Exploiting bank tax changes as shocks--论文代写范文精选

51Due论文代写网精选essay代写范文：“Exploiting bank tax changes as shocks” 无约束公司的行为应该是小型资本供应的问题，如果资本来源不足,不受约束的公司会简单地被替代。另一方面,面临着非弹性供给曲线,因此应该对其他资金来源有所了解。对债务的依赖应该接受冲击，从一个特定的供应来源。这些预测是否盈利,我们解决内生性税率变化，对于银行贷款给企业问题。国有银行税收的变化,影响贷款的税后利润,从而直接影响银行贷款，尽管经济效应的大小是一个实证问题。下面的金融essay代写范文进行阐述。

Abstract 
  The behavior of an unconstrained firm should be 19 unaffected by small shocks to capital supply that do not alter its investment opportunity set: if one source of capital becomes, say, less plentiful, an unconstrained firm can simply substitute towards another. A constrained firm, on the other hand, faces an inelastic supply curve and so should find itself unable to substitute towards other sources of capital when one source of capital becomes scarcer.22 Its reliance on debt should thus be sensitive to shocks to the supply of debt from a particular source. These predictions hold whether or not the firm is profitable, which addresses the main limitation of Test 1. 

  The supply of capital available to a particular firm is obviously endogenous to the firm’s characteristics. We address this endogeneity by exploiting changes in the tax rate that a state imposes on banks lending to firms in the state. For tax purposes, states apportion a bank’s income from lending to their state based on the location of the borrower, rather than the lender. Changes in state bank taxes, by affecting the after-tax profitability of lending, thus directly affect the supply of bank loans available to firms located in the state (though the economic magnitude of the effect is an empirical question, which we address below). 23 As a result, we expect banks to expand lending in states with falling taxes and reduce it in states with rising taxes. To operationalize Test 2, we exploit 88 state-level changes in bank taxes between 1989 and 2011, listed in Appendix B.

  As in the previous section, we first discuss the identifying assumptions and limitations of the test. We then show that bank tax changes affect bank lending, as required for identification, lay out our empirical specifications, use the private-firm sample to show that the test has power to identify financially constrained firms, and finally test if firms classified as constrained in the literature are indeed sensitive to tax-induced variation in the local supply of bank loans. Identifying assumptions and limitations The key identifying assumption of Test 2 is that the tax-induced supply shocks are not confounded by changes in firms’ demand for debt, allowing us to isolate changes in debt holdings that are the direct result of changes in supply. This assumption faces two main potential challenges: states do not change bank taxes in a vacuum and bank tax changes could coincide with the corporate tax changes we analyzed in Test 1. 

  We address each concern in turn. We follow a two-pronged approach to address the non-random nature of bank tax changes. We first ask if observed variation in local conditions causes both states to change bank taxes and firms to change their demand for debt. Table IA.1 in the Internet Appendix relates the probability of a bank tax change to political and economic conditions, focusing on the governor’s political affiliation, the state’s budget balance, bond rating changes, growth, unemployment, unionization, and tax competition with neighboring states. This reveals that states are more likely to cut bank taxes the larger their budget surplus, the higher their taxes relative to their neighbors, and if governed by a Republican; and more likely to increase bank taxes the larger the budget deficit and the lower their taxes relative to their neighbors. None of these factors has any obvious direct link to firms’ demand for debt, mitigating omitted variable concerns. 

  Second, as in Test 1, we remove unobserved changes in local conditions by means of a diff-in-diff approach, using as controls only firms headquartered in states that border a tax-change state. When bank tax increases coincide with corporate tax increases, two things happen: credit supply contracts and demand for credit increases.24 For a constrained firm, the demand increase could partially offset the supply shock, leaving its debt holdings little changed. This would make it look as if the firm were unaffected by the supply shock and hence unconstrained.25 Of the 88 bank tax changes in our sample, 24 are increases that coincided with a corporate tax rise. 

  We show in Table IA.2 in the Internet Appendix that our Test 2 results are robust to excluding these. A more philosophical challenge when exploiting supply shocks to identify financial constraints is how large the shock should ideally be. Too small and the test will have no power. Too large and it will fundamentally change the shape of the capital supply curve for virtually all firms. For instance, if the global financial system were to collapse due to another financial crisis, a large number of previously unconstrained firms would presumably find themselves facing an inelastic supply curve, unable to substitute across different sources of capital. But the aftermath of such a shock would not be particularly informative of the financial constraints faced by such firms in more ordinary times. In other words, a large shock to the financial system would have poor external validity. 

  In practice, changes in state bank taxes tend to be relatively small: over our sample period, increases and cuts average 71 and –52 basis points, respectively. Tax shocks of these magnitudes are unlikely to fundamentally alter the capital supply curves firms face. The greater concern is instead whether the shocks are large enough to induce a significant change in lending behavior. The first three columns in Table 4 aim to answer this question. Using Call Report data from the Federal Reserve, we analyze how changes in a state’s bank tax rate affect the log dollar amount of commercial and industrial (C&I) loans made by banks headquartered there, relative to untreated control banks in adjacent states. We find that a one-percentage-point rise (cut) in state bank tax rates is associated with a highly significant 1.5 to 1.8 percent decrease (increase) in C&I loans made by banks headquartered in the state. These results suggest that changes in state bank taxes induce a significant change in bank lending behavior, a necessary requirement for our identification strategy to be valid. This is true even though the loan-supply variable is measured with error (as the data capture loans made by banks headquartered in a state, rather than loans made to borrowers located in the state).26 Even so, bank tax changes turn out to be a strong instrument for changes in local loan supply: depending on specification, the F-tests clear Stock and Staiger’s (1997) critical value of 10.

  Power 
  To establish whether Test 2 has enough power to identify financial constraints, we examine private firms’ sensitivity of debt holdings to changes in bank taxes, as an instrument for changes in bank credit supply.27 To the extent that private firms, particularly small ones, are likely to face an inelastic debt supply curve and thus are unable to substitute across sources of credit, we expect their debt holdings to be sensitive to instrumented shifts in the supply of a particular source of credit, namely bank loans. By contrast, we expect no such sensitivity for public firms to the extent that the average public firm is unconstrained. The results, shown in Table 4, are consistent with this prediction. In column 4, changes in state bank taxes have no effect – either economically or statistically – on public firms’ leverage. Private firms, on the other hand, respond significantly to shocks to bank credit supply. 

  A onepercentage-point increase (cut) in bank taxes in column 5 is associated with a 0.4 percentage point reduction (increase) in leverage (p=0.004). Column 6 shows that this effect is driven by smaller private firms, particularly those in the two smallest size quartiles; larger private firms behave more like the average public firm in column 4. Columns 7 through 9 model log long-term debt instead, with qualitatively similar, albeit somewhat noisier, results. The results in Table 4 suggest that changes in a state’s bank taxes induce significant shifts in the debt supply curve faced by firms in that state and that these changes can be exploited to identify variation in financial constraints across firms. As before, the goal of this power test is not to conclusively prove that (small) private firms are financially constrained; sensitivity to changes in the supply of bank loans is only a sufficient, not a necessary condition.28 Rather, the goal is to alleviate the concern that the effect of bank tax changes on firms’ debt holdings is so small that Test 2 cannot detect it, causing us to classify any subsample of firms as unconstrained.（essay代写)

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