Petro Rents, Political Institutions, and Hidden Wealth: Evidence from Offshore Bank Accounts

Résumé

Do political institutions limit rent-seeking by politicians? We study the transformation of petroleum rents, almost universally under direct government control, into hidden wealth using unique data on bank deposits in offshore financial centers known to offer secrecy and asset protection to foreign customers. We find that plausibly exogenous shocks to petroleum income are associated with increases in hidden wealth, but only when institutional checks and balances are weak. We find only very limited evidence that shocks to other types of income not directly controlled by governments affect hidden wealth.