Can Repatriation Tax Holidays Teach Us Something About Monetary Policy Transmission?

Esteban Argudo

Journal of Money, Credit and Banking, 2025, vol. 57, issue 1, 243-265

Abstract: I study the “bank lending channel” using the 2004 repatriation tax holiday as a natural experiment. I isolate the effect of the repatriated funds on loan supply by (i) comparing the differences in lending between multinational and domestic banks pre‐ and postrepatriation and (ii) using the change in cash holdings abroad as an instrument for the repatriated funds. My results support the existence of the “bank lending channel.” I document that each additional repatriated dollar led to an increase of $0.04 in lending, which is driven entirely by commercial and industrial loans.

Date: 2025
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https://doi.org/10.1111/jmcb.13112

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:57:y:2025:i:1:p:243-265

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