taxation Bank Leverage And Financial Crises
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Author |
: Ruud A. de Mooij |
Publisher |
: International Monetary Fund |
Total Pages |
: 26 |
Release |
: 2013-02-25 |
ISBN-10 |
: 9781475577709 |
ISBN-13 |
: 1475577702 |
Rating |
: 4/5 (09 Downloads) |
Synopsis Taxation, Bank Leverage, and Financial Crises by : Ruud A. de Mooij
That most corporate tax systems favor debt over equity finance is now widely recognized as, potentially, amplifying risks to financial stability. This paper makes a first attempt to explore, empirically, the link between this tax bias and the probability of financial crisis. It finds that greater tax bias is associated with significantly higher aggregate bank leverage, and that this in turn is associated with a significantly greater chance of crisis. The implication is that tax bias makes crises much more likely, and, conversely, that the welfare gains from policies to alleviate it can be substantial—far greater than previous studies, which have ignored financial stability considerations, suggest.
Author |
: Ms.Grace Weishi Gu |
Publisher |
: International Monetary Fund |
Total Pages |
: 35 |
Release |
: 2012-11-30 |
ISBN-10 |
: 9781475540680 |
ISBN-13 |
: 147554068X |
Rating |
: 4/5 (80 Downloads) |
Synopsis Taxation and Leverage in International Banking by : Ms.Grace Weishi Gu
This paper explores how corporate taxes affect the financial structure of multinational banks. Guided by a simple theory of optimal capital structure it tests (i) whether corporate taxes induce subsidiary banks to raise their debt-asset ratio in light of the traditional debt bias; and (ii) whether international corporate tax differentials vis-a-vis foreign subsidiary banks affect the intra-bank capital structure through international debt shifting. Using a novel subsidiary-level dataset for 558 commercial bank subsidiaries of the 86 largest multinational banks in the world, we find that taxes matter significantly, through both the traditional debt bias channel and the international debt shifting that is due to the international tax differentials. The latter channel is more robust and tends to be quantitatively more important. Our results imply that taxation causes significant international debt spillovers through multinational banks, which has potentially important implications for tax policy.
Author |
: Julian S. Alworth |
Publisher |
: Oxford University Press (UK) |
Total Pages |
: 321 |
Release |
: 2012-02-23 |
ISBN-10 |
: 9780199698165 |
ISBN-13 |
: 0199698163 |
Rating |
: 4/5 (65 Downloads) |
Synopsis Taxation and the Financial Crisis by : Julian S. Alworth
This book examines how tax policies contributed to the financial crisis; whether taxation can play a role in the reform efforts to establish a sounder and safer financial system; and the pros and cons of various tax initiatives.
Author |
: Sven Langedijk |
Publisher |
: |
Total Pages |
: 37 |
Release |
: 2014 |
ISBN-10 |
: 927943442X |
ISBN-13 |
: 9789279434426 |
Rating |
: 4/5 (2X Downloads) |
Synopsis Debt Bias in Corporate Taxation and the Costs of Banking Crises in the EU by : Sven Langedijk
Author |
: Sajid M. Chaudhry |
Publisher |
: Edward Elgar Publishing |
Total Pages |
: 204 |
Release |
: 2014-10-31 |
ISBN-10 |
: 9781783476480 |
ISBN-13 |
: 1783476486 |
Rating |
: 4/5 (80 Downloads) |
Synopsis Taxing Banks Fairly by : Sajid M. Chaudhry
Taxing Banks Fairly offers an ethical perspective on bank taxation and financial stability to complement the traditional political economy approach. It also considers how a bank levy or financial activities tax, could be used to ensure that big banks m
Author |
: Mr.Michael Keen |
Publisher |
: International Monetary Fund |
Total Pages |
: 32 |
Release |
: 2012-02-01 |
ISBN-10 |
: 9781463937096 |
ISBN-13 |
: 1463937091 |
Rating |
: 4/5 (96 Downloads) |
Synopsis Debt, Taxes, and Banks by : Mr.Michael Keen
Understanding the impact of the asymmetric tax treatment of debt and equity on the capital structures of financial institutions is critical to shaping and assessing responses to the problem of excessive leverage that underlay the 2009 financial crisis - but there is no empirical evidence to draw on. Guided by a simple model of banks? financing decisions in the presence of both regulatory constraints and tax asymmetries, this paper explores the impact of corporate tax bias on bank leverage, the use of hybrid instruments and regulatory capital ratios for a panel of over 14,000 commercial banks in 82 countries over nine years. On average, the sensitivity of banks? debt choices proves very similar to that of non-financial firms, consistent with rough offsetting of two opposing effects suggested by the theory. As the model predicts, somewhat counter-intuitively, the impact of tax on hybrids is generally weak or insignificant. Responsiveness to taxation varies significantly across banks, however: those holding smaller equity buffers, and larger banks, are noticeably less sensitive to tax.
