The Incidence of Reserve Requirements in Brazil: do Stockholders Share the Burden?
There is consensus in the economic literature that reserve requirement is a tax levied upon financial intermediation. The incidence of the tax, however, is still a controversial issue. In this paper, we test whether the impact of changes in reserve requirements in the stock returns of the Brazilian financial system is different from the impact in stock returns of the rest of the economy. We find evidence that bank stock returns are not affected by changes in reserve requirements on demand deposits. In contrast, stock returns of non-financial institutions are substantially affected by such changes, suggesting that reserve requirements are a non-neutral instrument of monetary policy in Brazil. Reserve requirements on time deposits, however, are a tax paid by banks’ stockholders.
|Date of creation:||Aug 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: (61) 340-2311
Web page: http://e-groups.unb.br/face/eco/Email:
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:brs:wpaper:319. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luciano Póvoa)
If references are entirely missing, you can add them using this form.