## Taxation and Corporate Debt: Are Banks any Different?

_IMF Working Papers, October 29, 2013_

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## Bibliographic details
- Authors: Jost Heckemeyer, Ruud A. de Mooij
- Published: October 29, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484330340.001

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### Core findings
- The paper investigates whether corporate tax bias toward debt finance differs between banks and nonbanks using a large panel of micro data.
- On average, there is no significant difference between banks and non-banks.
- The marginal tax effect for both banks and non-banks is close to 0.2.
- Responsiveness to tax incentives differs considerably across the asset size distribution and the conditional leverage distribution.

### Patterns by firm type and size
- Nonbanks:
  - Exhibit a U-shaped relationship between asset size and tax responsiveness.
  - The U-shaped pattern does not hold universally across the conditional leverage distribution.
- Banks:
  - Tax responsiveness declines linearly in asset size.
  - Quantile regressions indicate capital-tight banks are significantly less responsive than capital-abundant banks.
  - Even the largest banks with high conditional leverage ratios still display a significant, positive tax response.

### Quantile-regression insights
- Quantile regressions reveal heterogeneity in tax responsiveness across the conditional leverage distribution:
  - Capital-tight banks: significantly less responsive to tax incentives.
  - Capital-abundant banks: more responsive to tax incentives.
  - The same pattern of lower responsiveness for capital-tight firms holds for the largest non-banks.
- Despite lower responsiveness in capital-tight segments, significant positive tax responses remain for the largest banks with high conditional leverage ratios.

### Subjects and keywords (as listed)
- Subjects: Bank levy, Banking, Collateral, Corporate income tax, Debt bias, Financial institutions, Inflation, Prices, Tax policy, Taxes
- Keywords: bank, bank assets, bank choice, bank dummy, Bank levy, banks, capital structure regression, Collateral, Corporate income tax, Corporate tax, debt, debt bias, Global, Inflation, leverage, leverage ratio, non-financial firms, quantile, quantile regressions, size distribution, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/taxation-and-corporate-debt-are-banks-any-different-41019_