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The Financial Secrecy Index: An Information Theory Approach
Galuszka, Lukáš ; Janský, Petr (advisor) ; Malovaná, Simona (referee)
The objective of this thesis is to evaluate alternative weighting systems to determine if they have the potential to improve the current weighting system of the Financial Secrecy Index (FSI). The FSI, a measure of countries' contributions to global financial secrecy, currently weights its 15 qualitative components equally. A web-based opinion survey conducted in January and February 2016 among academics, journalists, experts and other persons familiar with FSI serves as the baseline for assessing new weights. The new weights derived from the survey results are not significantly different from the equal weights in 14 out of 15 components. The survey results suggest that widely held opinion is consistent with equal weight assumptions. Statistical model selection criteria from information theory that penalize model complexity prefer in majority of cases the simple model over the more complex one even though more complex model provides better goodness-of-fit statistics. Alternative methods and analysis such as Principal Components Analysis is performed and discussed. The present work finds that, statistically, the weights should not diverge from the equal weighting system in use currently. Powered by TCPDF (www.tcpdf.org)
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Corruption, Tax Abuse, and Financial Secrecy
Palanský, Miroslav ; Janský, Petr (advisor) ; Riedel, Nadine (referee) ; Zucman, Gabriel (referee) ; Johannesen, Niels (referee)
Corruption, Tax Abuse, and Financial Secrecy PhD Dissertation, Miroslav Palanský, IES CUNI, 2020 Abstract This dissertation is composed of three papers that focus on different aspects of the relationship between the public sector and individuals who do not comply with the norms and regulations set by the government. I classify the ways in which individuals do so into two categories - corruption and tax abuse. Corruption, defined as the abuse of entrusted power for private gain, results in individuals obtaining more benefits from the public sector than is intended. Tax abuse, on the other hand, is defined as contributing less to the public sector than is intended. The last chapter of the dissertation focuses on financial secrecy, which I argue is the key facilitator of the two channels. In Chapter 2, I show that companies that donate money to Czech political parties subsequently report abnormally high profits, pointing to preferential treatment that these firms enjoy as a result of their political connections: I conservatively estimate that the connected firms outperform their non-connected but otherwise similar competitors by 8 to 12% following the establishment of the connection, which is a higher effect than found previously for more developed economies. Importantly, however, I find that the effect...
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Who wins and who loses due to financial secrecy? The Net Bilateral Financial Secrecy Index.
Kamenická, Lucie ; Palanský, Miroslav (advisor) ; Štěpánek, Martin (referee)
A bstr a ct Rece ntl y, w orl d le a ders are m a ki n g e ff orts t o fi n all y g ai n c o ntr ol o ver t he iss ue of t a x h a ve ns a n d fi n a nci al secrec y t hr o u g h vari o us p olic y me as ures. T h a n ks t o c o m b ati n g fi n a nci al secrec y, t a x f air ness is sl o wl y b ei n g ac hie ve d w hic h e n- a bles j uris dicti o n t o c ollect t a x re ve n ue w hic h t he y l ose d ue t o t he e xiste nce of secrec y j uris dicti o ns. I n m y t hesis I u p d ate a n d e xte n d t he e xisti n g rese arc h c o ncer ni n g bil ater al a p pr o ac h of e m piric al i de nti fic ati o n of t a x h a ve ns' fi n a nci al secrec y a n d b ase d o n it I q u a ntif y f or 1 1 1 c o u ntries t he secrec y t he y s u p pl y a n d f or 8 2 c o u ntries t he secrec y t he y recei ve. Ne xt, I pri m aril y q u a ntif y w hic h j ur- is dicti o n wi ns or l oses d ue t o secrec y b y de vel o pi n g t he Net Bil ater al Fi n a nci al Secrec y I n de x a n d esti m ate it f or 6 8 j uris dicti o ns b y setti n g f or e ac h c o u ntr y t he fi n a nci al secrec y recei ve d a n d s u p plie d a g ai nst e ac h ot her. T he n, I f o c us o n w or ki n g wit h t he est a blis he d Net B F SI a n d I b ase d o n it c o ncl u de se ver al fi n di n gs, a n d als o a n al yse h o w t he Net B F SI c h a n ge d d...
