Liability Taxes, Risk, and the Cost of Banking Crises
This study investigates the effects on risk and financial stability of the taxes on bank liabilities introduced across European countries after the global financial crisis. Using a difference-in-differences setup, we find that banks responded to the implementation of liability taxes by reducing their interbank exposure, and increasing both equity, at least in the short term, and the risk weight of their assets. When we consider these adjustments in a microsimulation model for bank portfolio losses, we show that liability taxes reduce risk in the banking sector and could therefore decrease the cost of crises.
BELLUCCI Andrea;
FATICA Serena;
HEYNDERICKX Wouter;
KVEDARAS Virmantas;
PAGANO Andrea;
2023-05-15
ELSEVIER SCIENCE BV
JRC132738
0929-1199 (online),
https://www.sciencedirect.com/science/article/pii/S0929119923000366,
https://publications.jrc.ec.europa.eu/repository/handle/JRC132738,
10.1016/j.jcorpfin.2023.102387 (online),
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