01881cas a2200277 a 4500 AALejournalIMF018893 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484389102 1018-5941 BD-DhAAL BD-DhAAL Dallari, Pietro. Pouring Oil on Fire : Interest Deductibility and Corporate Debt / Pietro Dallari, Nicolas End, Fedor Miryugin, Alexander Tieman. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (42 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper investigates the role of tax incentives towards debt finance in the buildup of leverage in the nonfinancial corporate (NFC) sector, using a large firm-level dataset. We find that so-called debt bias is a significant driver of leverage, for both small and medium-sized enterprises and larger firms, with its effect accounting for about a quarter of leverage. The strength of this effect differs with firm size, the availability of collateral, income and income volatility, cash flow, and capital intensity. We conclude that leveling the playing field between debt and equity finance through tax policy reform would decrease NFC leverage, reducing economic risks posited by leverage. Mode of access: Internet End, Nicolas. Miryugin, Fedor. Tieman, Alexander. IMF Working Papers; Working Paper ; No. 2018/257 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/257/001.2018.issue-257-en.xml IMF e-Library