Do Bank Stockholders Share the Burden of Required Reserve Tax? Evidence from Turkey
AbstractThis study examines whether bank shareholders bear the burden of required reserves tax by analyzing the reaction of banks’ stock returns to the changes in the required reserve ratio. Results show that increases in reserve requirements significantly lower bank returns implying that shareholders share a portion of the required reserve tax. Required reserves changes are partially predicted by investors, and increases and decreases in required reserve rates have an asymmetric effect on stock returns. In addition, large and public banks bear a larger share of the tax, and the remuneration of reserves has important implications for the tax burden. Finally, some heterogeneity across banks exists as reflected by differences in the signs and magnitudes of the estimated coefficients.
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Bibliographic InfoPaper provided by Research and Monetary Policy Department, Central Bank of the Republic of Turkey in its series Working Papers with number 1119.
Date of creation: 2011
Date of revision:
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Postal: Head Office, Istiklal Cad. 10 Ulus, 06100 Ankara
Phone: (90 312) 507 5000
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Web page: http://www.tcmb.gov.tr
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Stock returns; required reserves tax; monetary policy; tax incidence; Istanbul Stock Exchange (ISE); Turkey;
Other versions of this item:
- Mahir Binici & Bülent Köksal, 2013. "Do Bank Stockholders Share the Burden of Required Reserve Tax? Evidence from Turkey," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 49(4), pages 46-73, July.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
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