Exploring flows to tax havens through means of a gravity model: evidence from Italy

Alessia Cassetta (), Claudio Pauselli (), Lucia Rizzica and Marco Tonello
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Alessia Cassetta: Bank of Italy
Claudio Pauselli: Bank of Italy

No 236, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We exploit a gravity model to study the main determinants of cross-border financial flows and to identify those flows that appear to be abnormally above the predicted value. Our data include all Italian cross-border bank transfers that took place between 2007 and 2010. We find that, other things being equal, financial flows to risky destinations are 36 per cent larger than in other countries. Using the residuals from our main econometric specification, we then construct an index of anomaly and find positive and statistically significant correlations between this and the rate of property and drugs-related crimes in the province of origin, and also between the index and other measures of foreign jurisdictions� riskiness and opacity of legislation.

Keywords: offshore financial flows; money laundering; regulation (search for similar items in EconPapers)
JEL-codes: F36 G15 K33 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-eur
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_236_14

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