Work detail

The Financial Secrecy Index: An Information Theory Approach

Author: Mgr. Lukáš Galuszka
Year: 2016 - summer
Leaders: doc. Petr Janský Ph.D.
Consultants:
Work type: Finance, Financial Markets and Banking
Masters
Language: English
Pages: 79
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/124425/
Abstract: The objective of this thesis is to evaluate alternative weighting systems to determine if they have the
potential to improve the current weighting system of the Financial Secrecy Index (FSI). The FSI, a
measure of countries' contributions to global financial secrecy, currently weights its 15 qualitative
components equally. A web-based opinion survey conducted in January and February 2016 among
academics, journalists, experts and other persons familiar with FSI serves as the baseline for assessing
new weights. The new weights derived from the survey results are not significantly different from the
equal weights in 14 out of 15 components. The survey results suggest that widely held opinion is
consistent with equal weight assumptions. Statistical model selection criteria from information theory
that penalize model complexity prefer in majority of cases the simple model over the more complex one
even though more complex model provides better goodness-of-fit statistics. Alternative methods and
analysis such as Principal Components Analysis is performed and discussed. The present work finds
that, statistically, the weights should not diverge from the equal weighting system in use currently.
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