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International Taxation and Cross-Border Banking

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  • Harry Huizinga
  • Johannes Voget
  • Wolf Wagner

Abstract

This paper examines empirically how international taxation affects the volume and pricing of cross-border banking activities for a sample of banks in 38 countries over the 1998?2008 period. International double taxation of foreign-source bank income is found to reduce banking-sector FDI. Furthermore, such taxation is almost fully passed on into higher interest margins charged abroad. These results imply that international double taxation distorts the activities of international banks, and that the incidence of international double taxation of banks is on bank customers in the foreign subsidiary country.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 6 (2014)
Issue (Month): 2 (May)
Pages: 94-125

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Handle: RePEc:aea:aejpol:v:6:y:2014:i:2:p:94-125

Note: DOI: 10.1257/pol.6.2.94
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Citations

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Cited by:
  1. Bertay, Ata Can & Demirguc-Kunt, Asli & Huizinga, Harry, 2011. "Is the Financial Safety Net a Barrier to Cross-Border Banking?," CEPR Discussion Papers 8712, C.E.P.R. Discussion Papers.
  2. Timothy J. Goodspeed, 2012. "The Incidence of Bank Regulations and Taxes on Wages: Evidence from US States," CESifo Working Paper Series 4026, CESifo Group Munich.
  3. Gaëtan J.A. Nicodème, 2008. "Corporate Income Tax and Economic Distortions," CESifo Working Paper Series 2477, CESifo Group Munich.
  4. Copenhagen Economics, 2011. "Elasticities of Financial Instruments, Profits and Remuneration," Taxation Papers 30, Directorate General Taxation and Customs Union, European Commission.
  5. Beck, T.H.L. & Huizinga, H.P., 2011. "Taxing banks – here we go again!," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5046881, Tilburg University.
  6. Jürgen Antony & Michiel Bijlsma & Adam Elbourne & Marcel Lever & Gijsbert Zwart, 2012. "Financial transaction tax: review and assessment," CPB Discussion Paper 202, CPB Netherlands Bureau for Economic Policy Analysis.

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