Curbing Corporate Debt Bias

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Curbing Corporate Debt Bias

Author : Ruud A. de Mooij
Publisher : International Monetary Fund
ISBN 13 : 1475578296
Total Pages : 20 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Curbing Corporate Debt Bias by : Ruud A. de Mooij

Download or read book Curbing Corporate Debt Bias written by Ruud A. de Mooij and published by International Monetary Fund. This book was released on 2017-02-10 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tax provisions favoring corporate debt over equity finance (“debt bias”) are widely recognized as a risk to financial stability. This paper explores whether and how thin-capitalization rules, which restrict interest deductibility beyond a certain amount, affect corporate debt ratios and mitigate financial stability risk. We find that rules targeted at related party borrowing (the majority of today’s rules) have no significant impact on debt bias—which relates to third-party borrowing. Also, these rules have no effect on broader indicators of firm financial distress. Rules applying to all debt, in contrast, turn out to be effective: the presence of such a rule reduces the debt-asset ratio in an average company by 5 percentage points; and they reduce the probability for a firm to be in financial distress by 5 percent. Debt ratios are found to be more responsive to thin capitalization rules in industries characterized by a high share of tangible assets.

Curbing Corporate Debt Bias

Author : Ruud A. de Mooij
Publisher : International Monetary Fund
ISBN 13 : 1475573057
Total Pages : 20 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Curbing Corporate Debt Bias by : Ruud A. de Mooij

Download or read book Curbing Corporate Debt Bias written by Ruud A. de Mooij and published by International Monetary Fund. This book was released on 2017-01-30 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tax provisions favoring corporate debt over equity finance (“debt bias”) are widely recognized as a risk to financial stability. This paper explores whether and how thin-capitalization rules, which restrict interest deductibility beyond a certain amount, affect corporate debt ratios and mitigate financial stability risk. We find that rules targeted at related party borrowing (the majority of today’s rules) have no significant impact on debt bias—which relates to third-party borrowing. Also, these rules have no effect on broader indicators of firm financial distress. Rules applying to all debt, in contrast, turn out to be effective: the presence of such a rule reduces the debt-asset ratio in an average company by 5 percentage points; and they reduce the probability for a firm to be in financial distress by 5 percent. Debt ratios are found to be more responsive to thin capitalization rules in industries characterized by a high share of tangible assets.

Pouring Oil on Fire: Interest Deductibility and Corporate Debt

Author : Pietro Dallari
Publisher : International Monetary Fund
ISBN 13 : 1484389107
Total Pages : 42 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis Pouring Oil on Fire: Interest Deductibility and Corporate Debt by : Pietro Dallari

Download or read book Pouring Oil on Fire: Interest Deductibility and Corporate Debt written by Pietro Dallari and published by International Monetary Fund. This book was released on 2018-12-07 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the role of tax incentives towards debt finance in the buildup of leverage in the nonfinancial corporate (NFC) sector, using a large firm-level dataset. We find that so-called debt bias is a significant driver of leverage, for both small and medium-sized enterprises and larger firms, with its effect accounting for about a quarter of leverage. The strength of this effect differs with firm size, the availability of collateral, income and income volatility, cash flow, and capital intensity. We conclude that leveling the playing field between debt and equity finance through tax policy reform would decrease NFC leverage, reducing economic risks posited by leverage.

Financial Sector Debt Bias

Author : Ms.Oana Luca
Publisher : International Monetary Fund
ISBN 13 : 1475552807
Total Pages : 28 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Financial Sector Debt Bias by : Ms.Oana Luca

Download or read book Financial Sector Debt Bias written by Ms.Oana Luca and published by International Monetary Fund. This book was released on 2016-11-10 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most tax systems create a tax bias toward debt finance. Such debt bias increases leverage and may negatively affect financial stability. This paper models and estimates debt bias in the financial sector, and present novel estimates for investment banks and non-bank financial intermediaries such as finance and insurance companies. We find debt bias to be pervasive, explaining as much as 10 percent of total leverage for regular banks and 20 percent for investment banks, with the effects most pronounced before the global financial crisis. Going forward, debt bias is likely to once again gain prominence as a key driver of leverage decisions, underscoring the importance of policy reform at this juncture.

