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Bank secrecy in offshore centres and capital flows : Does blacklisting matter?

Balakina, Olga LU ; D'Andrea, Angelo and Masciandaro, Donato (2017) In Review of Financial Economics 32. p.30-57
Abstract
This study analyses cross-border capital flows in order to verify the existence and direction of the effect of the soft regulation promoted by international organizations against banking secrecy which characterized the so called tax and financial heavens. This effect is called in the literature Stigma Effect, but both the existence and the direction of the stigma effect are far from being obvious. The international capital flows can simply neglect the relevance of the blacklisting, or worst, the attractiveness of banking secrecy can produce a race to the bottom: the desire to elude more transparent regulation can sensibly influence the capital movements. We test whether being included and later excluded from the FATF blacklist is an... (More)
This study analyses cross-border capital flows in order to verify the existence and direction of the effect of the soft regulation promoted by international organizations against banking secrecy which characterized the so called tax and financial heavens. This effect is called in the literature Stigma Effect, but both the existence and the direction of the stigma effect are far from being obvious. The international capital flows can simply neglect the relevance of the blacklisting, or worst, the attractiveness of banking secrecy can produce a race to the bottom: the desire to elude more transparent regulation can sensibly influence the capital movements. We test whether being included and later excluded from the FATF blacklist is an effective measure that influences countries’ cross-border capital flows. Using annual panel data for the period 1996–2014, we apply our framework to 126 countries worldwide. We find evidence that in general the stigma effect does not exist. (Less)
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author
publishing date
type
Contribution to journal
publication status
published
subject
keywords
bank secrecy, offshore centres, international capital flows, money laundering, F21, K42
in
Review of Financial Economics
volume
32
pages
28 pages
publisher
Elsevier Inc.
external identifiers
  • scopus:85006003396
ISSN
1058-3300
DOI
10.1016/j.rfe.2016.09.005
language
English
LU publication?
no
id
b664e193-74d3-4499-b53c-bfa8afa2e163
date added to LUP
2017-09-18 11:32:09
date last changed
2018-01-07 12:18:49
@article{b664e193-74d3-4499-b53c-bfa8afa2e163,
  abstract     = {This study analyses cross-border capital flows in order to verify the existence and direction of the effect of the soft regulation promoted by international organizations against banking secrecy which characterized the so called tax and financial heavens. This effect is called in the literature Stigma Effect, but both the existence and the direction of the stigma effect are far from being obvious. The international capital flows can simply neglect the relevance of the blacklisting, or worst, the attractiveness of banking secrecy can produce a race to the bottom: the desire to elude more transparent regulation can sensibly influence the capital movements. We test whether being included and later excluded from the FATF blacklist is an effective measure that influences countries’ cross-border capital flows. Using annual panel data for the period 1996–2014, we apply our framework to 126 countries worldwide. We find evidence that in general the stigma effect does not exist.},
  author       = {Balakina, Olga and D'Andrea, Angelo and Masciandaro, Donato},
  issn         = {1058-3300},
  keyword      = {bank secrecy,offshore centres,international capital flows,money laundering,F21,K42},
  language     = {eng},
  pages        = {30--57},
  publisher    = {Elsevier Inc.},
  series       = {Review of Financial Economics},
  title        = {Bank secrecy in offshore centres and capital flows : Does blacklisting matter?},
  url          = {http://dx.doi.org/10.1016/j.rfe.2016.09.005},
  volume       = {32},
  year         = {2017},
}