Compnet Training Program
CompNet Training Program Structure The course is made for autonomous online learning. It is structured in three modules : Beginners, Intermediate and Advanced. Each of them…
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Centre for Business and Productivity Dynamics
Centre for Business and Productivity Dynamics (IWH-CBPD) The Centre for Business and Productivity Dynamics (CBPD) was founded in January 2025 and works with policy and research…
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IWH-DPE in a Nutshell
IWH-DPE in a Nutshell The IWH Doctoral Programme in Economics (IWH-DPE) is the unit that organises the education of doctoral students at the IWH in close cooperation with partner…
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Nothing Special about an Allowance for Corporate Equity: Evidence from Italian Banks
Dennis Dreusch, Felix Noth, Peter Reichling
Journal of International Money and Finance,
Vol. 150 (February),
2025
Abstract
This paper analyzes the impact of reduced tax incentives for equity financing on banks' regulatory capital ratios under the Basel III regime. We are particularly interested in a recent interest rate cut in the Italian corporate equity allowance, which reduces the relative tax advantage of equity financing. The results show that banks respond to this increased tax disparity by significantly reducing their regulatory capital while at the same time reducing their risk-taking. The decline in capital is more pronounced for small banks and outweighs the initial capital gains from the introduction of this tax instrument. Our results challenge the use of equity allowances, in that financial stability gains persist only as long as costly tax subsidies remain intact and diminish as the size of the subsidy is reduced.
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Organisation of Research
Tasks of the IWH Guided by its mission statement , the IWH places the understanding of the determinants of long term growth processes at the centre of the research agenda. Long…
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East Germany
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
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Open Calls for PhD Intake
Open Calls for PhD Intake We encourage outstanding students with a Master's degree in economics or related subjects such as mathematics, statistics, business administration,…
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Teaching
Teaching Within the framework of its cooperations with both German and foreign universities IWH researchers are actively committed to teaching by offering academic courses. These…
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FAQ
Frequently Asked Questions Answers to the most frequently asked questions about doctoral studies at IWH. What are the IWH's main areas of research? Researchers at IWH are leading…
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Department Profiles
Research Profiles of the IWH Departments All doctoral students are allocated to one of the four research departments (Financial Markets – Laws, Regulations and Factor Markets –…
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