Universität zu Köln

Sobiech, Anna L., Chronopoulos, Dimitris K. and Wilson, John O. S. (2021). The real effects of bank taxation: Evidence for corporate financing and investment. J. Corp. Financ., 69. AMSTERDAM: ELSEVIER. ISSN 1872-6313

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Abstract

This paper examines how bank taxation affects the financing decisions and investment activities of corporates. Exploiting exogenous tax variation at the bank level, we show that taxing banks' gross profits leads to higher bank leverage, and results in lower risk and credit supply. The contraction in credit supply has implications for corporate debt financing and investment activity. Corporates more exposed to banks subject to gross profit tax exhibit lower leverage and rely less on bank debt. Corporates partly offset lower bank financing by switching to bond financing. The cost of bond financing increases with corporate exposure to the tax. A greater exposure also impacts negatively on corporate investment activity. Overall, our results highlight the importance of bank taxation for corporate financing and investment decisions.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Sobiech, Anna L. UNSPECIFIED UNSPECIFIED UNSPECIFIED Chronopoulos, Dimitris K. UNSPECIFIED UNSPECIFIED UNSPECIFIED Wilson, John O. S. UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-571606
DOI:	10.1016/j.jcorpfin.2021.101989
Journal or Publication Title:	J. Corp. Financ.
Volume:	69
Date:	2021
Publisher:	ELSEVIER
Place of Publication:	AMSTERDAM
ISSN:	1872-6313
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language CAPITAL STRUCTURE; RISK-TAKING; DEBT; CREDIT; CRISIS; SHOCKS; DIVERSIFICATION; TRANSMISSION; INCENTIVES; LIQUIDITY Multiple languages Business, Finance Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/57160