Banks as patient lenders: Evidence from a tax reform

Effect of Bank Levy Introduction on Bank Risk-Taking

“…According to Table 8, BL introduction is found to increase a bank's LLP ratio by 1.152 percentage points. This result is consistent with the view that BLs on assets tend to increase nancial sector risk, as researchers show the reform might not change loan supply, but increase nancial institutions' willingness to lend to high-risk borrowers (Carletti, De Marco, Ioannidou, & Sette, 2018). Therefore, the BL on assets might increase credit risk in the Hungarian nancial sector, which con rms the rst hypothesis.…”

“…The results also provide evidence that the BL on assets in the Hungarian nancial sector negatively affects sector stability. Following the BL introduction in the Hungarian nancial sector, nancial institutions might be more willing to provide loans to high-risk borrowers (Carletti et al, 2018). Moreover, commercial banks that pay BLs at a lower rate and other small nancial institutions seem to be most affected.…”

Loan Guarantees, Bank Underwriting Policies and Financial Fragility

“…In addition, they can also bene…t depositors when losses would put the bank at risk of defaulting on its liabilities, and therefore they have implications for depositors' withdrawal behavior. Evidence supports the incentive view of demandable debt (e.g., Iyer and Puri, 2012;Iyer, Puri, and Ryan, 2016;Martin, Puri, and U…er, 2018;Artavanis et al, 2019;and Carletti et al, 2020): investors react to signals on banks'fundamentals when deciding whether to withdraw their funds and, anticipating this, banks take investors'reactions into account when making their lending decisions. It follows that the impact of loan guarantees for lending is best analyzed in a framework that incorporates the feedback between bank lending decisions and depositor withdrawal decisions.…”

“…As is well known, bank choices on the asset side also crucially depend on their capital structures. In particular, the degree of bank capitalization as well as the possibility for investors to withdraw their funds has been found to affect bank lending decisions (see, e.g., the evidence in Iyer and Puri, 2012;Iyer, Puri and Ryan, 2016;Martin, Puri and Ufier, 2018;Artavanis, Paravisini, Robles-Garcia, Seru and Tsoutsoura, 2019;or Carletti, De Marco, Ioannidou and Sette, 2020). This implies that the quality of a bank's assets, the threat of runs, and its capital structure are closely intertwined.…”

Informing Macroprudential Policy Choices Using Credit Supply and Demand Decompositions

“…Studies already available on policies during the pandemic include also a comparison of the effects of transfers vis-á-vis credit subsidies(Bigio et al, 2020); observations on the expected restructuring of the corporate sector(Greenwood et al, 2020); and considerations on the impact on public finances(Hanson et al, 2020).5 Notable exceptions of multi-country studies areAltavilla et al (2020b) andAltavilla et al (2021) For studies estimating supply with firm-time fixed effects to control for demand, seeParavisini (2008); Chodorow-Reich (2014);Jiménez et al (2014Jiménez et al ( , 2017;Behn et al (2016);Carletti et al (2021).ECB Working Paper Series No 2702 / August 2022…”