Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/57778 
Year of Publication: 
2012
Series/Report no.: 
Bundesbank Discussion Paper No. 10/2012
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
This paper studies the impact of bank regulation and taxation in a dynamic model where banks are exposed to credit and liquidity risk and can resolve financial distress in three costly forms: bond issuance, equity issuance or fire sales. We find an inverted U-shaped relationship between capital requirements and bank lending, efficiency, and welfare, with their benefits turning into costs beyond a certain threshold. By contrast, liquidity requirements reduce lending, efficiency and welfare significantly. On taxation, corporate income taxes generate higher government revenues and entail lower efficiency and welfare costs than taxes on non-deposit liabilities.
Subjects: 
Bank Regulation
Taxation
Dynamic Banking Model
JEL: 
G21
G28
G33
ISBN: 
978-3-86558-809-8
Document Type: 
Working Paper

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