Template-Type: ReDIF-Paper 1.0
Author-Name: Bernini Federico Gastón
Author-Name-First: Federico Gastón
Author-Name-Last: Bernini
Author-Name: Donaldson Paula
Author-Name-First: Paula
Author-Name-Last: Donaldson
Author-Name: Garcia-Lembergman Ezequiel
Author-Name-First: Ezequiel
Author-Name-Last: Garcia-Lembergman
Author-Name: Juárez Leticia
Author-Name-First: Leticia
Author-Name-Last: Juárez
Title: The Financial Channel of Tax Amnesty Policies
Abstract: In the past two decades, over 30 countries have implemented tax amnesty policies to encourage the declaration and repatriation of hidden assets, with the goal of increasing government tax revenues. While previous literature has primarily focused on the fiscal impact, this paper studies a new channel: the potential expansion of the financial sector resulting from these policies. We examine the macroeconomic effects of Argentina's 2016 Tax Amnesty, one of the largest programs for disclosing hidden assets, through the financial channel. This amnesty led to an influx of  savings into domestic banks, primarily in dollars, equivalent to 1.4% of GDP. We leverage the heterogeneous exposure of banks and firms to this amnesty-induced financial shock to identify bank responses and the spillovers to firms in the private sector. We find that more exposed banks significantly increased their lending compared to less exposed ones. Firms connected to banks with higher exposure experienced increased borrowing, along with a boost in imports, exports and employment. Our findings reveal that tax amnesty policies can stimulate economic growth by expanding the financial sector, demonstrating effects beyond their direct fiscal impact. These results are particularly relevant for countries with underdeveloped financial systems, where the potential for growth through improved access to capital is significant.
Length:  45 pages
Creation-Date:  2024-11
File-URL: https://aaep.org.ar/works/works2024/4710.pdf
File-Format: Application/pdf
Number: 4710
Classification-JEL: H0, L5
Handle: RePEc:aep:anales:4710