Working Paper (2013 - 01) The utility tax to curb leverage off-balance sheet banking
IFRS accounting standards were included in the balance sheets of banks most of derivative financial instruments that we consider here under the term "off-balance" the price of a certain invisibility of their "leverage." We describe activity of banks and investment and show that these derivatives are a function of risk intermediation in the economy where banks "are" not this risk assessment, unlike the traditional banking business "transformation ". If one examines the recent crisis and its origins bank, and if you want to consider a regulation or a tax that would limit the risk of recurrence, one is led to understand what is the value and articulation of these two functions.
To this end, we describe the bank as a source of "growth of the possible." Such a source, like any innovation is synonymous with risk. The "off
balance sheet "bank appears in this context as a leverage limitless natural. We then study that could be adapted to taxations three different objectives: capture rents and correct, mitigate systemic risk, control "growth of the possible."
Particular, it appears that a tax on financial transactions is quite appropriate to curb the use of complex derivatives when they are included in the tax base, which is the case in the European Directive but is not for the tax introduced in France in 2012. Similarly, considering a plate measuring positions on the commitments associated with these products in the balance sheet of banks, seems appropriate. It opposes a certain way, to a plate as regulatory capital which measures aggregate risk and not a sum of commitments. Especially since the incentive to reduce the aggregate risk by financial innovation can be counterproductive. Thus, the basis of economic capital, retained today for the "systemic risk" should be considered relevant to limit financial risk or actually a form of systemic risk, but it requires an additional control to ensure the overall function of banks' increased possible. " It should not be condemned as such, since this is an essential source of value for an economy, but as the "production function" of banks has no real returns to scale Ultimately, it is probably necessary to develop a device which enables the control simply.
- Keywords : transformation, mediation, risk transfer, taxation, off-balance sheet value of a contract.
- Authors : Jean-Paul Nicolai, Alain Trannoy
- No. 2013-01, February 2013