Does Taxation on Banks Tax Bank Borrowers? Evidence from the Tokyo Bank Tax Experiment
AbstractWe investigate the economic impacts of bank taxation on the value of banks and that of borrowing firms, exploiting the surprise announcement of a tax by the Tokyo metropolitan government as a natural experiment. We find that the tax announcement had broad effects on the share prices of banks, although the effects are stronger for a subset of soon-to-be taxed banks. However, the adverse effects of the tax on bank borrowers, although statistically significant, turn out to be quantitatively small (a half of the effects on bank share prices). These results suggest that the adverse economic consequence of bank taxation is felt primarily on banks themselves.
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Bibliographic InfoPaper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 2011-005.
Length: 11 pages
Date of creation: Oct 2011
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ACC-2011-11-14 (Accounting & Auditing)
- NEP-ALL-2011-11-14 (All new papers)
- NEP-BAN-2011-11-14 (Banking)
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