Corporate tax changes and bank lending

Corporate tax changes and bank lending

Wednesday, 06 October 2021, 15:00-16:15

Room: Zoom

Presenter: Politsidis Panagiotis, Audencia Business School and European Banking Institute

This paper examines the effect of corporate taxation on the cost of credit. We employ corporate income tax rate changes across the U.S. states as a quasi-natural experiment to examine their implications on the pricing of syndicated loans. We find that changes in the state corporate tax rates have 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 in the borrower’s state, but they are insensitive to corporate tax rises. We show that the easing effect of tax cuts comes from changes in credit demand by firms and is primarily concentrated in firms with greater reliance on debt and own funds. The transmission of corporate tax cuts to loan spreads depends on the firm’s access to alternative financing sources as firms with access to bond financing benefit to a greater extent.


Zoom link:

See also

Τμήμα Οικονομικών Επιστημών

myEcon Newsletter

Εγγραφείτε στην λίστα ειδοποιήσεων του Τμήματος Οικονομικών Επιστημών.