Grey Zones in Global Finance: the distorted Geography of Cross-Border Investments

Anne-Laure Delatte, Vincent Vicard and Guillin, Amélie

No 14756, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Complex cross-border financial structures inflate measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40\% of global assets (FDI, portfolio equity and debt) are `abnormal' -- unexplained -- and operated through tax havens. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.

Keywords: Cross-border investments; Capital openness; Tax havens; Gravity equation (search for similar items in EconPapers)
JEL-codes: F23 G21 H22 H32 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-ifn and nep-int
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Related works:
Journal Article: Grey zones in global finance: The distorted geography of cross-border investments (2022)
Working Paper: Grey zones in global finance: The distorted geography of cross-border investments (2022)
Working Paper: Grey ZOnes in Global Finance: the Distorted Geography of Cross Border Investments (2021)
Working Paper: Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments (2020)
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