Title: Spatial patterns and local banks' tax behaviour: an empirical analysis in Italy

Authors: Carmelo Algeri; Antonio Fabio Forgione; Raffaele Staglianò

Addresses: Department of Management, University of Bologna, Bologna, Italy ' Department of Economics, University of Messina, Via dei Verdi, 75, Messina 98122, Italy ' Department of Economics, University of Messina, Via dei Verdi, 75, Messina 98122, Italy

Abstract: In this study, we consider the spatial dependence effects in an empirical model measuring local banks' tax behaviour, assessing the interdependence between geographical units and the related spillover effects. Our results strongly support the existence of co-movements among banks' tax avoidance policies. The findings rely on the assumption that local banks compete mainly among themselves, even on the funding side, and therefore unfair tax behaviour can trigger loss of customers, which limits banks' tax avoidance activities. However, neighbours' adoption of opportunistic tax strategies can remove the competition hurdle in pursuing tax avoidance policies. Our findings point out a virtuous effect of customer pressure, which could take effect in other areas of bank management.

Keywords: tax behaviour; spatial dependence; small cooperative banks; Lerner index; Italy.

DOI: 10.1504/IJBAAF.2022.126156

International Journal of Banking, Accounting and Finance, 2022 Vol.13 No.2, pp.217 - 240

Received: 12 Jan 2021
Accepted: 12 May 2022
Published online: 13 Oct 2022 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article