Avoiding Taxes: Banks' Use of Internal Debt

Franz Reiter

VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: This paper investigates how banks use internal debt to shift profits to lower taxed affiliates. Using regulatory data on German multinational banks I find that banks employ the debt shifting channel more aggressively than non-banks do. This becomes even clearer when I correct for conduit entities in internal debt financing: A ten percentage points higher corporate tax rate increases the internal net leverage by 5.63 percentage points, corresponding to an 18% increase at the mean.

JEL-codes: F21 G21 H25 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ban and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc17:168115

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