Can taxes tame the banks? Capital structure responses to bank levies

Vella, John (2013) Can taxes tame the banks? Capital structure responses to bank levies. In: Law and Finance Seminar Series, 25/04/13, Faculty of Law, University of Oxford.

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Abstract

In the wake of the financial crisis, a number of countries have introduced Pigouvian levies on bank liabilities associated with systemic risk. We study how the levies have affected bank capital structure using a rich panel dataset for European banks. Our results suggest that the levies have caused an average increase in equity-asset ratios of around 1-1.5 percentage points driven by increases in stocks of equity rather than contractions of the balance. Our results also lend support to the theoretical prediction that levies induce banks to hold more risky assets when the regulatory capital requirement is binding.

Item Type: Conference or Workshop Item (Paper)
Keywords: corporate taxation; banking
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 23 May 2013 11:41
Last Modified: 23 Oct 2015 14:08
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4631

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