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Does taxation on banks mean taxation on bank-dependent borrowers?

Author

Listed:
  • Masami Imai

    (Wesleyan University)

  • Peter Hull

    (Massachusetts Institute of Technology)

Abstract

We investigate the economic impacts of bank levies on bank-dependent borrowers, exploiting the surprise announcement of a bank tax by the Tokyo metropolitan government on February 7th, 2000. We find that the tax announcement had negative effects on the abnormal return of firms which depended on soon-to-be taxed banks for external funds. Moreover, the adverse economic effects of the bank tax were larger for smaller and more financially distressed firms, suggesting that bank levies are likely to be passed onto bank-dependent firms with limited access to non-bank finance.

Suggested Citation

  • Masami Imai & Peter Hull, 2012. "Does taxation on banks mean taxation on bank-dependent borrowers?," Economics Bulletin, AccessEcon, vol. 32(4), pages 3439-3448.
    • Handle: RePEc:ebl:ecbull:eb-12-00750
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I4-P331.pdf
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    References listed on IDEAS

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    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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