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Treasure Island Revisited. Jersey's Offshore Finance Centre Crisis: Implications for other Small Island Economies

Author

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  • M P Hampton

    (Department of Economics, University of Portsmouth, Southsea PO4 8JF, England)

  • J E Christensen

    (Menas Associates, PO Box 444, Berkhamsted HP4 3DL, England)

Abstract

Jersey appears to be a successful offshore finance centre (OFC) with high levels of gross domestic product per capita. The OFC is the largest contributor to Jersey's tax revenue, and accounts for about 20% of local employment. Jersey has become a major OFC in a global industry and is a conduit for sizeable capital flows. However, an unparalleled crisis in 1996 generated international media interest. The crisis involved three separate but related issues: a US $26 million fraud; the fast-tracking of Limited Liability Partnership legislation through the island's parliament; and a political crisis resulting in the unprecedented expulsion of an outspoken Senator from the parliament. The anatomy of this crisis reveals several causes of concern for other OFC hosts, especially regulatory failure and the overlap of interests between the local political elite and those of international financial capital. We examine the changing international perceptions of ‘offshore’, question the need for bank secrecy, and consider Jersey's role as legitimiser for other OFCs. In addition, we discuss lessons for other OFC hosts, including the need for efficient regulation, the impacts of OFCs in small economies; and demonstrate that the costs of hosting an OFC are now significantly higher than was first realised.

Suggested Citation

  • M P Hampton & J E Christensen, 1999. "Treasure Island Revisited. Jersey's Offshore Finance Centre Crisis: Implications for other Small Island Economies," Environment and Planning A, , vol. 31(9), pages 1619-1637, September.
    • Handle: RePEc:sae:envira:v:31:y:1999:i:9:p:1619-1637
    DOI: 10.1068/a311619
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    References listed on IDEAS

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    1. 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.
    2. Hampton, Mark P., 1994. "Treasure islands or fool's gold: Can and should small island economies copy Jersey?," World Development, Elsevier, vol. 22(2), pages 237-250, February.
    3. Hampton, M-P, 1996. "Creating Spaces. The Political Economy of Island Offshore Finance Centres : the Case of Jersey," Papers 76, Portsmouth University - Department of Economics.
    4. P. J. Cain & A. G. Hopkins, 1987. "Gentlemanly capitalism and British expansion overseas II: new imperialism, 1850-1945," Economic History Review, Economic History Society, vol. 40(1), pages 1-26, February.
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    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. Rasmus Corlin Christensen & Leonard Seabrooke & Duncan Wigan, 2022. "Professional action in global wealth chains," Regulation & Governance, John Wiley & Sons, vol. 16(3), pages 705-721, July.
    4. Bill Maurer, 2012. "Finance 2.0," Chapters, in: James G. Carrier (ed.), A Handbook of Economic Anthropology, Second Edition, chapter 11, Edward Elgar Publishing.

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