Research Seminar, ReFi – Claire Celerier – University of Toronto (Rotman)

Organized by Prof. Gunther Capelle-Blancard (Université Paris I Panthéon-Sorbonne, Labex ReFi) and Prof. Christophe Moussu (ESCP Europe, Labex ReFi).

 Claire Celerier

University of Toronto (Rotman),

(cv & bio)

« Taxing Bank Leverage »

Abstract :

Regulators can monitor bank leverage either by increasing capital requirements or

taxing debt. We show in a simple model that, while increasing capital require-
ments leads banks to shift their assets away from loans, taxing debt makes them

refocus their activity on lending. We test empirically these predictions by exploit-
ing the staggered introduction of tax reforms that increased the cost of leverage

in the Euro-area from 2005 to 2012. In addition to decreasing leverage, affected
banks shift the composition of their assets towards loans away from securities and
decrease total risk. Our results suggest that taxes can be a complementary tool
to capital requirements that maintains credit supply.

« Paper«