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. |
| Consultants: | |
| Work type: | Bachelors |
| Language: | English |
| Pages: | 75 |
| Awards and prizes: | |
| Link: | https://is.cuni.cz/webapps/zzp/detail/202458/ |
| 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. |
