Finance Research Seminar Series

Ort: Wirtschaftsuniversität Wien D3.0.221 am 02. Juni 2017 Startet um 11:00 Endet um 12:30

Veranstalter Wirtschaftsuniversität Wien Vienna Graduate School of Finance

We explore the effect of tax reforms that decrease the cost of equity on bank lending. In 2000 and 2006, Italy and Belgium, respectively, introduced an allowance for corporate equity so that both firms and banks could deduct a notional interest on their equity from their taxable income. Because local firms were also affected by these reforms, we employ loan level data from a credit register in a third-country, i.e., Germany, to better identify the differential impact on lending by banks that were ’treated’ by these tax reforms versus a control group of banks that were not. We find that the decrease in the cost of equity leads banks to raise their equity ratio, and to concurrently expand their balance sheet by increasing the amount of credit supplied in Germany. Conversely, the reversal of these reforms leads to a decrease in lending.

Upcoming Seminars:

Jun 09   Patrick Bolton     Columbia University

Jun 16   Adriano Rampini  Duke University

Jun 23   Paola Sapienza   Northwestern University, Kellog School of Management



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