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Global Economy Journal

The Official Publication of the International Trade and Finance Association

Ed. by Pelzman, Joseph

4 Issues per year


CiteScore 2017: 0.36

SCImago Journal Rank (SJR) 2017: 0.217
Source Normalized Impact per Paper (SNIP) 2017: 0.392

Online
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1553-5304
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Volume 14, Issue 3-4

Issues

Offshore Financial Centers in the Global Capital Network

Simon M. Naitram
  • Corresponding author
  • Research and Economic Analysis Department, Central Bank of Barbados, Tom Adams Financial, Centre Spry Street, Bridgetown BB11126, Barbados
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Published Online: 2014-04-05 | DOI: https://doi.org/10.1515/gej-2013-0059

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.

Keywords: portfolio investment; offshore finance; dynamic networks; random walk centrality; counting betweenness

References

About the article

Published Online: 2014-04-05

Published in Print: 2014-10-01


Citation Information: Global Economy Journal, Volume 14, Issue 3-4, Pages 435–451, ISSN (Online) 1553-5304, ISSN (Print) 2194-5659, DOI: https://doi.org/10.1515/gej-2013-0059.

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