Research Articles
Research Articles Explore cutting-edge research based on CompNet’s micro-aggregated firm-level data and related analytical tools. These articles cover empirical and theoretical…
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Media Response
Media Response February 2026 Oliver Holtemöller: Talsohle scheint erreicht in: Wirtschaftswoche, 13.02.2026 IWH: »Rosenkrieg« ums Arbeitszeugnis (Bericht mit Bezug auf…
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FINPRO 5 Conference - Tokyo
Upcoming Event: FINPRO5 – Finance and Productivity Conference 24-25 April 2026, University of Tokyo The 5th Finance and Productivity Conference (FINPRO5) , co-organised by the…
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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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Archive
Media Response Archive 2021 2020 2019 2018 2017 2016 December 2021 IWH: Ausblick auf Wirtschaftsjahr 2022 in Sachsen mit Bezug auf IWH-Prognose zu Ostdeutschland: "Warum Sachsens…
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Research Clusters
Three Research Clusters Each IWH research group is assigned to a topic-oriented research cluster. The clusters are not separate organisational units, but rather bundle the…
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Alumni
IWH Alumni The IWH maintains contact with its former employees worldwide. We involve our alumni in our work and keep them informed, for example, with a newsletter. We also plan…
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Economic Outlook
IWH Economic Outlook 2026 Slight Upturn on the Horizon, Structural Problems Remain December 11, 2025 As the year draws to a close, it remains uncertain whether the German economy…
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DPE Courses Archive
DPE Course Programme Archive 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2025 Mathematics for Economists Roweno Heijmans (NHH Norwegian School of…
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Political Polarization and Finance
Elisabeth Kempf, Margarita Tsoutsoura
Annual Review of Financial Economics,
Vol. 16 (November),
2024
Abstract
We review an empirical literature that studies how political polarization affects financial decisions. We first discuss the degree of partisan segregation in finance and corporate America, the mechanisms through which partisanship may influence financial decisions, and the available data sources used to infer individuals’ partisan leanings. We then describe and discuss the empirical evidence. Our review suggests an economically large and often growing partisan gap in the financial decisions of households, corporate executives, and financial intermediaries. Partisan alignment between individuals explains team and financial relationship formation, with initial evidence suggesting that high levels of partisan homogeneity may be associated with economic costs. We conclude by proposing several promising directions for future research.
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