Tax Competition: Is It a Source of the Corporate Savings Glut?

Atsushi Kawamoto and Kei Muraki

No 9302, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the determinants of corporate savings in a cross-country panel setting. Specifically, it employs firm-level data covering more than 540,000 firm-year observations for 12 advanced and emerging market economies. Panel regression results suggest that reductions in statutory corporate income tax rates can explain one-third of the rise in corporate savings (defined as net financial assets) in 2003-17. This finding is supported by a propensity scores matching analysis of the effects of changes in corporate income tax rates.

Keywords: Taxation&Subsidies; Macro-Fiscal Policy; Economic Adjustment and Lending; Public Sector Economics; Public Finance Decentralization and Poverty Reduction; International Trade and Trade Rules; Macroeconomic Management; Financial Economics; Finance and Development (search for similar items in EconPapers)
Date: 2020-06-25
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9302

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