Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265879 
Year of Publication: 
2022
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series No. WP22/21
Publisher: 
University College Dublin, UCD School of Economics, Dublin
Abstract: 
We examine changes in the corporate tax rate across the U.S. and their implications on the pricing and quantity of loans. We find an asymmetric effect on the cost of credit: loan spreads decrease by approximately 5.9 basis points in response to a one percentage tax cut, but they are insensitive to corporate tax increases. Primarily, a debt restructuring effect (working via firm's leverage) and, secondarily, a credit supply effect (working via bank market power and bank capital) drive the easing effect of tax cuts on equilibrium loan pricing, while the effect on the equilibrium quantity of loans is insignificant.
Subjects: 
Corporate taxation
Cost of credit
Syndicated loans
Loan demand
Loan supply
JEL: 
G21
F31
F33
F34
Document Type: 
Working Paper

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