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The end of the great inversion: offshore national banks and the global financial crisis
[European financial cross-border consolidation: at the crossroads in]

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  • Daniel Haberly
  • Dariusz Wójcik

Abstract

Here we present a novel analysis of the geographic evolution of international banking since 1980, which addresses still unanswered questions about the role of offshore centers in the global financial crisis, and the post-crisis stability of these centers. We show that post-1980 regulatory shifts prompted a ‘Great Inversion’ of offshore banking, wherein conventional Euromarket activity was partially overshadowed by the growth of European ‘midshore’ center national banks. As a result, offshore jurisdictions (i) were likely more responsible for pre-crisis regulatory failures in a home than host regulator capacity and (ii) internalized far greater domestic fiscal risks than in previous crises.

Suggested Citation

  • Daniel Haberly & Dariusz Wójcik, 2020. "The end of the great inversion: offshore national banks and the global financial crisis [European financial cross-border consolidation: at the crossroads in]," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1263-1292.
    • Handle: RePEc:oup:jecgeo:v:20:y:2020:i:6:p:1263-1292.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbaa016
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    More about this item

    Keywords

    Offshore financial centers; banking regulation; global financial crisis; Eurozone crisis; lender of last resort; Basel framework;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts

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