Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks
AbstractAbstract: Corporate income taxation, by aff ecting the after-tax cost of funding, has implications for a bank's incentive to securitize. Using a sample of OECD banks over the period 1999-2006, we fi nd that corporate income taxation led to more securitization at banks that are constrained in funding markets, while it did not a ffect securitization at unconstrained banks. This is consistent with prior theory suggesting that the tax eff ects of securitization depend on the extent to which banks face funding constraints. Our results suggest that a country's tax system has distorting eff ects on banks' securitization decisions and therefore proposals of new taxes on bank profi ts are inappropriate.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2013-067.
Date of creation: 2013
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Web page: http://center.uvt.nl
Securitization; Banking; Corporate Income Tax;
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-12-29 (Accounting & Auditing)
- NEP-ALL-2013-12-29 (All new papers)
- NEP-BAN-2013-12-29 (Banking)
- NEP-PBE-2013-12-29 (Public Economics)
- NEP-PUB-2013-12-29 (Public Finance)
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