 The real effects of bank taxation: Evidence for corporate financing and investmentAnna L. Sobiech, Dimitris K. Chronopoulos and John Wilson Journal of Corporate Finance, 2021, vol. 69, issue C Abstract: This paper examines how bank taxation affects the financing decisions and investment activities of corporates. Exploiting exogenous tax variation at the bank level, we show that taxing banks' gross profits leads to higher bank leverage, and results in lower risk and credit supply. The contraction in credit supply has implications for corporate debt financing and investment activity. Corporates more exposed to banks subject to gross profit tax exhibit lower leverage and rely less on bank debt. Corporates partly offset lower bank financing by switching to bond financing. The cost of bond financing increases with corporate exposure to the tax. A greater exposure also impacts negatively on corporate investment activity. Overall, our results highlight the importance of bank taxation for corporate financing and investment decisions. Keywords: Bank taxation; Credit supply; Japanese banks; Natural experiment; Corporate financing; Investment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:69:y:2021:i:c:s0929119921001103 DOI: 10.1016/j.jcorpfin.2021.101989 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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