Can Taxes Tame the Banks? Evidence from the European Bank Levies
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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Can Taxes Tame the Banks? Evidence from the European Bank Levies. / Devereux, Michael P.; Johannesen, Niels; Vella, John.
I: Economic Journal, Bind 129, Nr. 624, 21.08.2019, s. 3058–3091.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Can Taxes Tame the Banks?
T2 - Evidence from the European Bank Levies
AU - Devereux, Michael P.
AU - Johannesen, Niels
AU - Vella, John
PY - 2019/8/21
Y1 - 2019/8/21
N2 - Following the 2007–2008 financial crisis, a large number of countries introduced levies on bank borrowing intended to reduce risk in the financial sector. This article studies the behavioural responses to bank levies and finds that banks exposed to levies increased their reliance on equity funding, but at the same time increased the risk of their assets; banks shifted risk from the liability side of their balance sheets to the asset side, which mitigated the impact of government intervention. Our analysis also shows that any reduction in total risk was concentrated among banks that pose no or little threat to financial stability.
AB - Following the 2007–2008 financial crisis, a large number of countries introduced levies on bank borrowing intended to reduce risk in the financial sector. This article studies the behavioural responses to bank levies and finds that banks exposed to levies increased their reliance on equity funding, but at the same time increased the risk of their assets; banks shifted risk from the liability side of their balance sheets to the asset side, which mitigated the impact of government intervention. Our analysis also shows that any reduction in total risk was concentrated among banks that pose no or little threat to financial stability.
U2 - 10.1093/ej/uez028
DO - 10.1093/ej/uez028
M3 - Journal article
VL - 129
SP - 3058
EP - 3091
JO - Economic Journal
JF - Economic Journal
IS - 624
ER -
ID: 231243770