The end of the great inversion: offshore national banks and the global financial crisis

European financial cross-border consolidation: at the crossroads in

Daniel Haberly and Dariusz Wójcik

Journal of Economic Geography, 2020, vol. 20, issue 6, 1263-1292

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.

Keywords: Offshore financial centers; banking regulation; global financial crisis; Eurozone crisis; lender of last resort; Basel framework (search for similar items in EconPapers)
JEL-codes: F34 G28 H81 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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