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Changes in the Cost of Bank Equity and the Supply of Bank Credit

Thomas Kick (), Claire Celerier and Steven Ongena ()

Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: We explore the effect of tax reforms in Italy and Belgium, respectively that decrease the cost of equity on bank lending. Because local firms were also affected by these reforms, we em-ploy loan level data from the German credit register, to identify the differential impact on lending by banks that were 'treated'. We find that the decrease in the cost of equity leads banks to raise their equity ratio, and to expand their balance sheet by increasing the amount of credit supplied in Germany.

JEL-codes: E51 E58 G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-eur and nep-mac
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc17:168164

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