Taxing Banks: An Evaluation of the German Bank Levy

46 Pages Posted: 16 Apr 2014

See all articles by Claudia M. Buch

Claudia M. Buch

Deutsche Bundesbank

Björn Hilberg

Goethe University Frankfurt

Lena Tonzer

Halle Institute for Economic Research

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Date Written: March 16, 2014


Bank distress can have severe negative consequences for the stability of the financial system, the real economy, and public finances. Regimes for restructuring and restoring banks financed by bank levies and fiscal backstops seek to reduce these costs. Bank levies attempt to internalize systemic risk and increase the costs of leverage. This paper evaluates the effects of the German bank levy implemented in 2011 as part of the German bank restructuring law. Our analysis offers three main insights. First, revenues raised through the bank levy are minimal, because of low tax rates and high thresholds for tax exemptions. Second, the bulk of the payments were contributed by large commercial banks and the head institutes of savings banks and credit unions. Third, the levy had no effect on the volume of loans or interest rates for the average German bank. For the banks affected most by the levy, we find evidence of fewer loans, higher lending rates, and lower deposit rates.

Keywords: bank levy, bank lending, interest rates, German banks

JEL Classification: G210, G280, C210

Suggested Citation

Buch, Claudia M. and Hilberg, Björn and Tonzer, Lena, Taxing Banks: An Evaluation of the German Bank Levy (March 16, 2014). CESifo Working Paper Series No. 4704, Available at SSRN: or

Claudia M. Buch (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431

Björn Hilberg

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323

Lena Tonzer

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06018 Halle, 06108

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