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<p>This paper examines whether the Pillar&#xa0;Two Global Minimum Tax reduces bank profitability and regulatory capital, and for which banks the effects are strongest. We use a quarterly exposure-based difference-in-differences design around 2024Q1, where treatment intensity is defined by pre-2024 low-tax exposure among in-scope banks. The analysis uses a quarterly bank-level panel for 2014–2024 and exploits predetermined cross-sectional heterogeneity in low-tax exposure while controlling for bank and quarter fixed effects. The headline estimates show that post-2024 profitability and capital buffers decline more for high-exposure banks: profit after tax falls by about 2.2 basis points of assets per quarter and Tier&#xa0;1 buffers by about 0.09 percentage points in the baseline specification. Higher low-tax exposure is not interpreted as vulnerability per se. The downside channel is concentrated where high pre-reform low-tax exposure coincides with limited initial capital headroom: event-study, placebo, matched-sample, and split-sample evidence all point to larger post-2024 capital-buffer compression for thin-buffer banks. Overall, the results indicate modest average effects but meaningful tail risk for banks that combine high minimum-tax exposure with thin initial capital buffers.</p>

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Bank capital and the minimum corporate tax

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年6月17日

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  • Alessandro Chiari

摘要

This paper examines whether the Pillar Two Global Minimum Tax reduces bank profitability and regulatory capital, and for which banks the effects are strongest. We use a quarterly exposure-based difference-in-differences design around 2024Q1, where treatment intensity is defined by pre-2024 low-tax exposure among in-scope banks. The analysis uses a quarterly bank-level panel for 2014–2024 and exploits predetermined cross-sectional heterogeneity in low-tax exposure while controlling for bank and quarter fixed effects. The headline estimates show that post-2024 profitability and capital buffers decline more for high-exposure banks: profit after tax falls by about 2.2 basis points of assets per quarter and Tier 1 buffers by about 0.09 percentage points in the baseline specification. Higher low-tax exposure is not interpreted as vulnerability per se. The downside channel is concentrated where high pre-reform low-tax exposure coincides with limited initial capital headroom: event-study, placebo, matched-sample, and split-sample evidence all point to larger post-2024 capital-buffer compression for thin-buffer banks. Overall, the results indicate modest average effects but meaningful tail risk for banks that combine high minimum-tax exposure with thin initial capital buffers.