Financial Transaction Tax and Banking Margins: An Empirical Note for Colombia

Ignacio Lozano-Espitia, Hernando Vargas-Herrera and Norberto Rodríguez-Niño ()
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Norberto Rodríguez-Niño: Banco de la República de Colombia
Authors registered in the RePEc Author Service: Norberto Rodríguez ()

Borradores de Economia from Banco de la Republica de Colombia

Abstract: Taxes on financial transactions have been especially controversial because of their potential effects on banking disintermediation. A modality of such taxes (Bank Debit Tax, BDT) was introduced in Colombia since the late nineties. Using monthly panel data from 1996 to 2014 for the major depository institutions, this paper provides evidence on the effects of the BDT on bank intermediation spreads. For the total sample (thirteen banks), results suggest that nowadays the hypothetical elimination of the BDT would reduce spreads in 90 basis points, from 7,7% to levels close to 6,8%. The results do not provide clear evidence of differential impacts by bank size. Tests for a regime switch of the BDT are performed, but no evidence is found to support this conjecture.

Keywords: Banking margins; intermediary; financial regulation; tax distortions (search for similar items in EconPapers)
JEL-codes: G12 G21 G28 H21 (search for similar items in EconPapers)
Pages: 14
Date: 2015-10
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https://doi.org/10.32468/be.909 (application/pdf)

Related works:
Journal Article: Financial transaction tax and banking margins: An empirical note for Colombia (2017)
Journal Article: Financial transaction tax and banking margins: An empirical note for Colombia (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:909

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