Does taxation on banks mean taxation on bank-dependent borrowers?

We investigate the economic impacts of bank levies on bank-dependent borrowers, exploiting the surprise announcement of a bank tax by the Tokyo metropolitan government on February 7th, 2000 We find that the tax announcement had negative effects on the abnormal return of firms which depended on soon-to-be taxed banks for external funds, Moreover, the adverse economic effects of the bank tax were larger for smaller and more financially distressed firms, suggesting that bank levies are likely to be passed onto bank-dependent firms with limited access to non-bank finance.