Offshore Schemes and Tax Evasion: The Role of Banks
105 Pages Posted: 20 Jul 2015 Last revised: 30 Jan 2017
Date Written: December 4, 2016
We use mandatory Russian banks’ reports to the Central Bank to construct a novel measure of offshore-banking. Individual bank involvement in offshore operations is calculated as a fraction of total transactions with foreign countries that go through offshore financial centers. We find that offshore-active banks perform less financial intermediation and focus more on international wire transfers. We show a positive relation between banks’ offshore activities and tax evasion of companies doing business through these banks. Finally, we show that the Central Bank eventually responds to this behavior: offshore-active banks have higher likelihood of license revocation and criminal investigation against top-management.
Keywords: Tax evasion, offshore schemes, banks
JEL Classification: G21, H26
Suggested Citation: Suggested Citation