Bank Capital and the Minimum Corporate Tax

Alessandro Chiari
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Alessandro Chiari: Charles University & Czech National Bank, Czech Republic

No 2026/09, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: This paper examines whether the Pillar Two Global Minimum Tax reduces bank profitability and regulatory capital, and for which banks the effects are strongest. We use a quarterly exposure-based differencein differences design around 2024Q1, where treatment intensity is defined by pre-2024 low-tax exposure among in-scope banks. The analysis uses a quarterly bank-level panel for 2014-2024 and exploits predetermined cross-sectional heterogeneity in low-tax exposure while controlling for bank and quarter fixed effects. The headline estimates show that post-2024 profitability and capital buffers decline more for high-exposure banks: profit after tax falls by about 2.2 basis points of assets per quarter and Tier 1 buffers by about 0.09 percentage points in the baseline specification. Higher low-tax exposure is not interpreted as vulnerability per se. The downside channel is concentrated where high pre-reform low-tax exposure coincides with limited initial capital headroom: event-study, placebo, matched-sample, and split-sample evidence all point to larger post-2024 capital-buffer compression for thin-buffer banks. Overall, the results indicate modest average effects but meaningful tail risk for banks that combine high minimum-tax exposure with thin initial capital buffers.

Keywords: Firm Behaviour; International Banking; Tax Havens; Country-by-Country Reporting (search for similar items in EconPapers)
JEL-codes: F23 G21 H22 H32 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2026-05, Revised 2026-05
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Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2026_09

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