Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5100641 | Journal of Financial Intermediation | 2017 | 21 Pages |
Abstract
This paper empirically highlights the role and significance of taxes for the capital structure decisions of banks. Using a difference-in-differences methodology, I show that an increase in the local U.S. state corporate tax rate affects the banks' financing as well as their operating choices. Better-capitalized banks raise their long-term non-depository debt and thus benefit from an enlarged tax shield. Worse-capitalized banks instead reduce their lending because a higher tax rate increases the tax-adjusted cost of funding, which renders the marginal loan unprofitable.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Strategy and Management
Authors
Alexander Schandlbauer,