Banks, debt and risk: assessing the spillovers of corporate taxes

Arbeitspapier

Using bank balance sheet data, we find evidence that leverage and asset risk of European multinational banks in the crisis and post-crisis period is affected by corporate taxes in their host country as well as by the tax rates in all the jurisdictions where the banking group operates. Then, we evaluate the effects that establishing tax neutrality between debt and equity finance has on systemic risk. We show that the degree of coordination in implementing the hypothetical tax reform matters. In particular, a coordinated elimination of the tax advantage of debt would significantly reduce systemic losses in the event of a severe banking crisis. By contrast, uncoordinated tax reforms are not equally beneficial. This is because national tax policies generate spillovers through cross-border bank activities and tax-driven strategic allocation of debt and asset risk across group affiliates.

Angaben zum Objekt

• ISBN: 978-92-79-93403-2
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: JRC Working Papers in Economics and Finance ; No. 2018/9

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Business Fluctuations; Cycles ; Open Economy Macroeconomics ; International Business Cycles ; Macroeconomic Issues of Monetary Unions
• Thema: Corporate tax ; Debt bias ; Debt shifting ; Multinational banks ; Leverage

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Fatica, Serena ; Heynderickx, Wouter ; Pagano, Andrea
• Ereignis: Veröffentlichung
• (wer): Publications Office of the European Union
• (wo): Luxembourg
• (wann): 2018

Weitere Informationen

• DOI: doi:10.2760/224402
• Handle: http://hdl.handle.net/10419/202301
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