Each year, international bank transactions equivalent to almost 10% of Norway’s GDP are carried out. Yet we know surprisingly little about the patterns, drivers, and consequences of these transactions. This project aims to fill this knowledge gap by investigating who transfers money, where it is sent, and how these flows are influenced by both individual actions and broader economic changes.
By using new and highly detailed data, we seek to uncover the factors that shape such cross-border money transfers – including the effects of external shocks and how these transactions contribute to economic inequality. In addition, we will examine how international bank transactions can be linked both to positive activities, such as remittances from migrants, and to harmful practices such as tax evasion and other illicit financial flows.
This research will provide policymakers and financial institutions with knowledge and tools to promote the positive effects of international bank transactions while limiting their misuse. In addition, the project will deliver actionable insights that contribute to building a more efficient, transparent, and fair global financial system.
2025 was the project’s first year, and most of the time has been spent on data cleaning and preparatory work, meaning that we are now entering the actual research phase. The bulk of dissemination is planned for later in the project. So far, the project has generated three external presentations (including at a course for journalists), held three data dialogue meetings with Statistics Norway and representatives of various banks, submitted one consultation response for a governmental hearing, written a data usage note, and is in the process of finalizing drafts of one scientific article in Norwegian and one in English.
International bank transfers (IBTs) are a sizable form of financial flows and amount to nearly 10% of annual Norwegian GDP. Nevertheless, nearly nothing is known about what drives them. This project sheds much needed light on IBTs by examining who is making IBTs, where they are going, and how IBTs are formed by habit formation and respond to the evolving economy.
In particular, we will investigate four main areas. The first considers the importance of habit formation in IBTs, by exploiting “round numbers” in bank transactions. Recognizing that aggregate economic decisions are a combination of routine, back of the envelope habits and more responsive choices aids in our understanding of how aggregate financial movements come about.
Second, we examine the role remittances play in IBTs. The flow of these funds is considered a lifeline for developing countries yet because of lack of data not much is understood about them. By using a new and unique dataset, we will for the first time gain insight into how regulation, employment, and other factors feed into them.
Third, we will examine how IBTs respond to a variety of external shocks, including variation in exchange rates and Brexit. In particular, our detailed data will allow us to see how these shocks are felt differently by high- and low-income Norwegians, providing a new insight into how financial markets can improve (or worsen) economic inequality.
Finally, we will delve into how IBTs relate to tax evasion and other illicit financial flows, particularly among wealthy firms and individuals. Using information on leaked financial information such as the Panama Papers, we will be able to uncover a trove of information regarding these activities.
Together, our research will provide the first nuanced understanding of these large financial flows. That in turn will enable both policy makers and banking institutions to implement policies that support the beneficial aspects of IBTs while curbing the abuses they support.
