Offshore Financial Centers in the Global Capital Network

Simon Naitram ()

Global Economy Journal (GEJ), 2014, vol. 14, issue 03n04, 435-451

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 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/abs/10.1515/GEJ-2013-0059
Access to full text is restricted to subscribers

Related works:
Journal Article: Offshore Financial Centers in the Global Capital Network (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:gejxxx:v:14:y:2014:i:03n04:n:gej-2013-0059

Ordering information: This journal article can be ordered from

DOI: 10.1515/GEJ-2013-0059

Access Statistics for this article

Global Economy Journal (GEJ) is currently edited by Joseph Pelzman

More articles in Global Economy Journal (GEJ) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().