Banks defy gravity in tax havens

Vincent Bouvatier (), Gunther Capelle-Blancard () and Anne-Laure Delatte ()
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Vincent Bouvatier: ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel
Gunther Capelle-Blancard: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Anne-Laure Delatte: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: Abstract This article examines the international activity of banks. We use a gravity framework and country-by-country reports (CbCR) to predict the turnover of European Union (EU) banks worldwide, including jurisdictions usually considered tax havens. Our results show that: (1) about half of the activity of EU banks in tax havens, which accounts for 17% of their global activity, is not explained by standard gravity factors; (2) abnormal activity is concentrated in only a few tax havens (Luxembourg, Hong Kong, and Singapore); and (3) abnormal activity has been stable since the introduction of CbCR.

Date: 2025-07-01
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Published in Oxford Economic Papers, 2025, 77 (3), pp.885-904. ⟨10.1093/oep/gpaf003⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-05242296

DOI: 10.1093/oep/gpaf003

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