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Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks

Listed author(s):
  • Gong, D.

    (Tilburg University, Center For Economic Research)

  • Ligthart, J.E.

    (Tilburg University, Center For Economic Research)

Abstract: Corporate income taxation, by affecting 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 affect securitization at unconstrained banks. This is consistent with prior theory suggesting that the tax effects of securitization depend on the extent to which banks face funding constraints. Our results suggest that a country's tax system has distorting effects on banks' securitization decisions and therefore proposals of new taxes on bank profi ts are inappropriate.

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File URL: https://pure.uvt.nl/portal/files/1557021/2013-067.pdf
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2013-067.

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Date of creation: 2013
Handle: RePEc:tiu:tiucen:f9b428b8-baff-441e-a73d-219f12e2797e
Contact details of provider: Web page: http://center.uvt.nl

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