Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments
Anne-Laure Delatte (),
Amélie Guillin and
Working Papers from CEPII research center
Tax avoidance schemes generate artificially complex cross-border financial structures inflating 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 – stocks. 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)
New Economics Papers: this item is included in nep-acc, nep-eur and nep-int
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Working Paper: Grey Zones in Global Finance: the distorted Geography of Cross-Border Investments (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2020-07
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