Work detail

Banks in Tax Havens: Evidence from the 2013-2019 Country-by-Country Reporting Data

Author: Bc. Petr Moravec
Year: 2020 - summer
Leaders: doc. Petr Janský Ph.D.
Work type: Bachelors
Language: English
Pages: 75
Awards and prizes:
Abstract: In this thesis I use gravity model to analyze the geography of banking activity. I utilize
the Country-by-Country Reporting data published by 45 Largest European banks. In
contrast to recent paper from 2017 which focuses on year 2015, I use the largest dataset
so far available for years from 2013 to 2019. My work is focused on turnover reported
in partner countries of European banks and provides empirical evidence that banks
report substantially higher turnover in tax havens compared to the rest of countries. I
answer the research question of what is the impact of tax havens on banking activity
and what properties of tax havens drive the turnover. The main result of this thesis
is that turnover in tax havens is higher by 103% compared to non-havens. Other
auxiliary results indicate what are the specifc factors that drive the activity of banks
in tax havens. I decompose the efect of tax havens into three factors - corporate
tax rate, secrecy and regulation of banking. In addition, I add additional variable
that controls for quality of governance. I fnd that turnover is positively infuenced
by countries with low statutory tax rates, while higher-tax countries do not seem to
have any efect. Similar to this, based on empirical evidence, regulations, secrecy and
governance have non-linear relationship with reported turnover. Specifcally, countries
with high secrecy (resp. low transparency) often recorded lower turnover and at the
same time, there was not enough evidence to say that low-secrecy countries have any
efect on turnover. In case of quality of governance, poorly governed countries were
found to have negative impact on turnover while well governed countries seemed to
have no impact. And fnally, banks were found to be discouraged from countries with
both high and low banking regulation measures. My fndings suggest that tax havens
play an important role in business allocation of European banks.


Česká Spořitelna


Patria Finance