ISSN:

2658-0845

eISSN:

2658-2430

Ministry of Education and Science:

100

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How to Design a Bank Levy: The Effect of a Levy Scheme on Bank Performance and its Activities

Aneta Hryckiewicz-Gontarczyk; Karolina Puławska

2022

( 3 )

DOI: 10.7206/cemj.2658-0845.85

https:/doi.org/10.7206/cemj.2658-0845.85

Abstract

Purpose: One of the regulatory responses to the 2008 financial crisis was to internalize the costs related to banks’ distress by introducing bank levies. More than 23 European banking sectors have been confronted with the new levy regime imposing the additional tax on banks’ balance sheet.

Methodology: This study analyzes the effect of the levy introduction on banks’ profitability, credit activity, and on their business models. More importantly, we confront two different levy regimes – one imposed on banks’ assets and the other on liabilities – to assess their differential impact. A generalized least squares regression with a random effect is performed on a data sample of Hungarian and German credit institutions from 2005 to 2015.

Results: The results show that levy introduction weakened banking sectors in terms of their profitability as well as their lending activity. Even though banks try to compensate for the cost of the levies by passing some of the costs on to the customers and restructuring their operations to limit the tax burden, we find that these activities are not sufficient to offset the whole tax burden. We also note that while the asset levy has a more severe effect on banks’ profits, the liability levy severely affects banks’ lending due to lower interest margin resulting from higher cost of funding.

Findings: Our research results provide important conclusions for regulators, especially during turbulent periods such as the COVID-19 pandemic to strengthen the banking sectors by considering the levy suspension.

Downloads869

Reducing the Tax Burden in Ukraine: Changing Priorities

Tetiana Paientko; Valeriy Oparin

2020

( 3 )

DOI: 10.7206/cemj.2658-0845.28

https:/doi.org/10.7206/cemj.2658-0845.28

Abstract

Purpose: To determine the impact of changes in tax burden in Ukraine on the country’s economic freedom.

Methodology: The study applies qualitative methods for historical analysis, periodization of reforms, and classification of their key priorities and influences. Quantitative methods are applied to compare tax burden (tax-to-GDP ratio) in Ukraine and OECD countries. The overall success and failure of tax reforms was measured by the index of economic freedom, including its component, the index of tax burden (fiscal freedom). The first hypothesis suggested that a reduction in tax burden positively impacted the level of economic freedom in Ukraine; the second hypothesis stated that a reduction in tax burden positively affected the fiscal freedom of Ukraine. Regressions in average tax burden and the index of economic freedom, including the index of tax burden, were built in R software.

Findings: Regression analysis did not confirm the first hypothesis. The second hypothesis was confirmed. Reduced tax burden does not affect the level of economic freedom of Ukraine. This is explained by the slow progress of institutional reforms in Ukraine. The reduction of tax burden has a significant positive impact on the level of fiscal freedom.

Practical Implications: The results obtained have practical relevance for the elaboration of fiscal policies in developing countries, in accordance with the country’s economic and political development priorities.

Research Limitations/Implications: Future research will include a more in-depth comparative
analysis of tax reforms in Ukraine, focusing on the key taxes.

Downloads1535

Tax System in Poland – Progressive or Regressive?

Jacek Tomkiewicz

2016

( 2 )

DOI: 10.7206/jmba.ce.2450-7814.172

https:/doi.org/10.7206/jmba.ce.2450-7814.172

Abstract

Purpose: To analyse the impact of the Polish fiscal regime on the general revenue of the country, and specifically to establish whether the cumulative tax burden borne by Polish households is progressive or regressive.

Methodology: On the basis of Eurostat and OECD data, the author has analysed fiscal regimes in EU Member States and in OECD countries. The tax burden of households within different income groups has also been examined pursuant to applicable fiscal laws and data pertaining to the revenue and expenditure of households published by the Central Statistical Office (CSO).

Conclusions: The fiscal regime in Poland is regressive; that is, the relative fiscal burden decreases as the taxpayer’s income increases.
Research Implications: The article contributes to the on-going discussion on social cohesion, in particular with respect to economic policy instruments aimed at the redistribution of income within the economy.

Originality: The author presents an analysis of data pertaining to fiscal policies in EU Member States and OECD countries and assesses the impact of the legal environment (fiscal regime and social security system) in Poland on income distribution within the economy. The impact of the total tax burden (direct and indirect taxes, social security contributions) on the economic situation of households from different income groups has been calculated using an original formula.

Downloads656

Analysis of Ineffectiveness Arising in “Investor-government” Relations

Dmytro, B. Sokolovskyi; Olena , V. Sokolovska

2015

( 3 )

DOI: 10.7206/mba.ce.2084-3356.150

https:/doi.org/10.7206/mba.ce.2084-3356.150

Abstract

behavior of investors and government in the process of decision-making related to financing designed
to reduce risks in investment activity.

Methodology: Considering the interdependent type (nature) of interactions between related parties,
game theory tools were used to model such interactions. Much attention was directed to search for
parameters of interaction leading to certain Nash equilibriums in pure strategies. The formal results
obtained with the model were verified by statistical analysis.
Findings: Analysis showed that the rational behavior of related parties can lead to unexpected
results. Powerful investors will aim to work in socially-oriented economies, whereas primarily
small investors will operate in most liberal economies with a minimum tax burden but with a higher
level of risk. As for governments’ behaviors, the images are the same: small economies tend to
liberalize their tax systems and to secure investment faster than powerful ones. Empirical verification
based on statistical data of groups of countries generally confirmed the conclusions. These
formal and logical conclusions were from statistical analysis of 124 countries divided into 5 groups:
OECD countries, post-socialist countries, Latin American countries, APAC countries and ACP
countries. Provided that the more powerful ones are covered economies, there was stronger interdependence
between the size of economies and tax burden and also between total investment and
tax burden, where this dependence is positive.

Originality: The results obtained used Nash equilibriums in pure strategies as models of behavioral
norms to define behaviors of related parties and also to explain assumptions concerning the
behaviors of investors and government.

Downloads452

Central European Management Journal

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