The effects of bank levies post-financial crisis in Eastern Europe

This article quantifies the effects of bank levies after the financial crisis for Central and Eastern European countries (Hungary, Latvia, Romania, Slovakia and Slovenia) from a pooled perspective and country-specific perspective. The results of the analysis emphasise the importance of these bank levies as regulatory tools and the negative externalities they have on other relevant outcomes for the economy. In particular, while these taxes were mostly designed to increase the governments' budgets, the additional revenues were marginal. They also had a significant negative impact on credit (especially on a short run) and affected foreign direct investment (FDI). The country-level results emphasise the heterogeneity of the impacts of these taxes on the analysed outcome, a heterogeneity that was driven by the way these levies were implemented.