Knockin’ on H(e)aven’s door. Financial crises and offshore wealth

This paper investigates the relationship between financial crises in developing countries and variation of bank deposits in offshore financial centers. Using a stacked difference-in-differences estimator, we find that three years after the onset of the crisis, bank deposits in tax havens increase by almost 30 percent. The effect appears independent of tax rates and is primarily driven by countries with weak institutions. We add to the literature on tax havens as we find that they not only facilitate tax evasion and corruption in “normal times”, but also absorb resources during financial crises, when most needed.