Negative interest rates and corporate tax behavior in banks

Year: 2025

Type: Journal Publication

Journal: Journal of Accounting and Public Policy

Using a sample of OECD domestic banks and a difference-in-difference research design, we examine the impact of Negative Interest Rate (NIR) regimes on corporate tax behavior. We document that the introduction of NIRs is associated with a 2.3 to 2.6 percentage point decrease in effective tax rates. The effect of NIRs is more pronounced in banks with lower distance to default, and in countries with lower tax enforcement or lower trust in the government. Collectively, our results suggest that the increased costs associated with NIRs are borne by commercial banks which lead to an increase in their respective tax planning.

Publication Information

TRR 266 researchers

Yuchen Wu Zhejiang University of Finance and Economics

External researchers

Alexander Edwards

Michael Marin

Volume Number

DOI

DOI Link

To cite this article

Edwards, A., Marin, M., & Wu, Y. (2025). Negative interest rates and corporate tax behavior in banks. Journal of Accounting and Public Policy, 53, https://doi.org/10.1016/j.jaccpubpol.2025.107337.

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, Goethe University Frankfurt, University of Cologne, Leibniz University Hannover and TU Darmstadt who share the same research agenda.