Dirty Money Coming Home: Capital Flows into and Out of Tax Havens

57 Pages Posted: 12 Jan 2018

See all articles by Lukas Menkhoff

Lukas Menkhoff

German Institute for Economic Research (DIW Berlin); Humboldt University of Berlin - Faculty of Economics

Jakob Miethe

German Institute for Economic Research (DIW Berlin)

Date Written: December 2017

Abstract

We use newly released bilateral locational banking statistics of the Bank for International Settlements to show the full circle of international tax evasion via tax havens. Surprisingly, white-washed money from tax havens is also withdrawn from banks in non-havens if an information treaty is signed between both countries. There are time lags and other economically plausible structures in these reactions. Interestingly, the effect of additional information-uponrequest treaties seems to fade out over time. By contrast, new treaties based on automatic information exchange again show bite; this puzzling evidence is best explained by dirty money changing its packaging.

Keywords: Tax evasion, international capital flows, international information exchange treaties, bank deposits

JEL Classification: H26, F38

Suggested Citation

Menkhoff, Lukas and Miethe, Jakob, Dirty Money Coming Home: Capital Flows into and Out of Tax Havens (December 2017). DIW Berlin Discussion Paper No. 1711. Available at SSRN: https://ssrn.com/abstract=3100117 or http://dx.doi.org/10.2139/ssrn.3100117

Lukas Menkhoff (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Humboldt University of Berlin - Faculty of Economics ( email )

Spandauer Strasse 1
Berlin
Germany

Jakob Miethe

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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