Global Waves of Debt

Author : M. Ayhan Kose
Publisher : World Bank Publications
ISBN 13 : 1464815453
Total Pages : 403 pages
Book Rating : 4.4/5 (648 download)

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Book Synopsis Global Waves of Debt by : M. Ayhan Kose

Download or read book Global Waves of Debt written by M. Ayhan Kose and published by World Bank Publications. This book was released on 2021-03-03 with total page 403 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

A Firm Lower Bound: Characteristics and Impact of Corporate Minimum Taxation

Author : Aqib Aslam
Publisher : International Monetary Fund
ISBN 13 : 1513561073
Total Pages : 50 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis A Firm Lower Bound: Characteristics and Impact of Corporate Minimum Taxation by : Aqib Aslam

Download or read book A Firm Lower Bound: Characteristics and Impact of Corporate Minimum Taxation written by Aqib Aslam and published by International Monetary Fund. This book was released on 2021-06-08 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the role of minimum taxes and attempts to quantify their impact on economic activity. Minimum taxes can be effective at shoring up the corporate tax base and enhancing the perceived equity of the tax system, potentially motivating broader taxpayer compliance. Where political and administrative constraints prevent reforms to the standard corporate income tax, a minimum tax can help mitigate base erosion from excessive tax incentives and avoidance. Using a new panel dataset that catalogues changes in minimum tax regimes over time around the world, firm-level analysis suggests that the introduction or reform of a minimum tax is associated with an increase in the average effective tax rate of just over 1.5 percentage points with respect to turnover and of around 10 percent with respect to operating income. Minimum taxes based on modified corporate income lead to the largest increases in effective tax rates, followed by those based on assets and turnover.

Key Aspects of Macroprudential Policy - Background Paper

Author : International Monetary Fund. Fiscal Affairs Dept.
Publisher : International Monetary Fund
ISBN 13 : 1498341713
Total Pages : 64 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Key Aspects of Macroprudential Policy - Background Paper by : International Monetary Fund. Fiscal Affairs Dept.

Download or read book Key Aspects of Macroprudential Policy - Background Paper written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2013-10-06 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: The countercyclical capital buffer (CCB) was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks. The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising. Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer). The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy—in good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times.

At A Cost: the Real Effects of Transfer Pricing Regulations

Author : Ruud A. de Mooij
Publisher : International Monetary Fund
ISBN 13 : 1484351479
Total Pages : 36 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis At A Cost: the Real Effects of Transfer Pricing Regulations by : Ruud A. de Mooij

Download or read book At A Cost: the Real Effects of Transfer Pricing Regulations written by Ruud A. de Mooij and published by International Monetary Fund. This book was released on 2018-03-23 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Unilateral adoption of transfer pricing regulations may have a negative impact on real investment by multinational corporations (MNCs). This paper uses a quasi-experimental research design, exploiting unique panel data on domestic and multinational companies in 27 countries during 2006-2014, to find that MNC affiliates reduce their investment by over 11 percent following the introduction of transfer pricing regulations. There is no significant reduction in total investment by the MNC group, suggesting that these investments are most likely shifted to affiliates in other countries. The impact of transfer pricing regulations corresponds to an increase in the ``TPR-adjusted'' corporate tax rate by almost one quarter.

International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots

Author : Sebastian Beer
Publisher : International Monetary Fund
ISBN 13 : 148436399X
Total Pages : 45 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots by : Sebastian Beer

Download or read book International Corporate Tax Avoidance: A Review of the Channels, Magnitudes, and Blind Spots written by Sebastian Beer and published by International Monetary Fund. This book was released on 2018-07-23 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the rapidly growing empirical literature on international tax avoidance by multinational corporations. It surveys evidence on main channels of corporate tax avoidance including transfer mispricing, international debt shifting, treaty shopping, tax deferral and corporate inversions. Moreover, it performs a meta analysis of the extensive literature that estimates the overall size of profit shifting. We find that the literature suggests that, on average, a 1 percentage-point lower corporate tax rate will expand before-tax income by 1 percent—an effect that is larger than reported as the consensus estimate in previous surveys and tends to be increasing over time. The literature on tax avoidance still has several unresolved puzzles and blind spots that require further research.

