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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...
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Following the global financial crisis of 2008/2009, many European countries introduced bank levies to enable financial institutions to share in the costs of future banking crises via resolution and restructuring funds. Simultaneously, bank levies can set an incentive for banks to reduce their...
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Using bank balance sheet data, we find evidence that leverage and asset risk of European multinational banks in the crisis and post-crisis period is affected by corporate taxes in their host country as well as by the tax rates in all the jurisdictions where the banking group operates. Then, we...
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among creditors, shareholders, and managers and, consequently, should influence the design of their debt contracts …. Specifically, a decrease in corporate and an increase in managerial taxes encourage managers to take more risk, accordingly, we … exogenous changes in income taxes—and, in turn, managers’ preferences—for risk …
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