Financial Sector Debt Bias - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Financial Sector Debt Bias write by Ms.Oana Luca. This book was released on 2016-11-10. Financial Sector Debt Bias available in PDF, EPUB and Kindle. Most tax systems create a tax bias toward debt finance. Such debt bias increases leverage and may negatively affect financial stability. This paper models and estimates debt bias in the financial sector, and present novel estimates for investment banks and non-bank financial intermediaries such as finance and insurance companies. We find debt bias to be pervasive, explaining as much as 10 percent of total leverage for regular banks and 20 percent for investment banks, with the effects most pronounced before the global financial crisis. Going forward, debt bias is likely to once again gain prominence as a key driver of leverage decisions, underscoring the importance of policy reform at this juncture.
Tax Policy, Leverage and Macroeconomic Stability
Tax Policy, Leverage and Macroeconomic Stability - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Tax Policy, Leverage and Macroeconomic Stability write by International Monetary Fund. Fiscal Affairs Dept.. This book was released on 2016-12-10. Tax Policy, Leverage and Macroeconomic Stability available in PDF, EPUB and Kindle. Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern. This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.
Tax Biases to Debt Finance
Tax Biases to Debt Finance - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Tax Biases to Debt Finance write by Ruud A. de Mooij. This book was released on 2011-05-03. Tax Biases to Debt Finance available in PDF, EPUB and Kindle. Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
Recognizing the Bias
Recognizing the Bias - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Recognizing the Bias write by Mrs.Nina Budina. This book was released on 2015-11-24. Recognizing the Bias available in PDF, EPUB and Kindle. This paper argues that asset price cycles have significant effects on fiscal outcomes. In particular, there is evidence of debt bias—the tendency of debt to increase over the cycle— that is significantly larger for house price cycles than stand-alone business cycles. Automatic stabilizers and discretionary fiscal policy generally respond to output fluctuations, whereas revenue increases due to house price booms are largely treated as permanent. Thus, neglecting the direct and indirect impact of asset prices on fiscal accounts encourages procyclical fiscal policies.
Taxation, Bank Leverage, and Financial Crises
Taxation, Bank Leverage, and Financial Crises - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Taxation, Bank Leverage, and Financial Crises write by Ruud A. de Mooij. This book was released on 2013-02-25. Taxation, Bank Leverage, and Financial Crises available in PDF, EPUB and Kindle. That most corporate tax systems favor debt over equity finance is now widely recognized as, potentially, amplifying risks to financial stability. This paper makes a first attempt to explore, empirically, the link between this tax bias and the probability of financial crisis. It finds that greater tax bias is associated with significantly higher aggregate bank leverage, and that this in turn is associated with a significantly greater chance of crisis. The implication is that tax bias makes crises much more likely, and, conversely, that the welfare gains from policies to alleviate it can be substantial—far greater than previous studies, which have ignored financial stability considerations, suggest.
