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  4. On the Incidence of Bank Levies: Theory and Evidence
 
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On the Incidence of Bank Levies: Theory and Evidence

Journal
International Tax and Public Finance
Series
Discussion Paper
Type
journal article
Date Issued
2019
Author(s)
Kogler, Michael  
DOI
https://doi.org/10.1007/s10797-018-9526-z
Abstract
In the aftermath of the financial crisis, several European countries have introduced levies on bank liabilities. The aim is to compensate taxpayers for the provision of bailouts and guarantees and to internalize the fiscal costs of future banking crises. This paper studies the tax incidence: Building on the Monti-Klein model, we predict that banks shift the tax mainly to borrowers by raising lending rates and that deposit rates may increase because deposits are partly exempt. Bank-level evidence from 23 EU countries (2007-2013) shows that the levy indeed increases the lending and the deposit rate as well as the net interest margin. Banks adjust differently to this tax depending on the composition of their balance sheets: In line with theory, especially those banks with a high loan-to-deposit ratio raise the interest rates. Market concentration and the capital structure influence the magnitude of the pass-through, which is stronger in concentrated markets and weaker in case of banks with a high regulatory capital ratio.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Springer
Number
26
Start page
677
End page
718
Official URL
https://link.springer.com/article/10.1007/s10797-018-9526-z?wt_mc=Internal.Event.1.SEM.ArticleAuthorOnlineFirst&utm_source=ArticleAuthorOnlineFirst&utm_medium=email&utm_content=AA_en_06082018&ArticleAuthorOnlineFirst_20181203
URL
https://www.alexandria.unisg.ch/handle/20.500.14171/99381
Subject(s)

economics

finance

Division(s)

FGN - Institute of Ec...

Eprints ID
245457
File(s)
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open.access

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Kogler2016IncidenceBankLeviesHSGDP.pdf

Size

976.36 KB

Format

Adobe PDF

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4afae6ba65a11de03338a9a2d95742c4

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