Tax evasion is a widespread phenomenon across the globe and even an important factor in the ongoing sovereign debt crisis..Printed Journal
We study whether cross-country differences in regulations have affected international bank flows. We find strong evidence that banks have transferred funds to markets with fewer regulations. This form of regulatory arbitrage suggests there may be a destructive ?race to the bottom? in global regulations, which restricts domestic regulators? ability to limit bank risk-taking. However, we also fin…