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The Scale of Corporate Profit Shifting out of the United States
Stárek, Martin ; Janský, Petr (advisor) ; Vacek, Pavel (referee)
There is a large body of literature indicating that profits are shifted into countries with better conditions, i.e. lower tax rates. It was showed that the problem is nonlinear. However, precise estimates are missing in the available literature. In this thesis we improved the precision by allowing for nonlinearity, time-variant tax semi-elasticity of profits and financial secrecy is a driver of the profit shifting. We showed that all three elements of the estimation are very important. Our analysis suggests that the profit shifting problem started at the turn of millennium and increases since, with some temporal drops. The highest amount of profit shifted out of the United States was almost 300 billion of U.S. dollars with the consequent revenue loss of 62.3 billion of U.S. dolars.
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Base erosion and profit shifting by multinational firms: re-estimation of firm-level evidence
Petrouš, Michal ; Janský, Petr (advisor) ; Horváth, Roman (referee)
iv Abstract The thesis focuses on base erosion and profit shifting (BEPS) and resulting corporate income tax gains or losses. I first estimated profit shifting semi-elasticity using database of firm-level financial data. Subsequently I used these estimates to calculate corporate income tax gains or losses for individual countries. I estimate several models to see how much the semi-elasticity depends on specification and what affects it. The evidence suggests that companies do shift profits to countries with lower tax rate. The estimated overall profit shifting semi-elasticity ranges from 1.524 to 3.695 for different specifications of the benchmark model. Semi-elasticity of individual countries increases with financial secrecy score. Using statutory tax rate yields stronger results than using country-level effective tax rates calculated from the financial data. The estimated effect on government revenue ranges from 12% loss to 23% gain of corporate income tax revenues. In the sample of 53 countries with sufficient number of observations this translates to overall loss 48 billion US dollars. JEL Classification F23, F68, G38, H25, H26, H87 Keywords base erosion, profit shifting, corporate income tax, financial secrecy Author's e-mail michal.petrous@gmail.com Supervisor's e-mail jansky@fsv.cuni.cz
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Financial Secrecy and Its Impact on Cross-Border Deposits
Džmuráň, Daniel ; Janský, Petr (advisor) ; Novák, Jiří (referee)
The role of tax havens in the global issue of tax evasion has been illustrated by numerous studies. In 2009, a major international initiative has been launched by G20 and OECD with a purpose to put an end to offshore tax evasion. Yet the outcomes of this tax haven crackdown are often contested. This thesis brings new findings to the empirical research that has been done on the field of crackdown's evaluation. First, I confirm the results of earlier academic papers and I find a negative impact of information exchange treaties on the value of funds placed in tax havens. Second, I extend the existing research shifting the attention to deposits in non-havens, concluding that also the money from tax havens placed on non-havens' bank accounts disappear after signing a treaty. In the final part of the thesis, I - for the first time in literature - link the data on cross-border deposits with a measure of financial secrecy. I find that a decrease in secrecy score corresponds to a decline in deposits on a sample of all countries and non-havens. All my findings suggest that weakening the financial secrecy is associated with a significant outflow of cross-border deposits.
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The Financial Secrecy Index: An Information Theory Approach
Galuszka, Lukáš ; Janský, Petr (advisor) ; Malovaná, Simona (referee)
The objective of this thesis is to evaluate alternative weighting systems to determine if they have the potential to improve the current weighting system of the Financial Secrecy Index (FSI). The FSI, a measure of countries' contributions to global financial secrecy, currently weights its 15 qualitative components equally. A web-based opinion survey conducted in January and February 2016 among academics, journalists, experts and other persons familiar with FSI serves as the baseline for assessing new weights. The new weights derived from the survey results are not significantly different from the equal weights in 14 out of 15 components. The survey results suggest that widely held opinion is consistent with equal weight assumptions. Statistical model selection criteria from information theory that penalize model complexity prefer in majority of cases the simple model over the more complex one even though more complex model provides better goodness-of-fit statistics. Alternative methods and analysis such as Principal Components Analysis is performed and discussed. The present work finds that, statistically, the weights should not diverge from the equal weighting system in use currently. Powered by TCPDF (www.tcpdf.org)
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