Tax cuts affect bank leverage and liabilities – BIS paper

The Bank for International Settlements, Basel
The Bank for International Settlements. Image: Ulrich Roth
Photo: Ulrich Roth

Research published by the Bank for International Settlements (BIS) seeks to establish a stronger link between changes in tax rates and the structure of bank balance sheets.

The effects of tax on bank liability structure, published as a working paper on February 23, exploits unique regional taxes in Italy to assess how different banks respond to tax cuts.

Authors Leonardo Gambacorta, Giacomo Ricotti, Suresh Sundaresan and Zhenyu Wang find that levels of capitalisation appear to matter in banks'

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