Bank Levy in Europe

Abstract

Risk-taking by financial institutions is widely regarded as the one of the causes of the financial crisis. To reduce the probability of crises and internalize the costs of financial institution distress, policymakers have introduced bank levy. However, these regulations are different in all countries. Our paper contributes to a specific strand of literature. The role of regulations in monitoring risk lies in the intervention of, for example, the tax policy. The problem lies in identifying regulatory instruments or a combination of instruments that would be most effective in reducing risk and assessing how effectively they can be applied. Our paper may be of interest to a wide range of researchers as it is call for more research on effect on bank levy introduction on risk-taking by financial institutions in Europe. First of all, we present the significance of the research on bank levy for the theory and economic practise, then we present the models of taxation of banking sector and we propose directions of future research.