Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks

D. Gong, J.E. Ligthart

Research output: Working paperDiscussion paperOther research output

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Abstract

Abstract: Corporate income taxation, by affecting the after-tax cost of funding, has implications for a bank's incentive to securitize. Using a sample of OECD banks over the period 1999-2006, we fi nd that corporate income taxation led to more securitization at banks that are constrained in funding markets, while it did not affect securitization at unconstrained banks. This is consistent with prior theory suggesting that the tax effects of securitization depend on the extent to which banks face funding constraints. Our results suggest that a country's tax system has distorting effects on banks' securitization decisions and therefore proposals of new taxes on bank profi ts are inappropriate.
Original languageEnglish
Place of PublicationTilburg
PublisherEBC
Number of pages29
Volume2013-013
Publication statusPublished - 2013

Publication series

NameEBC Discussion Paper
Volume2013-013

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Corporate income taxation
Securitization
Funding
Tax
Tax system
Incentives
Costs
Tax effects

Keywords

  • Securitization
  • Banking
  • Corporate Income Tax

Cite this

Gong, D., & Ligthart, J. E. (2013). Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks. (EBC Discussion Paper; Vol. 2013-013). Tilburg: EBC.
Gong, D. ; Ligthart, J.E. / Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks. Tilburg : EBC, 2013. (EBC Discussion Paper).
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Gong, D & Ligthart, JE 2013 'Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks' EBC Discussion Paper, vol. 2013-013, EBC, Tilburg.

Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks. / Gong, D.; Ligthart, J.E.

Tilburg : EBC, 2013. (EBC Discussion Paper; Vol. 2013-013).

Research output: Working paperDiscussion paperOther research output

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N2 - Abstract: Corporate income taxation, by affecting the after-tax cost of funding, has implications for a bank's incentive to securitize. Using a sample of OECD banks over the period 1999-2006, we fi nd that corporate income taxation led to more securitization at banks that are constrained in funding markets, while it did not affect securitization at unconstrained banks. This is consistent with prior theory suggesting that the tax effects of securitization depend on the extent to which banks face funding constraints. Our results suggest that a country's tax system has distorting effects on banks' securitization decisions and therefore proposals of new taxes on bank profi ts are inappropriate.

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Gong D, Ligthart JE. Does Corporate Income Taxation Affect Securitization? Evidence from OECD Banks. Tilburg: EBC. 2013. (EBC Discussion Paper).