Thesis (Selection of subject)Thesis (Selection of subject)(version: 356)
Assignment details
   Login via CAS
The Role of Tax Havens for Banks: Evidence from Two Firm-Level Datasets
Thesis title in Czech: Role daňových rájů pro banky: Evidence ze dvou datových zdrojů na úrovni bank
Thesis title in English: The Role of Tax Havens for Banks: Evidence from Two Firm-Level Datasets
Academic year of topic announcement: 2016/2017
Type of assignment: diploma thesis
Thesis language: angličtina
Department: Institute of Economic Studies (23-IES)
Supervisor: doc. Petr Janský, M.Sc., Ph.D.
Author: hidden - assigned by the advisor
Date of registration: 01.06.2017
Date of assignment: 01.06.2017
Date and time of defence: 20.06.2018 09:00
Venue of defence: Opletalova - Opletalova 26, O314, Opletalova - místn. č. 314
Date of electronic submission:11.05.2018
Date of proceeded defence: 20.06.2018
Reviewers: prof. Ing. Karel Janda, Dr., Ph.D., M.A.
URKUND check:
Core bibliography:

Baltagi, B.H. (2001). Econometric Analysis of Panel Data. 2nd ed., John Wiley & Sons Ltd, England.

Cobham, A. & Janský, P. (2015). Working Paper 42: Measuring misalignment: The location of US multinationals’ economic activity versus the location of their profits.

Cobham, A., Janský, P., Jones, C., Temouri, Y. (2017). The Impact of the CC(C)TB : European Tax Base Shifts under a Range of Policy Scenarios, (C), 1–20.

Cobham, A. & S. Loretz (2014): “Working Paper 27 International Distribution of the Corporate Tax Base: Implications of Different Apportionment Factors under Unitary Taxation .”

European Parliament (2013). Directive 2013/36/EU of the European Parliament and of the Councile. Official Journal of the European Union.

Murphy, R. (2015). European Banks’ Country-by-Country Reporting A review of CRD IV. Tax Research LLP Greens / EFA MEPs European Parliament.

Jelínková, E. (2016). Estimating the Misalignment between the Locations of Profits and Economic Activities of EU's Banks [online]. [cit. 2017-07-15]. Dostupné z: Vedoucí práce Petr Janský.

Wooldridge, J. M. (2006). Introductory econometrics: A modern approach. Mason, OH: Thomson/South-Western.
Preliminary scope of work

Base erosion and profit shifting is well-known issue discussed by several governments. The tendency of multinational compaties to reallocate their profits to low-tax jurisdictions concerns also financial institutions namely banks. The thesis will be focused on banks since banks are one of the most important financial intermediary of each economy and their profitability is crucial for stable economy.

In 2011 European commission proposed so called Common Consolidated Corporate Tax Base (CCCTB) which should give opportunity to multinational companies to declare their profits on consolidated basis. The profits would be then redistributed back to each country using the apportionment factors which reflect the economic activity of each subsidiary. The new version of this proposal was published in 2016. I would like to analyse impact of CCCTB on banks’ profits as well as on country tax revenue.

In 2014 the Capital Requirements Directive (CRD IV) came into effect (European Parliament, 2013). The CRD IV states that financial institution are obliged to declare basic accounting details on country-by-country basis. In the second part of my thesis I will examine if there is change in banks’ behaviour after the introduction of the CRD IV.

As mention above, I will also to analyse the possible misalignment of banks’ profits. Taxes are the main source of governments’ incomes; therefore, it is important that institutions declare their profits in jurisdictions where the economic activity take place. Otherwise, governments are losing their income. In the thesis, I will focus on the influence of tax rate of each jurisdiction and so called tax havens on banks declared profit and paid tax.


In the thesis, the following hypotheses will be tested:

1. Hypothesis 1: Introducing CBCR cause change in banks’ behaviour in declaration of profits.
2. Hypothesis 2: More detailed CBCR data give us different results of simulation CCCTB than Bankscope data.
3. Hypothesis 3: Banks tend to misalign profits to low-tax jurisdictions.


Dataset for my analysis will consist of two single data sources. First is the same as the one used in my bachelor thesis (Jelínková, 2016). It is based on the Country-by-country reports which banks must publish since 2014 when the Capital Requirements Directive (CRD IV) came into effect (European Parliament, 2013). The dataset will be extended for newly collected data from recent years. The second data source, which will be used in the thesis, are data from Orbis Data Focus which are collected by Bureau van Dijk.

Many analyses search the impact of new CCCTB on multinationals’ profits and on countries tax income. I would like simulate analysis of Cobham et al. (2017) using three different datasets. First dataset will be the Bankscope data with as many available banks as possible. Second dataset will be also Bankscope data only for approximately 50 larger European multinational banks. The last dataset will be the newest available data on country-by-country basis which banks are obliged to report. I would like to compare results for each dataset and find possible weakness of Bankscope data and show that these data might not be detailed enough.

Using the resulting CCCTB for each bank in each country I will analyse whether banks tend to reallocate their tax base to low tax jurisdictions. Using the panel data with difference between reallocated profit and declared profit as dependent variable I will focus on tax rate as an independent variable and test its significance. Similarly, I will compare the results of CBCR data and Bankscope data in analysis of how the banks misalign their profits.

Using the Bankscope data I will analyse whether introducing the Country-by-country reporting in 2014 had any effect on banks’ performance. I will compare the performance of banks couple of years before 2014 and the years after. I will use panel data analysis with profit as a dependent variable. Then I will use dummy variable for the years before 2014 and test it significance. As a control group, I will analyse the performance of such a group of banks which are not effected by CBCR obligation.

1. Introduction: I will introduce the topic and motivation of the thesis.
2. Literature review: It will cover overview of existing literature and comparing the method use my analysis with the ones used in the previous researches.
3. Dataset: In this section, the dataset will be described in detail. Since one part was collected by myself the detailed description is needed.
4. Methodology: The method, regression and test used in the analysis.
5. Analysis: Presentation of results.
6. Discussion: The result of my analysis will be compared with existing literature.
7. Conclusion

Expected contribution:

Using the country base data, I want to find the evidence about banks misalignment of profit to low-tax jurisdictions and tax havens. The data are newly available and thus, it will be one of the first studies based on this dataset. I will also uncover if preventive measures of EU have any measurable effect. Whether making banks to publish their detailed accounting will prevent them from misalignment of their profit.

Using the CBCR dataset I will simulate CCCTB and compare the simulation with results obtained using Bankscope dataset and analyse the quality and possible shortage of Bankscope data.
Charles University | Information system of Charles University |