Can taxes tame the banks? Evidence from European bank levies
In the wake of the fi?nancial crisis, a number of countries have introduced levies on bank borrowing with the aim of reducing risk in the ?financial sector. This paper studies the behavioural responses to the bank levies and evaluates the policy. We find that the levies induced banks to borrow less but also to hold more risky assets. The reduction in funding risk clearly dominates for banks with high capital ratios but is exactly offset by the increase in portfolio risk for banks with low capital ratios. This suggests that while the levies have reduced the total risk of relatively safe banks, they have done nothing to curb the risk of relatively risky banks, which presumably pose the greatest threat to fi?nancial stability.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0)1865 288800
Fax: +44 (0)1865 288805
Web page: http://www.sbs.ox.ac.uk/ideas-impact/tax/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Berger, Allen N. & Bouwman, Christa H.S., 2013. "How does capital affect bank performance during financial crises?," Journal of Financial Economics, Elsevier, vol. 109(1), pages 146-176.
- Douglas W. Diamond & Raghuram Rajan, 2009.
"The Credit Crisis: Conjectures about Causes and Remedies,"
NBER Working Papers
14739, National Bureau of Economic Research, Inc.
- Douglas W. Diamond & Raghuram G. Rajan, 2009. "The Credit Crisis: Conjectures about Causes and Remedies," American Economic Review, American Economic Association, vol. 99(2), pages 606-10, May.
- Avery, Robert B. & Berger, Allen N., 1991.
"Risk-based capital and deposit insurance reform,"
Journal of Banking & Finance,
Elsevier, vol. 15(4-5), pages 847-874, September.
- Oliver Hart & Luigi Zingales, 2011.
"A New Capital Regulation for Large Financial Institutions,"
American Law and Economics Review,
Oxford University Press, vol. 13(2), pages 453-490.
- Luigi Zingales & Oliver Hart, 2009. "A New Capital Regulation For Large Financial Institutions," Working Papers 2009.124, Fondazione Eni Enrico Mattei.
- Hart, Oliver & Zingales, Luigi, 2009. "A New Capital Regulation For Large Financial Institutions," CEPR Discussion Papers 7298, C.E.P.R. Discussion Papers.
- Adrian, Tobias & Shin, Hyun Song, 2010.
"Liquidity and leverage,"
Journal of Financial Intermediation,
Elsevier, vol. 19(3), pages 418-437, July.
- Gruber, Jon & Saez, Emmanuel, 2002.
"The elasticity of taxable income: evidence and implications,"
Journal of Public Economics,
Elsevier, vol. 84(1), pages 1-32, April.
- Jon Gruber & Emmanuel Saez, 2000. "The Elasticity of Taxable Income: Evidence and Implications," NBER Working Papers 7512, National Bureau of Economic Research, Inc.
- Beltratti, Andrea & Stulz, René M., 2012.
"The credit crisis around the globe: Why did some banks perform better?,"
Journal of Financial Economics,
Elsevier, vol. 105(1), pages 1-17.
- Beltratti, Andrea & Stulz, Rene M., 2010. "The Credit Crisis around the Globe: Why Did Some Banks Perform Better?," Working Paper Series 2010-5, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Gary Gorton & Andrew Metrick, 2010.
"Securitized Banking and the Run on Repo,"
in: Market Institutions and Financial Market Risk
National Bureau of Economic Research, Inc.
- Gary B. Gorton & Andrew Metrick, 2009. "Securitized Banking and the Run on Repo," NBER Working Papers 15223, National Bureau of Economic Research, Inc.
- Gary Gorton & Andrew Metrick, 2009. "Securitized Banking and the Run on Repo," Yale School of Management Working Papers amz2358, Yale School of Management, revised 01 Sep 2009.
- repec:dgr:uvatin:2011040 is not listed on IDEAS
- Perotti, Enrico C & Suarez, Javier, 2011.
"A Pigovian Approach to Liquidity Regulation,"
CEPR Discussion Papers
8271, C.E.P.R. Discussion Papers.
- repec:dgr:uvatin:20110040 is not listed on IDEAS
- Rime, Bertrand, 2001. "Capital requirements and bank behaviour: Empirical evidence for Switzerland," Journal of Banking & Finance, Elsevier, vol. 25(4), pages 789-805, April.
- Jo�o A. C. Santos, 2011. "Bank Corporate Loan Pricing Following the Subprime Crisis," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 1916-1943.
- Michael Keen, 2011. "The Taxation and Regulation of Banks," IMF Working Papers 11/206, International Monetary Fund.
- Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
- Michael L. Lemmon & Michael R. Roberts & Jaime F. Zender, 2008. "Back to the Beginning: Persistence and the Cross-Section of Corporate Capital Structure," Journal of Finance, American Finance Association, vol. 63(4), pages 1575-1608, 08.
- Jacques, Kevin & Nigro, Peter, 1997. "Risk-based capital, portfolio risk, and bank capital: A simultaneous equations approach," Journal of Economics and Business, Elsevier, vol. 49(6), pages 533-547.
When requesting a correction, please mention this item's handle: RePEc:btx:wpaper:1325. 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: (Dongxian Guo)
If references are entirely missing, you can add them using this form.