Author |
: |
Publisher |
: |
Total Pages |
: 0 |
Release |
: 2014 |
ISBN-10 |
: 9279434411 |
ISBN-13 |
: 9789279434419 |
Rating |
: 4/5 (11 Downloads) |
Synopsis Debt Bias in Corporate Taxation and the Costs of Banking Crises in the EU by :
This study points to a relation between corporate taxation, bank leverage and costs of financial crises. The authors first estimate the effect of corporate taxation on bank leverage with a series of panel regressions, building on the methodology of Keen and Mooij, but focusing on a sample of 3,000 EU banks using data spanning the period 2001-2011. In a second step, they measure the potential reduction in public finance costs in financial crises that would result from reducing banks' incentives for debt financing compared to equity financing, using an actual bank balance-sheet-based model of costs of systemic crisis (SYMBOL-model) for six EU member states. Finally, they show under which conditions the results hold when varying the sensitivity of leverage to corporate income tax, when asset portfolio risk is adjusted together with bank leverage, and when allowing for increased asset portfolio risk.
Author |
: International Monetary Fund. Fiscal Affairs Dept. |
Publisher |
: International Monetary Fund |
Total Pages |
: 78 |
Release |
: 2016-12-10 |
ISBN-10 |
: 9781498345200 |
ISBN-13 |
: 1498345204 |
Rating |
: 4/5 (00 Downloads) |
Synopsis Tax Policy, Leverage and Macroeconomic Stability by : International Monetary Fund. Fiscal Affairs Dept.
Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern. This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.
Author |
: Ruud A. de Mooij |
Publisher |
: International Monetary Fund |
Total Pages |
: 26 |
Release |
: 2013-02-25 |
ISBN-10 |
: 9781475550276 |
ISBN-13 |
: 1475550278 |
Rating |
: 4/5 (76 Downloads) |
Synopsis Taxation, Bank Leverage, and Financial Crises by : Ruud A. de Mooij
That most corporate tax systems favor debt over equity finance is now widely recognized as, potentially, amplifying risks to financial stability. This paper makes a first attempt to explore, empirically, the link between this tax bias and the probability of financial crisis. It finds that greater tax bias is associated with significantly higher aggregate bank leverage, and that this in turn is associated with a significantly greater chance of crisis. The implication is that tax bias makes crises much more likely, and, conversely, that the welfare gains from policies to alleviate it can be substantial—far greater than previous studies, which have ignored financial stability considerations, suggest.
Author |
: Sajid M. Chaudhry |
Publisher |
: Edward Elgar Publishing |
Total Pages |
: 166 |
Release |
: 2015-08-28 |
ISBN-10 |
: 9781785360275 |
ISBN-13 |
: 1785360272 |
Rating |
: 4/5 (75 Downloads) |
Synopsis Balancing the Regulation and Taxation of Banking by : Sajid M. Chaudhry
This concise book gives a unique overview of bank taxation as an alternative or a compliment to prudential regulation or non-revenue taxation. Existing bank taxation is reviewed with a view to eliminating distortions in the tax system, which have incen