Bank Profitability and Taxation

This paper investigates how bank profitability is affected by the corporate income tax (CIT). For this purpose it uses aggregate data of the banking sector of the main industrialized countries, for the period 1980-2003. The main novelties with respect to the existing literature are two. First, it explicitly considers that the CIT is not specific to the banking sector so that changes in CIT rate can affect both banks and borrowing firms. With the help of a simple theoretical model we derive a set of predictions about the impact of the CIT on banks’ income statement. Second, we consider all main components of banks’ profit and loss accounts: net interest income, interest expenses, non-interest income, operating costs, and provisions. In this way, we are able to disentangle the extent to which a bank is able to shift its tax-burden forward to its lenders, depositors, and purchasers of fee-generating servicesTax-Shifting, Corporate Income Tax, Bank Profitability

Bank profitability and taxation

This paper investigates how bank profitability is affected by corporate income tax (CIT) using aggregate data on the banking sector of the main industrialized countries for the period 1981-2003. Two main novelties emerge with respect to the existing literature. First, the paper explicitly considers that CIT is not specific to the banking sector, so that changes in the CIT rate can affect both banks and borrowing firmsÂ’ behaviour. Thus, with the help of a simple theoretical model we derive a set of predictions about the impact of CIT on banksÂ’ income statement. Second, by considering all the main components of banksÂ’ profit and loss accounts, we are able to test such predictions and to disentangle the extent to which a bank is able to shift its tax-burden onto its borrowers, depositors, and purchasers of fee-generating services. It turns out that CIT has a substantial impact on the composition of banking sector revenues but cannot explain large differences in the level of profitability across countries.tax-shifting, corporate income tax, bank profitability

Italy’s looming election: will the Five Star Movement really form the next government?

Italy will hold its next general election no later than spring 2018, with Beppe Grillo’s Five Star Movement (M5S) currently ahead in most of the recent polling. Daniele Albertazzi argues that despite intense media speculation about what a victory for the M5S could mean for Italy and its participation in the euro, the picture is far from clear and could be altered substantially by current negotiations over the country’s electoral law

Forget about Strasbourg, it’s Rome that will make or break the Five Star Movement

On 9 January, the Alliance of Liberals and Democrats for Europe rejected a request from Italy’s Five Star Movement (M5S) to join the group in the European Parliament. Daniele Albertazzi states that although the incident constituted an embarrassment for the M5S at the European level, a far more pressing priority for the party will be to ensure it can maintain its anti-establishment appeal among Italian voters

Loan maturity and renegotiation evidence from the lending practices of large and small banks

Corporate finance theories suggest that problems of asymmetric information and moral hazard in credit markets can be addressed by choosing short-term maturities. Theories of debt renegotiation suggest that the credibility of the implicit commitment to not make concessions to insolvent borrowers, which would undermine the effectiveness of short-term maturities, is related to the characteristics of the lender and in particular to its size. the joint implication of these theories is that, for given borrower's characteristics, small banks should be less willing to issue long term, loans. Using information on Italian banks, this study presents a cross-sectional analysis of the maturity of loans to firms and shows a first evidence consistent with this prediction. With more opaque borrowers, like small and innovative firms, other supply-side features (special regulatory regimes favouring lending relationships and economies of scale in the screening technology) are also shown to be relevant in the determination of loan maturity

Junior partner no more: how the growth of the Lega Nord could reshape the right in Italy

In recent decades, the right of Italy’s party system has been dominated by Silvio Berlusconi, who currently heads a revived version of his Forza Italia party. As Daniele Albertazzi writes, however, Forza Italia has been pushed into fourth place in several opinion polls in 2015 by the growth of the Northern League (Lega Nord), which has traditionally advocated a political platform focused on the interests of regions in northern Italy. He notes that the party’s rise in popularity, which has been coupled with a strategy to win support in central and southern Italy, could indicate the start of an important shift in the Italian right

Silvio Berlusconi’s revival of Forza Italia is unlikely to bring him back to power, but his career in Italian politics is far from finished

For the past few decades, Italian politics has been marked by the presence of Silvio Berlusconi. As Daniele Albertazzi writes, Berlusconi’s revival of his old political party, Forza Italia, is his latest attempt to retain political influence within the country’s party system. He argues that while Berlusconi is unlikely to enjoy the same success that he first had with the party, with Forza Italia currently polling around 21 per cent of the vote it would be reckless to dismiss his political prospects

Individual cheating in the lab: a new measure and external validity

This paper investigates to what extent laboratory measures of cheating generalise to the field. To this purpose, we develop a lab measure that allows for individual-level observations of cheating whilst reducing the likelihood that participants feel observed. Decisions made in this laboratory task are then compared to individual choices taken in the field, where subjects can lie by misreporting their experimental earnings. We use two field variations that differ in the degree of anonymity of the field decision. According to our measure, no correlation of behaviour between the laboratory and the field is found. We then perform the same analysis using a lab measure that can only detect cheating at the aggregate level. In this case, we do find a weak correlation between the two environments. We discuss the significance and interpretation of these results

Spatial Elements in Visual Awareness. Challenges for an Intrinsic “Geometry” of the Visible

Un enjeu majeur pour les recherches actuelles dans les sciences de la vision consiste à mettre au point une approche dépendante de l’observateur – une science des apparences visuelles située au-delà de leur véridicité. L’espace dont nous faisons l’expérience subjective est en réalité hautement « illusoire», et les éléments de base du champ visuel sont des structures qualitatives, contextuelles et relationnelles, et non des indices métriques et dépendants du stimulus. Sur la base de nombreux résultats disponibles dans la littérature traitant de la manière dont fonctionnent les divers constituants de l’espace (formes, surfaces, etc.), l’article décrit les éléments qualitatifs de base d’un tel espace et pose la question de la « géométrie» des apparences visuelles. Il formule enfin un ensemble de propositions pour d’éventuelles recherches poursuivant l’examen de l’espace visuel d’un point de vue expérimental.A challenge for current vision science is to develop an observer-dependent science—a science of visual appearances beyond veridicalism. The space that we subjectively experience in vision is, in fact, highly ``illusory’’, and the primitives of the visual field are qualitative, contextual, and relational patterns rather than metric or stimuli-dependent cues. Drawing on the extensive evidence that the experimental literature on visual space perception offers on the behavior of the various constituents of that space such as shapes and surfaces, the paper describes the qualitative primitives of such a space and addresses the question of the intrinsic ``geometry’’ of visual appearances. The paper also makes suggestions for potential future developments of examining visual space from an experimental viewpoint