Capital regulation, liquidity requirements and taxation in a dynamic model of banking

Gianni De Nicolò, Andrea Gamba and Marcella Luccetta
Authors registered in the RePEc Author Service: Marcella Lucchetta ()

No 10/2012, Discussion Papers from Deutsche Bundesbank

Abstract: This paper studies the impact of bank regulation and taxation in a dynamic model where banks are exposed to credit and liquidity risk and can resolve financial distress in three costly forms: bond issuance, equity issuance or fire sales. We find an inverted U-shaped relationship between capital requirements and bank lending, efficiency, and welfare, with their benefits turning into costs beyond a certain threshold. By contrast, liquidity requirements reduce lending, efficiency and welfare significantly. On taxation, corporate income taxes generate higher government revenues and entail lower efficiency and welfare costs than taxes on non-deposit liabilities.

Keywords: Bank Regulation; Taxation; Dynamic Banking Model (search for similar items in EconPapers)
JEL-codes: G21 G28 G33 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ban, nep-cba and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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https://www.econstor.eu/bitstream/10419/57778/1/715123459.pdf (application/pdf)

Related works:
Working Paper: Capital Regulation, Liquidity Requirements and Taxation in a Dynamic Model of Banking (2012)
Working Paper: Capital Regulation, Liquidity Requirements and Taxation in a Dynamic Model of Banking (2011)
Working Paper: Capital Regulation, Liquidity Requirements and Taxation in a Dynamic Model of Banking (2011)
Working Paper: Capital Regulation, Liquidity Requirements and Taxation in a Dynamic Model of Banking (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:102012

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