the presence of _disclosure rules_ for politicians. This result may reflect that disclosure rules create stronger incentives for politicians to hide diverted funds on bank accounts in havens rather than keeping them in the domestic financial system where they are disclosed. Column (3) shows that the effect of aid on haven deposits is larger when the country’s _capital account_ is more open. This finding is suggestive that regulatory restrictions on cross-border capital flows may deter diversion of aid through foreign bank accounts. Column (4) shows that the effect varies with _institutional quality_ : it is somewhat larger in autocracies than in countries with more democratic institutions. This is consistent with Andersen et al (2017) who find that the checks-and-balances embedded in democratic institutions are mediating the transformation of petroleum rents to political rents. Finally, Column (5) shows that the effect of aid on haven deposits decreases with domestic _financial sector development_ . This suggests an alternative mechanism whereby firms involved in aid-sponsored projects receive payments in the disbursement quarter and rely on foreign banks for cash deposits when domestic banks are underdeveloped; however, this mechanism is difficult to reconcile with the finding that money only flows to havens around disbursements and not to banking centers without financial secrecy.

Moreover, we exploit the detailed information in the World Bank Project Database to explore differences between two types of aid: Development Policy Financing (DPF) supporting policy programs and Investment Project Financing (IPF) supporting investment projects (World Bank, 2017). One may hypothesize that the latter type of aid, tied to specific expenditure and disbursed over a long time horizon, is more difficult to divert than the former, subject to fewer constraints and disbursed more quickly. However, if anything, aid supporting investment projects correlates more strongly with money flows to havens. As shown in Columns (1)-(3) of Table 5, an aid disbursement of 1% of GDP is associated with an increase in haven deposits of around 2.8% when the aid takes the form of DPF and 5.3% when it takes the form of IPF, but the difference between the coefficients is not statistically significant. The difference between the two forms of aid is much less pronounced when the increase in haven deposits is measured relative to the increase in non-haven deposits as shown in Columns (7)-(9).

Last, we investigate whether there are systematic differences in the correlation between aid disbursements and haven deposits across countries that differ in aid-dependence.<sup>17</sup> While the baseline analysis focused exclusively on the sample of 22 countries with average annual aid disbursements from the World Bank above 2% of GDP, we now re-estimate the baseline model

> 17Table A6 in the Online Appendix reports descriptive statistics similar to Table 1 for the 24 countries that are not part of the baseline analysis (because their ratio of annual aid from the World Bank to GDP is below 2%) but enter this analysis (because their ratio of annual aid from the World Bank to GDP is above 1%)

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