Izvorni znanstveni članak
https://doi.org/10.1080/1331677X.2021.1985565
Effective tax rates for bank entities across European Union. The role of loan loss provisions
Sebastian Lazăr
Alin Marius Andrieș
Sažetak
The paper investigates the impact of loan loss provisions (LLPs)
on bank-specific effective tax rates (ETRs) using data of 2943
banks from European Union during 2007-2014.As control variables
we used size, equity, fixed assets and return on assets (ROA),
while the specific country-year tax reforms were captured using
Devereux-Griffith effective tax rates. The results prove robust to
different model estimators and sample selections, which suggests
that LLPs act systematically towards the reduction of the bank
entities’ corporate tax burden. When distinguishing between two
banking business models, respectively shareholders-value (commercial banks) and stakeholders-value banks (savings and
cooperative banks), empirical findings indicate that provisions
negatively affects the former (commercial banks) specific ETRs,
whereas for the latter (savings and cooperative banks), no statistical significant effect was detected. From policy perspective, in
the context of the switch from the incurred-loss model to the
expected-loss model with respect to LLPs (IFRS 9), this may signal
additional tax bill reduction for bank entities, if decision makers
fail to react promptly. Finally, looking at types of banks investigated, the results show that among all three categories of banks,
commercial banks manage to avoid the increase of tax bill driven
by some bank-specific determinants (i.e. ROA), while maximizing
the tax savings driven by others (i.e. capital intensity), thus suggesting more tax planning oriented behaviour as compared to
savings and cooperative banks.
Ključne riječi
effective tax rates; loan loss provisions; bank entities; banking business model
Hrčak ID:
302061
URI
Datum izdavanja:
31.3.2023.
Posjeta: 406 *