The Tax Elasticity of Corporate Debt

Author : Ruud A. de Mooij
Publisher : International Monetary Fund
ISBN 13 : 1455252328
Total Pages : 30 pages
Book Rating : 4.4/5 (552 download)

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Book Synopsis The Tax Elasticity of Corporate Debt by : Ruud A. de Mooij

Download or read book The Tax Elasticity of Corporate Debt written by Ruud A. de Mooij and published by International Monetary Fund. This book was released on 2011-04-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although the empirical literature has long struggled to identify the impact of taxes on corporate financial structure, a recent boom in studies offers ample support for the debt bias of taxation. Yet, studies differ considerably in effect size and reveal an equally large variety in methodologies and specifications. This paper sheds light on this variation and assesses the systematic impact on the size of the effects. We find that, typically, a one percentage point higher tax rate increases the debt-asset ratio by between 0.17 and 0.28. Responses are increasing over time, which suggests that debt bias distortions have become more important.

Building Tax Capacity in Developing Countries

Author : Juan Carlos Benitez
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 33 pages
Book Rating : 4.4/5 (2 download)

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Book Synopsis Building Tax Capacity in Developing Countries by : Juan Carlos Benitez

Download or read book Building Tax Capacity in Developing Countries written by Juan Carlos Benitez and published by International Monetary Fund. This book was released on 2023-09-19 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tax capacity—the policy, institutional, and technical capabilities to collect tax revenue—is part of a deeper process of state building that is essential for achieving the sustainable development goals. This Staff Discussion Note shows that developing countries have made some progress in revenue mobilization during the past decades. However, much more is needed. We find that a staggering 9 percentage-point increase in the tax-to-GDP ratio is feasible through a combination of tax system reform and institutional capacity building. Achieving this calls for a holistic and institution-based approach that focuses on improving policy, administration and legal implementation of core taxes. The note offers practical lessons and guidance, based on IMF capacity building experience in this area.

Islamic Finance

Author : Hans Visser
Publisher : Edward Elgar Publishing
ISBN 13 : 1786433508
Total Pages : 297 pages
Book Rating : 4.7/5 (864 download)

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Book Synopsis Islamic Finance by : Hans Visser

Download or read book Islamic Finance written by Hans Visser and published by Edward Elgar Publishing. This book was released on 2019-12-27 with total page 297 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this extensively updated third edition, Hans Visser explores the ideas and concepts that drive and shape Islamic finance. This incisive book reviews the products, institutions and markets offered by Islamic finance in the modern marketplace, offering a critical discussion of the ways in which fiscal and monetary policy can be adapted to Islamic financial institutions. Visser offers new directions for economics and finance students, as well as students of Islamic finance and Islam studies more broadly.

IMF Research Bulletin, Summer 2017

Author : International Monetary Fund. Research Dept.
Publisher : International Monetary Fund
ISBN 13 : 1484315448
Total Pages : 19 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis IMF Research Bulletin, Summer 2017 by : International Monetary Fund. Research Dept.

Download or read book IMF Research Bulletin, Summer 2017 written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2017-08-11 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Summer 2017 issue of the IMF Research Bulletin highlights new research such as recent IMF Working Papers and Staff Discussion Notes. The Research Summaries are “Structural Reform Packages, Sequencing, and the Informal Economy (by Zsuzsa Munkacsi and Magnus Saxegaard) and “A Broken Social Contract, Not High Inequality Led to the Arab Spring” (by Shantayanan Devarajan and Elena Ianchovichina). The Q&A section features “Seven Questions on Fintech” (by Tommaso Mancini-Griffoli). The Bulletin also includes information on recommended titles from IMF Publications and the latest articles from the IMF Economic Review.

