Do tax benefits conferred to Sub-S banks affect their deposit or loan rates?

Depken, Craig A.; Hollans, Harris; Swidler, Steve

doi:10.1016/j.frl.2010.09.002

Cited by 12 publications

(16 citation statements)

References 3 publications

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“…These results indicate that the tax benefit is not passed on to the borrowers by Subchapter S banks in the form of lower loan rates or to the depositors in the form of higher deposit rates. Our results confirm the findings of Depken, Hollans, and Swidler (2010), who find no significant difference in the loan and deposit rates of Subchapter S banks compared to non-Subchapter S banks.…”

Section: Subchapter S In Year (+1supporting

confidence: 91%

“…They specifically compare the characteristics of the bank that adopt Subchapter S status with the banks that do not adopt this status and find that banks that adopt Subchapter S status have higher dividend payout rates, higher profit growth, lower capital, and rely more on core deposits. Depken, Hollans, and Swidler (2010) investigate if Subchapter S banks have shared the portion of the tax benefit with customers in the form of lower loan rates or higher deposit rates as compared to C banks. They compare the rates for individual products for the Subchapter S banks and C banks by using the second quarter data for the year 2008 and find that Subchapter-S deposit (loan) rates are equal to or lower (higher) than similar C corporation bank rates.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Our study extends their work beyond mutual thrifts and credit unions as we compare member owned credit unions with privately owned Subchapter S banks. Depken, Hollans, and Swidler (2010) compare the rates for individual products for the Subchapter S banks, credit unions and C banks by using the second quarter data for the year 2008 and find that Subchapter-S deposit (loan) rates are equal to or lower (higher) than similar C corporation bank rates. They also find that that credit unions offer higher deposit rates on certain products but overall the results are inconclusive.…”

mentioning

confidence: 99%

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Essays on the Effect of Tax Exemption on Competitiveness, Performance and Portfolio Risk of Credit Unions and Subchapter S Banks

Jain¹

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Section: Subchapter S In Year (+1supporting

confidence: 91%

Section: Literature Reviewmentioning

confidence: 99%

mentioning

confidence: 99%

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Essays on the Effect of Tax Exemption on Competitiveness, Performance and Portfolio Risk of Credit Unions and Subchapter S Banks

Jain¹

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“…Studies of differences between Subchapter S corporations (hence Sub-S banks) and C corporation banks tend to focus on the tax advantages of Sub-S status (Depken, Hollans, and Swidler 2010) and the superior performance of Sub-S banks (Cyree, Hein, and Koch 2010). While tax advantages are important, we instead focus on the behavioural implication of the Sub-S limitation to 100 shareholders and hypothesize that Sub-S banks will grow more slowly than their C corporation peers in terms of equity and, as a consequence of capital requirements, assets.…”

Section: Introductionmentioning

confidence: 99%

Equity and asset growth among Subchapter S banks

Kashian

Cummings

Westort

2016

Applied Economics Letters

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Since 2004, commercial banks in the United States have been allowed to elect Subchapter S (hence Sub-S) status with up to 100 shareholders. That limitation may promote more effective monitoring of bank managers by shareholders which can, in turn, explain previous findings of superior performance among Sub-S banks. The present research focuses on the possibility that the shareholder limitation also constrains opportunities for bank growth, or a slow growth hypothesis for Sub-S banks. Using a differences-in-differences regression approach for a sample of community banks (i.e., less than $1b in assets) from 2004 to 2014, and controlling for initial assets and urban location, it is found that annual growth in real assets and equity was significantly higher among banks that never held Sub-S status than for banks that always held Sub-S status, and that banks switching to Sub-S later grew significantly faster than those that always held Sub-S status. Fixed effects regressions show that switching to Sub-S status significantly reduced equity growth, with asset growth significantly reduced after 2008. In conjunction with earlier findings, the results suggest that the availability of Sub-S status helped to protect and strengthen community banks across a time period including substantial financial turmoil.

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“…There are literally various works devoted on the relationship between bank deposit and loans. Depken II et al (2010) for instance performed and empirical investigation and reported that Sub-S deposit (loan) rates are equal to or lower (higher) than similar C corporation bank rates and therefore there was a little evidence of any tax benefits accruing to Sub-S bank clients. Bushman and Williams (2012) estimated two methods of the forward-looking orientation reflected in discretionary loan provisioning practices within a country.…”

Section: Introductionmentioning

confidence: 99%

Investigating on effects of different granting loans on bank deposits

Ebrahimi¹,

Nazari²

2013

msl

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This paper investigates the relationship between different granting loans and bank deposits in some governmental banks in province of Semnan, Iran. For the proposed study of this paper, equipment of resources includes cash account, zero-interest account, short term investment and long term investment and these are considered as dependent variables. There are also seven types of granting loans devoted to customers, which are partnership loans, zero-interest loans, civic participation, contract quantity loans, future contract loans, rent-purchase loans and installment sales loans. The study considers the financial information of 171 governmental banks located in province of Semnan, Iran over the period 2006-2011. The results of our study indicate that five variables maintain positive impact on dependent variable. The highest impact belongs to Partnership loans (0.34), followed by Sales loans (0.24), contract quantity loans (0.21) and Zero-interest loans (0.16) and Future contract loans (0.14) come in the last position. The study also uses Freedman test to rank dependent factors and the results indicate that shortterm investment is number one priority followed by long term investment and the other two options including zero-interest and cash accounts are in lower priority.

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Do tax benefits conferred to Sub-S banks affect their deposit or loan rates?

Cited by 12 publications

References 3 publications

Essays on the Effect of Tax Exemption on Competitiveness, Performance and Portfolio Risk of Credit Unions and Subchapter S Banks

Essays on the Effect of Tax Exemption on Competitiveness, Performance and Portfolio Risk of Credit Unions and Subchapter S Banks

Equity and asset growth among Subchapter S banks

Investigating on effects of different granting loans on bank deposits

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