In the absence of financial frictions, the purpose of thin capitalization rules is to limit multinational firms’ possibilities of engaging in tax planning via debt shifting. This paper analyzes the effects of thin capitalization rules in the case where firms have limited access to external...

The financial crisis has stimulated the debate on the taxation of the financial sector. The focus is on the bank levy and financial transaction tax, whereas corporate income tax attracts less attention in the public debate. Accordingly, this study analyses the contribution of the financial...

We examine the pervasive view that "equity is expensive" which leads to claims that high capital requirements are costly for society and would affect credit markets adversely. We find that arguments made to support this view are fallacious, irrelevant to the policy debate by confusing private...