Can Taxes Tame the Banks? Evidence from the European Bank Levies

Michael Devereux, Niels Johannesen and John Vella

The Economic Journal, 2019, vol. 129, issue 624, 3058-3091

Abstract: Following the 2007–2008 financial crisis, a large number of countries introduced levies on bank borrowing intended to reduce risk in the financial sector. This article studies the behavioural responses to bank levies and finds that banks exposed to levies increased their reliance on equity funding, but at the same time increased the risk of their assets; banks shifted risk from the liability side of their balance sheets to the asset side, which mitigated the impact of government intervention. Our analysis also shows that any reduction in total risk was concentrated among banks that pose no or little threat to financial stability.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://hdl.handle.net/10.1093/ej/uez028 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Can taxes tame the banks? Evidence from European bank levies (2013)
Working Paper: Can taxes tame the banks? Evidence from European bank levies (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:econjl:v:129:y:2019:i:624:p:3058-3091.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Economic Journal is currently edited by Francesco Lippi

More articles in The Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press () and ().