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Banks as Patient Lenders: Evidence from a Tax Reform

Elena Carletti, Filippo De Marco, Vasso Ioannidou and Enrico Sette

No 13722, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study how a greater reliance on deposits affects bank lending policies. For identification, we exploit a tax reform in Italy that induced households to substitute bank bonds with deposits. We show that the reform led to larger increases (decreases) in term deposits (bonds) in areas where households held more bonds before the reform. We then find that banks with larger increases in deposits did not change their overall credit supply, but increased credit-lines and the maturity of term-loans. These results are consistent with key theories on the role of deposits as a discipline device and of banks as liquidity providers.

Keywords: banks; deposits; government guarantee; Maturity; risk-taking (search for similar items in EconPapers)
JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn and nep-fmk
Date: 2019-05
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