Discussion paper

DP12222 Banks Defy Gravity in Tax Havens

Using country-by-country reports from the Systemically Important Banks in the European Union, we measure "abnormal'' banking activity in tax havens (TH). Our assessment is based on a gravity model used to predict the expected international turnover of EU banks worldwide. We find that: 1) banks turnover in TH represents on average twice the gravity predictions; 2) the abnormal turnover of EU banks represents 1.46\% of GDP in TH and varies between 16\% of GDP and zero; 3) there is a large heterogeneity across TH with Hong Kong, Luxembourg and Singapore concentrating the bulk of the abnormal turnover; 4) we observe a decline and a concentration of abnormal turnover since the reporting requirement has been introduced in the EU.


Delatte, A, G Capelle-Blancard and V Bouvatier (2018), ‘DP12222 Banks Defy Gravity in Tax Havens‘, CEPR Discussion Paper No. 12222. CEPR Press, Paris & London. https://cepr.org/publications/dp12222