Arbeitspapier
Tax on interest and the pricing of personal demand deposits
The paper analyzes the effects of taxation on the pricing of personai transactions deposits such as chequing accounts. In many fiscal systems, explicit interest on deposits is taxable while "implicit interest" in the form of underpriced bank services for depositors is not. Conditions are developed under which this asymmetry leads to zero deposit rates, zero service charges, ar both. Minimum balance requirements are also explained. It is found that the asymmetric tax system generally involves an implicit subsidy to the service production activities of banks. The subsidy to banking is increases when the tax rate on interest income is increased. The analysis is extended to the Finnish system of tax exempt regulated deposit rates. The implicit subsidy to the real activities of banks is shown to be even larger in this system.
- ISBN
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951-686-320-5
- Language
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Englisch
- Bibliographic citation
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Series: Bank of Finland Discussion Papers ; No. 11/1992
- Classification
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Wirtschaft
- Event
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Geistige Schöpfung
- (who)
-
Tarkka, Juha
- Event
-
Veröffentlichung
- (who)
-
Bank of Finland
- (where)
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Helsinki
- (when)
-
1992
- Handle
- Last update
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10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Tarkka, Juha
- Bank of Finland
Time of origin
- 1992
Other Objects (12)
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A case for interest rate smoothing
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Two tales of the natural rate of interest
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Export pricing and the cross-country correlation of stock prices
Risk sharing in the pricing of payment services by banks
How are the key Finnish market interest rates determined?
Taxation of personal interest income in 18 OECD countries
Approaches to deposit pricing: a study in the determination of deposit interest and bank service charges
Deposit insurance: Pricing and incentives
Ageing, interest rates, and financial flows
A case for interest rate smoothing
Nonlinear dynamics of interest rate and inflation
The interest rate sensitivity of output in Finland
Two tales of the natural rate of interest
Pricing decisions and the position constraint in foreign exchange dealing
Export pricing and the cross-country correlation of stock prices
Risk sharing in the pricing of payment services by banks
How are the key Finnish market interest rates determined?
Taxation of personal interest income in 18 OECD countries
Approaches to deposit pricing: a study in the determination of deposit interest and bank service charges
Deposit insurance: Pricing and incentives
Ageing, interest rates, and financial flows
A case for interest rate smoothing
Nonlinear dynamics of interest rate and inflation
The interest rate sensitivity of output in Finland
Two tales of the natural rate of interest
Pricing decisions and the position constraint in foreign exchange dealing
Export pricing and the cross-country correlation of stock prices
Risk sharing in the pricing of payment services by banks
How are the key Finnish market interest rates determined?