Taxation and corporate debt: are banks any different?

Jost Heckemeyer and Ruud de Mooij

No 1306, Working Papers from Oxford University Centre for Business Taxation

Abstract: This paper explores whether corporate tax bias toward debt finance differs between banks and nonbanks,using a large panel of micro data. On average, it finds that there is no significant difference. The marginal tax effect for both banks and non-banks is close to 0.2. However, the responsiveness differs considerably across the size distribution and the conditional leverage distribution. For nonbanks,we find a U-shaped relationship between asset size and tax responsiveness, although this pattern does not hold universally across the conditional leverage distribution. For banks, in contrast,the tax responsiveness declines linearly in asset size. Quantile regressions show further that capitaltight banks are significantly less responsive than are capital-abundant banks; the same pattern holdsfor the largest non-banks. Still, even the largest banks with high conditional leverage ratios feature a significant, positive tax response.

Keywords: Corporate tax; debt bias; leverage; banks; non-financial firms; quantile regressions (search for similar items in EconPapers)
JEL-codes: G21 G32 H25 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-ban, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: Taxation and Corporate Debt: Are Banks Any Different? (2017)
Working Paper: Taxation and Corporate Debt: Are Banks any Different? (2013)
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