The Effect of Bank Levy Introduction on Commercial Banks in Europe

Puławska, Karolina

doi:10.3390/jrfm14060279

Cited by 3 publications

(1 citation statement)

References 62 publications

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“…-a negative impact on economic growth with relatively low (compared to other taxes) tax revenues (Osvát & Osvát, 2010), -a squeeze of lending and a decrease in the banks' profitability affecting negatively banks' capital (Giżyński, 2021;Stypułkowski, 2020;Puławska, 2021), -an increase in the prices of banking products and services. The latter issue, including the problem of shifting the bank tax onto bank customers, is the subject of this article.…”

Section: Introductionmentioning

confidence: 99%

Do Commercial Banks in Poland Pass the Bank Tax On to Their Customers?

Karpowicz

Korzeb

Niedziółka

2022

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Theoretical background: Bank tax was introduced in Poland in February 2016. As a consequence, several banks with assets surpassing certain value need to cope with the additional burden. Purpose of the article: The aim of the research is to verify whether Polish banks that nominally are subject to the bank tax indeed shifted onto their clients most of the cost connected with this new levy and, thus, now these are the clients who effectively bear the burden of bank tax. Research methods:The analysis is based on monthly data for the years 2010-2021, for which a multilayer comparison of performance of banks subject to the bank tax was made from various perspectives: (1) before and after the introduction of bank tax and (2) with remaining banks not subject to a bank tax -which serve as a control sample. The analysis took into account the composition of Polish bank sector, while focusing on the development of: (1) revenues, costs and income from commissions and charges, (2) revenues and income from interest, (3) level of commissions and charges as well as interest imposed on different bank products, (4) banks profitability, (5) their balance sheet total and (6) ROA. Main findings: The analysis does not confirm increases in revenues of commercial banks and foreign branches following the introduction of the bank levy, whereas the profitability and ROA of these banks worsened significantly. At the same time, the performance of banks not affected by the levy did not deteriorate, which allows to conclude that banks did not manage to shift the cost of bank tax onto their customers. Conclusions are important primarily from the perspective of fiscal policy (they answer the question on effective tax incidence) and supervisory policy (to what extent the introduction of the tax erodes the performance of the banking sector, inhibiting the accumulation of capital determining the level of financial stability).

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Section: Introductionmentioning

confidence: 99%

Do Commercial Banks in Poland Pass the Bank Tax On to Their Customers?

Karpowicz

Korzeb

Niedziółka

2022

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Macroprudential Regulation and International Policy Coordination

VanHoose

2022

The Industrial Organization of Banking

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Taxation of the financial sector: Is a bank levy the answer to the financial crisis?

Puławska

2021

J Bank Regul

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To reduce the probability of financial crises, policymakers have introduced bank levies, whose application differs across countries. The problem in their use lies in identifying the most effective regulatory instruments to reduce risk. Our study might be of interest to various researchers and professionals, as we discuss the significance of research on bank levies with respect to theory and economic practice and then propose models of banking sector taxation and directions for future research. Moreover, this paper presents the history of taxation of the financial sector, the models introduced in different European countries, the advantages and disadvantages of each of the possible solutions, the results of studies on the impact of the new levy on the behavior of the financial sector and recommendations for how the levy should be structured.

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The Effect of Bank Levy Introduction on Commercial Banks in Europe

Cited by 3 publications

References 62 publications

Do Commercial Banks in Poland Pass the Bank Tax On to Their Customers?

Do Commercial Banks in Poland Pass the Bank Tax On to Their Customers?

Macroprudential Regulation and International Policy Coordination

Taxation of the financial sector: Is a bank levy the answer to the financial crisis?

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