At A Cost: The Real Effects of Thin Capitalization Rules

Author : Ruud A. de Mooij
Publisher : International Monetary Fund
ISBN 13 : 1513568558
Total Pages : 17 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis At A Cost: The Real Effects of Thin Capitalization Rules by : Ruud A. de Mooij

Download or read book At A Cost: The Real Effects of Thin Capitalization Rules written by Ruud A. de Mooij and published by International Monetary Fund. This book was released on 2021-02-05 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thin capitalization rules (TCRs) aim to mitigate profit shifting by multinational corporations (MNCs) but, by raising the cost of capital for affected affiliates, can also negatively affect real investment. Exploiting unique panel data on multinational companies in 34 countries during 2006-2014, we estimate that the size of this adverse investment effect can be large, and dependent on the statutory corporate tax rate and the tightness of the safe-haven ratio. Negative investment effects are more pronounced for highly-levered firms for which TCRs are more likely to be binding.

Staff Guidance Note on Macroprudential Policy

Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 1498342620
Total Pages : 45 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Staff Guidance Note on Macroprudential Policy by : International Monetary Fund

Download or read book Staff Guidance Note on Macroprudential Policy written by International Monetary Fund and published by International Monetary Fund. This book was released on 2014-06-11 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This note provides guidance to facilitate the staff’s advice on macroprudential policy in Fund surveillance. It elaborates on the principles set out in the “Key Aspects of Macroprudential Policy,” taking into account the work of international standard setters as well as the evolving country experience with macroprudential policy. The main note is accompanied by supplements offering Detailed Guidance on Instruments and Considerations for Low Income Countries

Mergers, Acquisitions, and Other Restructuring Activities

Author : Donald DePamphilis
Publisher : Academic Press
ISBN 13 : 0128150769
Total Pages : 586 pages
Book Rating : 4.1/5 (281 download)

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Book Synopsis Mergers, Acquisitions, and Other Restructuring Activities by : Donald DePamphilis

Download or read book Mergers, Acquisitions, and Other Restructuring Activities written by Donald DePamphilis and published by Academic Press. This book was released on 2019-09-04 with total page 586 pages. Available in PDF, EPUB and Kindle. Book excerpt: Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions, Tenth Edition, is the most comprehensive and cutting-edge text available on the subject. Supported by recent peer-reviewed academic research, this book provides many recent, notable deals, precedent-setting judicial decisions, government policies and regulations, and trends affecting M&As, as well as takeover strategies and tactics. Today's policies, politics and economics are reflected in the book's 40 case studies, 90% of which involve deals either announced or completed during the last several years. These cases represent friendly, hostile, highly leveraged, and cross-border transactions in ten different industries, involving public and private firms and those experiencing financial distress. Sections discuss an overview of M&As, key regulations, common strategies and tactics, how managers may choose a business strategy from available options, valuation methods and basic financial modeling techniques, the negotiating process, how deal structuring and financing are inextricably linked, how consensus is reached during the bargaining process, the role of financial models in closing the deal and strategic growth options as alternatives to domestic M&As. - Provides a rigorous discussion of the strengths and limitations of financial modeling as applied to M&A and how these models can be applied in various areas - Includes new academic research and updated/revised case studies - Presents updated M&A tactics and strategies, along with court cases and new regulations governing business combinations, valuation methodologies and financing

Current Challenges in Revenue Mobilization - Improving Tax Compliance

Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 1498344895
Total Pages : 81 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Current Challenges in Revenue Mobilization - Improving Tax Compliance by : International Monetary Fund

Download or read book Current Challenges in Revenue Mobilization - Improving Tax Compliance written by International Monetary Fund and published by International Monetary Fund. This book was released on 2015-01-29 with total page 81 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper addresses core challenges that all tax administrations face in dealing with noncompliance—which are now receiving renewed attention. Long a priority in developing countries, assuring strong compliance has acquired greater priority in countries facing intensified revenue needs, and is critical for fairness and statebuilding. Series: Policy Papers