Regulations, institutions and income smoothing by managing technical reserves: international evidence from the insurance industry
Chrysovalantis Gaganis, Iftekhar Hasan, Fotios Pasiouras
Omega,
No. 3,
2016
Abstract
This paper investigates the role of technical reserves in the income smoothing behavior of insurance companies. This is one of the first attempts in the literature to trace such relationship in the insurance industry, especially at a multi-country setting. The experience of 770 insurance firms operating in 87 countries over the period 2000–2009 reveals that there is a significant evidence of income smoothing. The paper also finds that institutional characteristics, e.g., the rule of law, common law legal origin, economic freedom, and regulations relating to technical provisions and supervisory power constrain income smoothing but other factors such as capital requirements, tax deductibility of provisions, auditing, and corporate governance do not have a significant effect.
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Monetary Policy under the Microscope: Intra-bank Transmission of Asset Purchase Programs of the ECB
L. Cycon, Michael Koetter
IWH Discussion Papers,
No. 9,
2015
Abstract
With a unique loan portfolio maintained by a top-20 universal bank in Germany, this study tests whether unconventional monetary policy by the European Central Bank (ECB) reduced corporate borrowing costs. We decompose corporate lending rates into refinancing costs, as determined by money markets, and markups that the bank is able to charge its customers in regional markets. This decomposition reveals how banks transmit monetary policy within their organizations. To identify policy effects on loan rate components, we exploit the co-existence of eurozone-wide security purchase programs and regional fiscal policies at the district level. ECB purchase programs reduced refinancing costs significantly, even in an economy not specifically targeted for sovereign debt stress relief, but not loan rates themselves. However, asset purchases mitigated those loan price hikes due to additional credit demand stimulated by regional tax policy and enabled the bank to realize larger economic margins.
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Corporate Taxation and Firm Location in Germany
Götz Zeddies
IWH Discussion Papers,
No. 2,
2015
Abstract
German Fiscal Federalism is characterized by a high degree of fiscal equalization which lowers the efficiency of local tax administration. Currently, a reform of the fiscal equalization scheme is on the political agenda. One option is to grant federal states the right to raise surtaxes on statutory tax rates set by the central government in order to reduce the equalization rate. In such an environment, especially those federal states with lower economic performance would have to raise comparatively high surtaxes. With capital mobility, this could further lower economic performance and thus tax revenues. Although statutory tax rates are so far identical across German federal states, corporate tax burden differs for several reasons. This paper tries to identify the impact of such differences on firm location. As can be shown, effective corporate taxation did seemingly not have a significant impact on firm location across German federal states.
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IWH Economic Outlook 2004: No longer waiting for the economic upturn
Wirtschaft im Wandel,
No. 1,
2004
Abstract
The Economic Outlook 2004 updates the IWH forecast for 2004 and gives a first outlook on 2005. The world recovery is mainly driven by the strong economic impulses from the USA. Whereas the upturn in the US is domestically driven, the impetus in the euro area is coming from external trade. Nonetheless in Germany corporate investment activity still is slow. Although the tax reductions in 2004 will support private consumption, its overall economic impulse will be weak. German GDP in 2004 will increase 1.6% and 1.8% in 2005. At the labour market no clear improvement can be expected till the second half of 2004; on a yearly average employment will decrease by 100 000 persons in 2004. Albeit the partly broad forward third instalment of the tax reform, fiscal policy will have a restrictive aim. Monetary policy on the other hand will continue to be highly expansive, but as the output gap shrinks the ECB can be expected to increase interest rates moderately.
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Current Trends: Corporate income tax revenue for the first time negative
Kristina vanDeuverden
Wirtschaft im Wandel,
No. 2,
2002
Abstract
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Local Taxes and Capital Structure Choice
Reint E. Gropp
International Tax and Public Finance,
No. 1,
2002
Abstract
This paper investigates the question of taxation and capital structure choice in Germany. Germany represents an excellent case study for investigating the question of whether and to what extent taxes influence the debt-equity decision of firms, because the relative tax burdens on debt and equity vary greatly across communities. German communities levy local taxes on profits and long-term debt payments in addition to personal and corporate taxes on the federal level. A stylized model is presented incorporating these taxes. The model shows that local taxes create substantial incentives for firms to use debt financing. Furthermore, the paper empirically investigates the effect of local business taxes on the share of debt used to finance incremental investments by German firms. I find that local taxes significantly influence the capital structure choice of firms, controlling for a large number of other factors. In an extensive sensitivity analysis the tax effect are found to be robust across several different specifications.
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FDI and Corporate Tax Revenue: Tax Harmonization or Competition?
Reint E. Gropp, Kristina Kostial
Finance & Development,
No. 2,
2001
Abstract
OECD countries with high corporate tax rates have experienced both high net outflows of foreign direct investment and a decline in corporate tax revenue. Identification of a causal link between these two trends has implications for the debate on tax harmonization versus tax competition.
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FDI and Corporate Tax Revenue: Tax Harmonization or Competition?
Reint E. Gropp, Kristina Kostial
Finance & Development,
No. 2,
2001
Abstract
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Incentive effects of the corporate tax reform
Kristina vanDeuverden
Wirtschaft im Wandel,
No. 4,
2000
Abstract
Der Gesetzentwurf zur Reform der Unternehmensbesteuerung vom Februar des Jahres wird anhand einer mikroökonomischen Veranlagungssimulation für (westdeutsche) Personengesellschaften unterschiedlicher Größe analysiert. Der mikroökonomischen Untersuchung werden die erwarteten makroökonomischen Auswirkungen der Reform - ihre allokativen und distributiven Folgewirkungen - gegenübergestellt.
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Corporate tax reform: An assessment simulation for East German industrial corporations
Kristina vanDeuverden
Wirtschaft im Wandel,
No. 15,
1999
Abstract
Die sich Ende des Jahres 1999 zunehmend konkretisierenden Regierungspläne zur Reform der Unternehmensbesteuerung werden mit Hilfe einer mikroökonomischen Veranlagungssimulation anhand ostdeutscher Industrieunternehmen untersucht. Die Analyse bezieht sowohl die Unternehmens- als auch die Unternehmerebene, sowohl Kapital- als auch Personengesellschaften ein. Die beabsichtigte Verbreiterung der Bemessungsgrundlage wird berücksichtigt.
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