Does the tax advantage of debt impact financial stability?

Glenn Schepens

Research Bulletin, 2016, vol. 27

Abstract: The tax deductibility of interest expenses on debt is an often neglected factor in the policy debate on bank capital requirements. A more equal tax treatment of debt and equity funding could enhance financial stability by giving banks an incentive to reduce leverage. JEL Classification: G21, G28, G32, H25

Keywords: bank capital structure; bank regulation; tax shields (search for similar items in EconPapers)
Date: 2016-09
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