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Non-Regulatory Incentives and Bank Behavior : the Stock-market, Taxes and Social Capital

Abstract : In the first chapter of this thesis, we study how stock-market forces determine the persistence of bank performance across crises. In this analysis, we observe that the persistence of business models that make banks more vulnerable across crises is not a specificity of publicly held banks but also applies to privately held institutions. However, for privately held banks, there is a group of banks that perform well across crises. This result suggests that stock-market listing may have adverse effects on the ability of banks to withstand crises well. To deepen this analysis, we look at banks that make a private-to-public transition between crises. Our results indicate that, after becoming publicly held, banks more subject to short-termist market pressures increase risk which makes top performer banks in one crisis more vulnerable to ubsequent shocks. In the second chapter, we study the effect of tax incentives on bank capital. We exploit a tax change that reduces significantly the unequal tax treatment between equity and debt with respect to interests and cost of equity deductibility and show that banks increase their equity ratios following this tax change. When this tax incentive is removed we observe a reduction of bank capital ratios. In the third chapter, we focus on bank misconduct. We document that social capital (defined as strength of civic norms and density of social networks where a bank is headquartered) is negatively related to the probability that a bank is involved in misconduct Moreover, we show that once misconduct is revealed, banks tend to lose greater percentages of deposits market-share in areas higher social capital areas.
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Submitted on : Monday, October 26, 2020 - 3:22:07 PM
Last modification on : Wednesday, December 2, 2020 - 10:47:14 AM


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  • HAL Id : tel-02978559, version 1



José Maria Martin Flores. Non-Regulatory Incentives and Bank Behavior : the Stock-market, Taxes and Social Capital. Business administration. Université Panthéon-Sorbonne - Paris I, 2019. English. ⟨NNT : 2019PA01E022⟩. ⟨tel-02978559⟩



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