Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258921 
Year of Publication: 
2020
Series/Report no.: 
CEBI Working Paper Series No. 07/20
Publisher: 
University of Copenhagen, Department of Economics, Center for Economic Behavior and Inequality (CEBI), Copenhagen
Abstract: 
Do elites capture foreign aid? This paper documents that aid disbursements to highly aid-dependent countries coincide with sharp increases in bank deposits in offshore financial centers known for bank secrecy and private wealth management, but not in other financial centers. The estimates are not confounded by contemporaneous shocks such as civil conflicts, natural disasters and financial crises, and are robust to instrumenting with predetermined aid commitments. The implied leakage rate is around 7.5% at the sample mean and tends to increase with the ratio of aid to GDP. The findings are consistent with aid capture in the most aid-dependent countries.
Subjects: 
foreign aid
corruption
offshore financial centers
JEL: 
D73
F35
P16
Document Type: 
Working Paper

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