To finance resolution funds, the regulatory toolkit has been expanded in many countries by bank levies. In addition, these levies are often designed to reduce incentives for banks to rely excessively on wholesale funding resulting in high leverage ratios. At the same time, corporate income taxation biases banks’ capital structure towards debt financing in light of the deductibility of interest on debt. ...
This article summarises the key findings from a counterfactual exercise where the effect of removing repo assets from the leverage ratio on banks’ default probabilities is considered. The findings suggest that granting such an exemption may have adverse effects on the stability of the financial system, even when measures are introduced to compensate for the decline in capital required by the leverage ...
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis yields three main results: The introduction ...
Opinions regarding capital account openness have been undergoing changes. On the one hand, financial liberalization and integration are viewed as sources of economic growth and prosperity due to a better allocation of capital to productive uses. In addition, free capital mobility and access to foreign capital are considered to be important facilitators of investment as well as cross-border risk sharing. ...
A timely and incisive look at austerity measures that succeed—and those that don’t. Fiscal austerity is hugely controversial. Opponents argue that it can trigger downward growth spirals and become self-defeating. Supporters argue that budget deficits have to be tackled aggressively at all times and at all costs. In this masterful book, three of today’s leading experts –...
Förderbanken sind in den letzten Jahren sowohl in Deutschland als auch in Europa immer wichtiger geworden. Über zehn Jahre nach Ausbruch der Großen Finanzkrise, bald zehn Jahre seit Beginn der Europäischen Staatsschuldenkrise und mitten in der gesellschaftlichen Diskussion um die notwendigen Investitionen zur Begrenzung des Klimawandels und zur Verbesserung von Infrastrukturen ...
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