Do tax benefits conferred to Sub-S banks affect their deposit or loan rates?
AbstractPositive economics predicts that Sub-S banks, with no taxes paid at the corporate level, will price their products lower than otherwise identical C corporation banks in a competitive environment. Alternatively, if banks price bundle their products, Sub-S tax benefits might have little (no) effect on product rates. The empirical analysis finds that Sub-S deposit (loan) rates are equal to or lower (higher) than similar C corporation bank rates. Thus, there is little evidence of any tax benefits accruing to Sub-S bank customers. In contrast, tax-exempt credit unions do offer higher deposit rates and lower loan rates than C corporation banks.
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Bibliographic InfoArticle provided by Elsevier in its journal Finance Research Letters.
Volume (Year): 7 (2010)
Issue (Month): 4 (December)
Contact details of provider:
Web page: http://www.elsevier.com/locate/frl
Sub-chapter S bank Community bank Deposit rate Loan rate;
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