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Regular version of the site
ФКН

ICEF/LFE Research Seminar by Steven Ongena (University of Zurich)

On Thursday, October 6 at 4.40 pm, room 3211 (Shabolovka str. 26) ICEF and LFE held the Research Seminar in Finance.
Speaker: Steven Ongena (University of Zurich)
Theme: "Changes in the cost of bank equity and the supply of bank credit" joint with Célérier Claire and Thomas Kick

Abstract: We explore the effect of tax reforms that decrease the cost of equity on bank lending. In 2000 and 2006, Italy and Belgium, respectively, introduced an allowance for corporate equity so that both firms and banks could deduct a notional interest on their equity from their taxable income. Because local firms were also affected by these reforms, we employ loan level data from a credit register in a third-country, i.e., Germany, to better identify the differential impact on lending by banks that were 'treated' by these tax reforms versus a control group of banks that were not. We find that the decrease in the cost of equity leads banks to raise their equity ratio, and to concurrently expand their balance sheet by increasing the amount of credit supplied in Germany. Conversely, the reversal of these reforms leads to a decrease in lending.


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Past seminar