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Research Summary: Probing the value of bank secrecy

Professor Michel Habib, Professor Alexandre Ziegler, Dr François-Xavier Delaloye

How much is bank secrecy worth to Swiss banks? We examine bank stocks following official announcements impacting offshore banking law and find that removing bank secrecy would appear to be costly for some, but not all Swiss banks.

Offshore banking, meaning bank services provided to clients residing in other countries, is affected by international agreements on the disclosure of information about clients and investments.

Changes to any one of these agreements may affect a bank's financial performance. We estimate the size of this effect by examining stock market reactions to official media announcements about offshore banking rules.

Data and Analysis

An event study methodology was used to measure the impact of negotiations on daily abnormal returns computed from the share prices of a sample of liquidly traded Swiss banks. Stock price data was sourced from Datastream for the period between November 1, 1998 to June 30, 2004 (1422 trading days). Media announcements were sourced from the Swiss Parliament's web site, news released by the Swiss Telegraphic Agency and from announcements made by the Administration Fédérale des Finances.


Secrecy affects different banks in different ways. Our study conservatively estimates bank secrecy to account for 8-15% of a bank's total value in some cases, while in other cases it has little or no apparent impact on value. Our findings highlight the complex international considerations impacting this hotly debated topic.

Link to working paper:
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