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Do tax benefits conferred to Sub-S banks affect their deposit or loan rates?

Craig Depken, Harris Hollans and Steve Swidler ()

Finance Research Letters, 2010, vol. 7, issue 4, 238-245

Abstract: Positive economics predicts that Sub-S banks, with no taxes paid at the corporate level, will price their products lower than otherwise identical C corporation banks in a competitive environment. Alternatively, if banks price bundle their products, Sub-S tax benefits might have little (no) effect on product rates. The empirical analysis finds that Sub-S deposit (loan) rates are equal to or lower (higher) than similar C corporation bank rates. Thus, there is little evidence of any tax benefits accruing to Sub-S bank customers. In contrast, tax-exempt credit unions do offer higher deposit rates and lower loan rates than C corporation banks.

Keywords: Sub-chapter; S; bank; Community; bank; Deposit; rate; Loan; rate (search for similar items in EconPapers)
Date: 2010
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Handle: RePEc:eee:finlet:v:7:y:2010:i:4:p:238-245