Interactions Between Bank Levies and Corporate Taxes: How is Bank Leverage Affected?
Franziska Bremus, Kirsten Schmidt, Lena Tonzer
Journal of Banking and Finance,
September
2020
Abstract
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis yields three main results: The introduction of bank levies leads to lower leverage as liabilities become more expensive. This effect is weaker the more elevated corporate income taxes are. In countries charging very high corporate income taxes, the incentives of bank levies to reduce leverage turn insignificant. Thus, bank levies can counteract the debt bias of taxation only partially.
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Interactions between Bank Levies and Corporate Taxes: How is the Bank Leverage Affected?
Franziska Bremus, Kirsten Schmidt, Lena Tonzer
Abstract
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis yields three main results: The introduction of bank levies leads to lower leverage as liabilities become more expensive. This effect is weaker the more elevated corporate income taxes are. In countries charging very high corporate income taxes, the incentives of bank levies to reduce leverage turn ineffective. Thus, bank levies can counteract the debt bias of taxation only partially.
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Fehlende Fachkräfte in Deutschland – Unterschiede in den Betrieben und mögliche Erklärungsfaktoren: Ergebnisse aus dem IAB-Betriebspanel 2018
Eva Dettmann, Daniel Fackler, Steffen Müller, Georg Neuschäffer, Viktor Slavtchev, Ute Leber, Barbara Schwengler
IAB-Forschungsbericht 10/2019,
2019
Abstract
In the years after the economic crisis, the economic situation of establishments in West and East Germany has improved steadily. At the same time, increased labor market dynamics and a positive trend in total employment can be observed. Also the demand for skilled employees reached a new high of 2.7 million in 2018. Only about 60 percent of the demand could be covered, which is also reflected in a further increase of the so-called non-occupancy quota. With regard to the distribution of this indicator for skilled labor shortages, we observe clear sector- and size-specific differences as well as regional heterogeneity. The quota is particularly high in the construction industry and in agriculture and forestry, with more than half the positions left vacant. A positive correlation between shortages of skilled labor and the use of temporary work, flexible working hours and investments in vocational training and further education is assessed in a multivariate analysis. The structure of formal occupational skill requirements did not change very much over recent years. However, a clear trend towards more flexible work organization can be observed. For example, about one quarter of the establishments offer teleworking. The share of part-time employment is also increasing nationwide, especially in sectors with a higher proportion of women, such as the service industries or the public sector. The share of marginal employment is particularly high in sectors that are characterized by cyclical and/or seasonal demand fluctuations or comparatively unspecific skill requirements – and above-average shortages of skilled labor. In 2018, the proportion of establishments authorized to provide in-house vocational training rose for the first time since 2010 – to 54 percent in Germany. In Eastern Germany, the share is significantly lower at 49 percent. The proportion of authorized establishments that actually train apprentices has been relatively stable at around 50 percent for several years. Both successfully occupied and vacant apprenticeships are distributed very heterogeneously across sectors. The recruitment rate of successful graduates is about three quarters. In establishments with skilled labor shortages, both the training rate and the graduate hiring rate are higher, suggesting that vocational training is already used here as an alternative strategy for recruiting skilled employees. The share of establishments supporting further education of their employees remains stable at about fifty percent for several years, and the proportion of employees participating in training is still about one third. A comparatively higher rate of further education among unskilled employees in establishments with skilled labor shortages indicates that internal resources are being increasingly used here to meet the demand for skilled employees.
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Do Diasporas Affect Regional Knowledge Transfer within Host Countries? A Panel Analysis of German R&D Collaborations
Lutz Schneider, Alexander Kubis, Mirko Titze
Regional Studies,
No. 1,
2019
Abstract
Interactive regional learning involving various actors is considered a precondition for successful innovations and, hence, for regional development. Diasporas as non-native ethnic groups are regarded as beneficial since they enrich the creative class by broadening the cultural base and introducing new routines. Using data on research and development (R&D) collaboration projects, the analysis provides tentative evidence that the size of diasporas positively affects the region’s share of outward R&D linkages enabling the exchange of knowledge. The empirical analysis further confirms that these interactions mainly occur between regions hosting the same diasporas, pointing to a positive effect of ethnic proximity rather than ethnic diversity.
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Innovation and Top Income Inequality
Philippe Aghion, Ufuk Akcigit, Antonin Bergeaud, Richard Blundell, David Hemous
Review of Economic Studies,
No. 1,
2019
Abstract
In this article, we use cross-state panel and cross-U.S. commuting-zone data to look at the relationship between innovation, top income inequality and social mobility. We find positive correlations between measures of innovation and top income inequality. We also show that the correlations between innovation and broad measures of inequality are not significant. Next, using instrumental variable analysis, we argue that these correlations at least partly reflect a causality from innovation to top income shares. Finally, we show that innovation, particularly by new entrants, is positively associated with social mobility, but less so in local areas with more intense lobbying activities.
