nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2016‒11‒13
three papers chosen by

  1. The Impact of regulatory capital regulation on balance sheet structure, intermediation cost and growth By Pierre-Charles Pradier; Hamza El Khalloufi
  2. Standardized Measurement Approach for Operational risk: Pros and Cons By Gareth Peters; Pavel Shevchenko; Bertrand Hassani; Ariane Chapelle
  3. A Note on the Effects of Income-Splitting under Dual Income Tax By Seppo Kari; Olli Ropponen

  1. By: Pierre-Charles Pradier (Centre d'Economie de la Sorbonne & LabEx RéFi); Hamza El Khalloufi (PRISM & LabEx RéFi)
    Abstract: As Europe is subject to a protracted recession, it should be asked whether the reform of the financial sector is not costly in terms of potential growth. Our analysis shows that the negative effect of the Basel III package excepted by the pre-QE studies are almost annihilated today. The recession must then have other causes: falling corporate lending volumes resulted from falling demand in the aftermath of the financial crisis, but this is longer the case. The EU is trying to incentivize corporate lending, via forward guidance as well as ‘supporting factor’ cutting down the Basel capital requirements. The macroeconomic theorists are trying to account for future success of monetary policy around zero nominal interest rate via the risk-taking channel. All these clever initiatives failed to deliver. As a consequence, we might infer that banks are simply not taking any risks: rather than appealing to risk aversion, we would like to argue that the banks seem especially embarrassed by future regulatory developments, which appear remote and uncertain. The binding constraint for corporate lending and growth in the EU is then plausibly a combination of banks' expectations of future regulation and strong uncertainty aversion. While we offer some mitigation prospects, we hope that the theoretical developments of the recent years will quickly yield both theoretical advances and practical results
    Keywords: banking, financial regulation
    JEL: G22 G28 G01
    Date: 2016–09
  2. By: Gareth Peters (Department of Statistical Sciences - University College of London [London]); Pavel Shevchenko (Department of Statistical Sciences - University College of London [London], CSIRO - Commonwealth Scientific and Industrial Research Organisation - CSIRO - Commonwealth Scientific and Industrial Research Organisation [Canberra]); Bertrand Hassani (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Ariane Chapelle (Department of Computer Science - University College of London [London])
    Abstract: This response has been put together by academics and in total independence of any corporate or individual interests. Our results are solely driven by scientific analysis and presented in the interest of the financial and business community, both the regulated entities and the regulators alike. The response addresses the Standardised Measurement Approach (SMA) proposed in the Basel Committee for Banking Supervision consultative document "Standardised Measurement Approach for operational risk" (issued in March 2016 for comments by 3 June 2016) [BCBSd355,2016]; and closely related Operational risk Capital-at-Risk (OpCar) model proposed in the Committee consultative document "Operational risk - revisions to the simpler approaches" October 2014 [BCBSd291].
    Keywords: Basel Committee for Banking Supervision regulations,advanced measurement approach,operational risk,standardised measurement approach,loss distribution approach
    Date: 2016–06
  3. By: Seppo Kari; Olli Ropponen
    Abstract: This paper reconsiders the income-splitting rules of the Nordic dual income tax system, introduced to address the incentives to shift income between labor and capital income tax bases. These rules impute a return on equity, categorized as capital income, and tax the residual roughly at the rates levied on labor income. There are broadly two ways to calculate the capital income part. One is to impute a return on the acquisition price of shares (Sweden and Norway) and the second is to calculate a return on the net book assets of the firm (Finland). This paper addresses the economic effects of the net asset-based splitting method, which has not been studied thoroughly in earlier literature. Using a dynamic investment model, we show that at appropriately chosen parameter values the net assets-based split exhibits the key properties of the reportedly neutral ACE corporation tax. Our analysis, therefore, implies that the incentive problems of Finnish taxation of closely held companies, found in some earlier studies, derive from wrong parameter values rather than from wrong principles.
    Keywords: dual income tax, income-splitting, neutral taxation, investment, depreciation allowances
    JEL: H32 H24 H21 H25
    Date: 2016–10–14

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