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Solvency Effects of Taxation: A Comparison of Hungarian Banks and Insurance Companies

Author

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  • Borbála Szüle

    (Insurance Education and Research Group, Corvinus University of Budapest)

Abstract

Recently, there has been a growing interest in the solvency of financial intermediaries. Bank and insurer insolvency cases generated numerous adverse economic effects and also promoted academic efforts to design solvency-related taxation methods. The focus of this paper is on corporate taxation and its empirical relation to solvency in the Hungarian financial intermediation sector. Based on the previous literature, a complex empirical model of the interactions between capital formation, asset growth and solvency risk is presented, and panel data results are compared for banks and insurance companies. A comparison with international empirical results is also possible, although it may only be of limited relevance due to some differences in solvency measurement. The paper also aims to highlight the potential differences between banking and insurance. As far as solvency effects are concerned, the empirical results do not reveal significant differences in these two sectors; however, other results point to the heterogeneity of the Hungarian financial intermediation sector.

Suggested Citation

  • Borbála Szüle, 2017. "Solvency Effects of Taxation: A Comparison of Hungarian Banks and Insurance Companies," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 67(1), pages 63-75, March.
    • Handle: RePEc:aka:aoecon:v:67:y:2017:i:1:p:63-75
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    More about this item

    Keywords

    banking; insurance; business tax; panel data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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