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Lohnunterschiede zwischen Betrieben in Ost- und Westdeutschland: Ausmaß und mögliche Erklärungsfaktoren. Ergebnisse aus dem IAB-Betriebspanel 2017
Steffen Müller, Eva Dettmann, Daniel Fackler, Georg Neuschäffer, Viktor Slavtchev, Ute Leber, Barbara Schwengler
IAB-Forschungsbericht 6/2018,
2018
Abstract
The economic situation in German establishments improved even further in 2017. The development of wages, however, reflects this economic growth only partly. Compared to 1997, the wage differential between large and small establishments increased considerably – with substantially lower wages paid in East Germany in general. The wage differential of about 19 percent between East and West Germany can to some extent be explained in a multivariate analysis (Blinder-Oaxaca decomposition) showing that the main cause for the wage gap is the productivity gap between East German and West German establishments; other structural heterogeneities like sector composition, industrial relations and size structure seem not to contribute to an explanation of this gap. The overall positive economic development in Germany is associated with a further growth in total employment and with increased labor market dynamics, especially regarding employee turnover. Turnover rates, however, are very heterogeneous among sectors, ranging from 23 percent in the accommodation and food service sector and less than five percent in public administration. Also the demand for skilled personnel continued to grow. Yet for the first time, not even two thirds of the posted job vacancies could be filled in 2017. With over fifty percent, this non-occupancy quota is particularly high in the construction industry. Also small and very small establishments face serious recruitment problems. The structure of formal occupational skill requirements did not change very much over recent years, but the increasing use of digital technologies changes everyday job requirements and may lead to a rising workload for employees. Looking at the personnel structure in the German economy, a growing share of atypical employment becomes apparent, especially in form of part-time jobs. The proportion of marginal employment remains relatively stable and is comparatively high in sectors with less specific knowledge requirements and strong cyclical and/or seasonal fluctuations like is the case in accommodation and food service sector or personal services sector. Since 2010, the proportion of establishments authorized to provide in-company vocational training has declined constantly and now accounts for 53 percent of the establishments in Germany. About one half of these establishments do actually train apprentices. The share of vacant apprenticeships further increased in 2017 to about one quarter of all apprenticeships offered, in East Germany even to more than one third. As in recent years, the share of establishments supporting further training of their employees remained stable at about fifty percent and the proportion of employees participating in training is still about one third. In East Germany these figures prove to be slightly higher.
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Interactions Between Regulatory and Corporate Taxes: How Is Bank Leverage Affected?
Franziska Bremus, Kirsten Schmidt, Lena Tonzer
Abstract
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis yields three main results: The introduction of bank levies leads to lower leverage as liabilities become more expensive. This effect is weaker the more elevated corporate income taxes are. In countries charging very high corporate income taxes, the incentives of bank levies to reduce leverage turn ineffective. Thus, bank levies can counteract the debt bias of taxation only partially.
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The Drivers of Revenue Productivity: a New Decomposition Analysis with Firm-level Data
Filippo di Mauro, Giordano Mion, Daniel Stöhlker
ECB Working Paper,
2017
Abstract
This paper aims to derive a methodology to decompose aggregate revenue TFP changes over time into four different components – namely physical TFP, mark-ups, quality and production scale. The new methodology is applied to a panel of EU countries and manufacturing industries over the period 2006-2012. In summary, patterns of measured revenue productivity have been broadly similar across EU countries, most notably when we group them into stressed (Italy, Spain and Slovenia) and non-stressed countries (Belgium, Finland, France and Germany). In particular, measured revenue productivity drops for both groups by about 6 percent during the recent crisis. More specifically, for both stressed and non-stressed countries the drop in revenue productivity was accompanied by a substantial dip in the proxy we use for TFP in quantity terms, as well as by a strong reduction in mark-ups.
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20.06.2016 • 24/2016
Financial market reaction to poll data suggests strong effects of a Brexit on exchange rates and the banking system both in the UK and in the EU
On 23 June 2016, there will be a referendum in the United Kingdom (UK) on the question of whether or not the country should remain in the European Union (EU). We use the polls as a measure of the likelihood of an exit to examine the likely effect of a Brexit on financial markets. “Whenever the probability in the polls of a Brexit moves above 50%, we observe a substantial depreciation of the UK pound with respect to most major currencies (including the euro), and strong decline in bank stock prices, suggesting that markets feel the financial sector (both in the UK and the EU) will be most severely affected by a Brexit”, IWH President Reint E. Gropp says. There is little effect on the euro/US Dollar exchange rate. “A huge concern is that overall market volatility both in the UK and the EU are on record highs since last Thursday, reflecting the higher uncertainty associated with Brexit and how exactly, if it happened, it would come about.” Within the UK, we see some evidence for a flight to safety into UK government bonds, but no effects for German bonds.
Reint E. Gropp
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Foreign Direct Investment: The Role of Institutional and Cultural Determinants
Stefan Eichler, N. Lucke
Applied Economics,
No. 11,
2016
Abstract
Using panel data for 29 source and 65 host countries in the period 1995–2009, we examine the determinants of bilateral FDI stocks, focusing on institutional and cultural factors. The results reveal that institutional and cultural distance is important and that FDI has a predominantly regional aspect. FDI to developing countries is positively affected by better institutions in the host country, while foreign investors prefer to invest in developed countries that are more corrupt and politically unstable compared to home. The results indicate that foreign investors prefer to invest in countries with less diverse societies than their own.
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