Can taxes tame the banks? Evidence from European bank levies.

Devereux, Michael, Johannesen, Niels and Vella, John (2015) Can taxes tame the banks? Evidence from European bank levies. The Economic Journal. (Accepted)

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Abstract

Following the 2007-2008 Financial crisis, a large number of countries introduced levies on bank borrowing intended to reduce risk in the financial sector. This paper studies the behavioral responses to bank levies and finds that banks exposed to levies increased their reliance on equity funding, but at the same time increased the risk of their assets; banks shifted risk from the liability side of their balance sheets to the asset side, which mitigated the impact of government intervention. Our analysis also shows that any reduction in total risk was concentrated among banks that pose no or little threat to financial stability.

Item Type: Article
Keywords: Oxford University Centre for Business Taxation; corporate taxation; banking
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 11 Apr 2019 15:25
Last Modified: 11 Apr 2019 15:25
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/7355

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