Banks As Patient Lenders: Evidence from a Tax Reform

53 Pages Posted: 29 Mar 2019

See all articles by Elena Carletti

Elena Carletti

Bocconi University - Department of Finance; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Filippo De Marco

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Vasso Ioannidou

Lancaster University - Management School; Centre for Economic Policy Research (CEPR)

Enrico Sette

Bank of Italy

Multiple version iconThere are 2 versions of this paper

Date Written: March 2019

Abstract

We study how a greater reliance on deposits affects bank lending policies. For identification, we exploit a tax reform in Italy that induced households to substitute bank bonds with deposits. We show that the reform led to larger increases (decreases) in term deposits (bonds) in areas where households held more bonds before the reform. We then find that banks with larger increases in deposits did not change their overall credit supply, but increased credit-lines and the maturity of term-loans. These results are consistent with key theories on the role of deposits as a discipline device and of banks as liquidity providers.

Keywords: banks, deposits, maturity, risk-taking, government guarantee

JEL Classification: G21, G28, G01

Suggested Citation

Carletti, Elena and De Marco, Filippo and Ioannidou, Vasso and Sette, Enrico, Banks As Patient Lenders: Evidence from a Tax Reform (March 2019). BAFFI CAREFIN Centre Research Paper No. 2019-110. Available at SSRN: https://ssrn.com/abstract=3362192 or http://dx.doi.org/10.2139/ssrn.3362192

Elena Carletti (Contact Author)

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Filippo De Marco

Bocconi University - Department of Finance ( email )

Department of Finance
Via Roentgen 1
Milano, MI 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Vasso Ioannidou

Lancaster University - Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Enrico Sette

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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