Reserve Requirementson Bank Deposits a+L558s Implicit Taxes: A Case Study of Italy

February 1, 1992

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Lazaros E. Molho Reserve Requirementson Bank Deposits a+L558s Implicit Taxes: A Case Study of Italy, (USA: International Monetary Fund, 1992) accessed December 30, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the quasi-fiscal effects of Italy’s relatively high bank reserve requirements, against the background of growing pressure to align them with those of other EC countries. The paper develops an integrated accounting framework for the measurement of implicit and explicit taxes on the banking system and applies that framework to the Italian experience during the 1980s. Pointing to a lack of transparency in the yield and incidence of the reserve requirement tax, the results reinforce the case for lowering the attendant burden on the Italian banking system. It is estimated that that burden could be halved at a cost to the budget of no more than 0.2 percent of GDP.

Subject: Bank deposits, Bank levy, Banking, Deposit rates, Financial institutions, Financial services, Loans, Monetary policy, Reserve requirements, Taxes

Keywords: Bank deposits, Bank equity, Bank levy, Bank reserve requirements, Bank set, Credit policy, Deposit rates, Interest rate, Loans, Optimization problem, Rate function, Rate of return, Requirements in Italy, Reservable deposit base, Reserve ratio, Reserve requirements, Reserve requirements, Supply function, Tax burden, Tax rate, Withholding tax, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1992/018
Stock No:

WPIEA0181992
ISBN:

9781451843583
ISSN:

1018-5941

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