IDEAS home Printed from https://ideas.repec.org/a/bpj/glecon/v14y2014i3-4p17n1.html
   My bibliography  Save this article

Offshore Financial Centers in the Global Capital Network

Author

Listed:
  • Naitram Simon M.

    (Research and Economic Analysis Department, Central Bank of Barbados, Tom Adams Financial, Centre Spry Street, Bridgetown BB11126, Barbados)

Abstract

Offshore financial centers are inextricably linked with the global flow of capital. Offshore financial centers encourage short-term investment by reducing market frictions. Lowered tax rates diminish the required expected gains from trading. This study employs data from the IMF’s Coordinated Portfolio Investment Survey to create a network that is weighted, directed and dynamic based on the portfolio investment positions of 240 countries. The aim of this article is to examine the topology of the global capital network to identify the importance of the roles played by 17 offshore financial centers over the period 2001–2011–particularly in diffusing portfolio investment throughout the network. This article employs two generalized measures of node centrality: random walk centrality and counting betweenness. These algorithms uncover the findings that some of these offshore financial centers are only well connected to a narrow range of countries, but they all perform well in their roles as capital transmitters and are thus very important to the efficient flow of capital to productive end users. While this study reveals reduced influence of offshore finance over time, it suggests that offshore financial centers may be beneficial to global welfare.

Suggested Citation

  • Naitram Simon M., 2014. "Offshore Financial Centers in the Global Capital Network," Global Economy Journal, De Gruyter, vol. 14(3-4), pages 435-451, October.
    • Handle: RePEc:bpj:glecon:v:14:y:2014:i:3-4:p:17:n:1
    DOI: 10.1515/gej-2013-0059
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/gej-2013-0059
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/gej-2013-0059?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kim, Woochan & Wei, Shang-Jin, 2002. "Offshore investment funds: monsters in emerging markets?," Journal of Development Economics, Elsevier, vol. 68(1), pages 205-224, June.
    2. Gooptu, Sudarshan, 1993. "Portfolio investment flows to emerging markets," Policy Research Working Paper Series 1117, The World Bank.
    3. Mark P. Hampton & Jason P. Abbott (ed.), 1999. "Offshore Finance Centres and Tax Havens," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-14752-6, December.
    4. Hampton, M.P. & Levi, M., 1999. "Recent Developments in Money Laundering Policies and Offshore Finance Centers," Papers 126, Portsmouth University - Department of Economics.
    5. Mark Hampton, 1996. "The Offshore Interface," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-25131-5, December.
    6. Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2006. "Do tax havens divert economic activity?," Economics Letters, Elsevier, vol. 90(2), pages 219-224, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hampton, Mark P. & Christensen, John, 2002. "Offshore Pariahs? Small Island Economies, Tax Havens, and the Re-configuration of Global Finance," World Development, Elsevier, vol. 30(9), pages 1657-1673, September.
    2. John Christensen & Mark Hampton, 2005. "Exploring the relationship between tourism and offshore finance in small island economies: lessons from Jersey," International Finance 0507006, University Library of Munich, Germany.
    3. Seamus Grimes, 2006. "Ireland's Emergence as a Centre for Internationally Traded Services," Regional Studies, Taylor & Francis Journals, vol. 40(9), pages 1041-1054.
    4. Hsun Chu, 2014. "Tax Enforcement Policy and the Provision of Public Goods with the Presence of Tax Havens," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(3), pages 304-321, July.
    5. Simplice A. Asongu, 2014. "Fighting African Capital Flight: Empirics on Benchmarking Policy Harmonization," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(1), pages 93-122, June.
    6. Andrade, Sandro C. & Kohlscheen, Emanuel, 2010. "Pessimistic Foreign Investors and Turmoil in Emerging Markets : The Case of Brazil in 2002," The Warwick Economics Research Paper Series (TWERPS) 926, University of Warwick, Department of Economics.
    7. Choy, Siu Kai & Lai, Tat-Kei & Ng, Travis, 2017. "Do tax havens create firm value?," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 198-220.
    8. Agus Bandiyono & Etty Murwaningsari, 2019. "Effect of Intra Group Transaction, Thin Capitalization and Executive Characters on Tax Avoidation with Multinationality as a Moderation," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 7(2), pages 82-97.
    9. Vincent Bouvatier & Gunther Capelle-Blancard & Anne-Laure Delatte, 2017. "Banks Defy Gravity in Tax Havens," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03101505, HAL.
    10. Svetlana Ledyaeva & Päivi Karhunen & Riitta Kosonen & John Whalley, 2015. "Offshore Foreign Direct Investment, Capital Round-Tripping, and Corruption: Empirical Analysis of Russian Regions," Economic Geography, Clark University, vol. 91(3), pages 305-341, July.
    11. Wright, Calvin & Swidler, Steve, 2023. "Abnormal trading volume, news and market efficiency: Evidence from the Jamaica Stock Exchange," Research in International Business and Finance, Elsevier, vol. 64(C).
    12. Stephanie Kremer & Dieter Nautz, 2013. "Short†term Herding of Institutional Traders: New Evidence from the German Stock Market," European Financial Management, European Financial Management Association, vol. 19(4), pages 730-746, September.
    13. Gomeh, Carmel & Strawczynski, Michel, 2020. "Simulating corporate tax rate at Laffer curve's peak using microdata," Journal of Economics and Business, Elsevier, vol. 112(C).
    14. Ms. Carmen Reinhart & Mr. Mohsin S. Khan, 1995. "Capital Flows in the APEC Region," IMF Occasional Papers 1995/015, International Monetary Fund.
    15. Frankel, Jeffrey A & Okongwu, Chudozie, 1996. "Liberalized Portfolio Capital Inflows in Emerging Markets: Sterilization, Expectations, and the Incompleteness of Interest Rate Convergence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 1(1), pages 1-23, January.
    16. Schwab, Thomas & Todtenhaupt, Maximilian, 2016. "Spillover from the haven: Cross-border externalities of patent box regimes within multinational firms," ZEW Discussion Papers 16-073, ZEW - Leibniz Centre for European Economic Research.
    17. Corbo, Vittorio & Hernandez, Leonardo, 1994. "Macroeconomic adjustment to capital inflows : Latin American style versus East Asian style," Policy Research Working Paper Series 1377, The World Bank.
    18. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1996. "Inflows of Capital to Developing Countries in the 1990s," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 123-139, Spring.
    19. Jones, Chris & Temouri, Yama, 2016. "The determinants of tax haven FDI," Journal of World Business, Elsevier, vol. 51(2), pages 237-250.
    20. Steffen Juranek & Dirk Schindler & Guttorm Schjelderup, 2018. "Transfer pricing regulation and taxation of royalty payments," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(1), pages 67-84, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:glecon:v:14:y:2014:i:3-4:p:17:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.