Hide and Protect: The Role of Global Financial Secrecy in Shaping Domestic Institutions

Most of the literature on the drivers and effects of financial secrecy on emerging economies focuses on tax avoidance, neglecting the problems of institutional arbitrage that go beyond taxation issues. This paper discusses the limits of the institutionalist paradigm that treats businesses solely as rule-takers and calls for more attention to business agency and responsibility. Discussions about corporate social responsibility in emerging economies should incorporate thinking about the potential role businesses, especially large corporations, could play in promoting more effective institutions at home. Further research is needed to understand the political and institutional effects of global financial secrecy at the domestic level. We suggest some promising avenues for future research as well as new items to be included on the policymaking agenda in relation to financial secrecy.