The macroeconomic costs of the bank tax

Marcin Borsuk, Joanna Przeworska, Anthony Saunders and Dobromił Serwa

Journal of Financial Stability, 2024, vol. 72, issue C

Abstract: In this paper, we investigate the real effects of special taxation on banks. We provide evidence that the introduction of a new fiscal levy on banks significantly impairs their performance and has an adverse impact on the real economy through the lending channel. Using micro-level data on lending relationships, we identify the credit supply shock related with a bank tax controlling for loan demand factors. We compute a firm-specific measure of firm exposure to burdened credit institutions. We find a negative impact of the tax shock on investment and output. Our results are important from a policy perspective as they shed light on the economic consequences of double taxation on banks.

Keywords: Bank tax; Bank levy; Credit supply; Macro-financial feedback effects (search for similar items in EconPapers)
JEL-codes: G21 H22 L13 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:72:y:2024:i:c:s1572308924000470

DOI: 10.1016/j.jfs.2024.101262

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