This paper reviews the literature on deferred taxation in the banking sector, with a particular focus on Deferred Tax Assets (DTAs) and Deferred Tax Credits (DTCs). Drawing on research in accounting for income taxes (AFIT), transparency and disclosure, banking regulation, and fiscal policy, it synthesizes theoretical and empirical insights into an integrated perspective. The literature highlights the significance of DTAs, especially those arising from temporary book-tax differences through loan loss provisions, for banks’ regulatory capital. The conversion of DTAs into DTCs, as exemplified by the Greek case, provides short-term solvency relief but generates long-term fiscal risks and reinforces the sovereign-bank nexus. By linking AFIT theory with the ongoing debate on DTAs and DTCs, the paper develops a unified conceptual framework, identifies research gaps, and underscores the broader fiscal implications.
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