International Taxation, Financial Centres and the Shadow Banking System in Europe

This paper uses a new firm-level dataset to examine the importance of double taxation treaties and international financial centres in determining the foreign activities of non-bank financial institutions. Drawing on a unique... [ view full abstract ]

This paper uses a new firm-level dataset to examine the importance of double taxation treaties and international financial centres in determining the foreign activities of non-bank financial institutions. Drawing on a unique sample of 7,881 firms incorporated in 156 European NUTS2 regions over the period 2004-2012, the paper provides empirical evidence that the network of international double taxation treaties and international financial centres are important determinants in attracting non-bank financial institutions. Our results have important policy implications in light of Brexit and recent efforts to understand better the factors which influence the geographic structure of the shadow banking system in Europe.