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Taxation of financial intermediation : measurement principles and application to five African countries

Author

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  • Chamley, Christophe
  • Honohan, Patrick

Abstract

The purpose of this study is to set out a practical method for analyzing how inflation, interest ceilings, reserve requirements and like impositions have had tax-like effects and how they can be compared with explicit taxes. Using this method estimates of the varying magnitudes of the total taxation of financial intermediation in five African economies during recent years are computed. The paper explores the macroeconomic and fiscal dynamics which have contributed to the use of heavy taxation on the financial sector in certain countries and for certain periods. The likely impact of these taxes on efficiency is also examined.

Suggested Citation

  • Chamley, Christophe & Honohan, Patrick, 1990. "Taxation of financial intermediation : measurement principles and application to five African countries," Policy Research Working Paper Series 421, The World Bank.
  • Handle: RePEc:wbk:wbrwps:421
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    References listed on IDEAS

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    6. Englund, Peter, 1989. "Monetary Policy and Bank Regulations in an Economy with Financial Innovations," Economica, London School of Economics and Political Science, vol. 56(224), pages 459-472, November.
    7. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
    8. Honohan, Patrick, 1990. "Monetary cooperation in the CFA zone," Policy Research Working Paper Series 389, The World Bank.
    9. Honohan, Patrick, 1992. "Price and monetary convergence in currency unions: The franc and rand zones," Journal of International Money and Finance, Elsevier, vol. 11(4), pages 397-410, August.
    10. Peter A. Diamond & J. A. Mirrlees, 1968. "Optimal Taxation and Public Production," Working papers 22, Massachusetts Institute of Technology (MIT), Department of Economics.
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    12. Pinto, Brian, 1988. "Black market premia, exchange rate unification, and inflation in sub-Saharan Africa," Policy Research Working Paper Series 37, The World Bank.
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    14. Brock, Philip L, 1989. "Reserve Requirements and the Inflation Tax," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(1), pages 106-121, February.
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    Citations

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    Cited by:

    1. Jan Willem Gunning & Paul Collier, 1999. "Explaining African Economic Performance," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 64-111, March.
    2. Andres Erosa, 2001. "Financial Intermediation and Occupational Choice in Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 303-334, April.
    3. Caprio, Gerard Jr., 1996. "Bank regulation : the case of the missing model," Policy Research Working Paper Series 1574, The World Bank.
    4. Christa N. Brunnschweiler, 2006. "Financing the alternative: renewable energy in developing and transition countries," CER-ETH Economics working paper series 06/49, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    5. Gerard Caprio, Jr., 1995. "The role of financial intermediaries in transitional economies," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 42(1), pages 257-302, June.
    6. Patrick Honohan, 1998. "Diagnosing Banking System Failures in Developing Countries," Papers WP093, Economic and Social Research Institute (ESRI).
    7. Patrick Honohan, 1994. "The Fiscal Approach to Financial Intermediation Policy," Papers WP049, Economic and Social Research Institute (ESRI).

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