Factors influencing the origin and evolution of the tax havens

This thesis examines tax havens, specifically it searches for factors which influence the probability that a given country becomes tax haven. Nowadays there are roughly 40 tax havens all over the world. The main target of this thesis is to find out what effects does the demographic, economic and geographic indicators have on their ex- istence. By using the extensive dataset for the period of 6 years we illustrate the time development and possible trends. With the help of several standard regression methods we confirmed the already existing hypothesis that tax havens are inclined to be small and more affluent jurisdictions. Moreover, the results indicate that the quality of governance in tax havens is substantially higher than in other countries. This is not only a short-term phenomenon, it showed to be valid for a longer time period. The discovered outcomes are statistically significant and robust to the use of other relevant variables. Tax havens also scores much better on the measures of corruption than other countries. Our conclusions help to clarify the causes why certain jurisdictions become tax havens, and at the same time they provide recom- mendations for the concerning economic policy. Keywords tax haven, government index, probit model, regression analysis.