The Governance of the Black Holes of the World Economy: Shadow Banking and Offshore Finance

Palan, Ronen; Nesvetailova, Anastasia

doi:10.2139/ssrn.2216795

Cited by 9 publications

(16 citation statements)

References 14 publications

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“…Again, approximately half of the global flows of foreign portfolio investment are routed through offshore financial centres (Palan et al ., ; Palan and Nesvetailova, ).…”

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confidence: 99%

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Tax Havens, Tax Evasion and Tax Information Exchange Agreements in the OECD

Kemme

Parikh

Steigner

2017

Euro Fin Management

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Using data on Foreign Portfolio Investment (FPI), we find a positive relationship between higher tax burden and OECD residents' tax evasion, especially via tax havens. Contrary to established investor preference for certain country characteristics, we find they are less important to tax evaders who value privacy and want to remain undetected by their home tax authorities. We find very limited evidence that OECD Tax Information Exchange Agreements (TIEAS) reduce tax evasion, controlling for other determinants of overall OECD FPI. Without the US in the OECD sample, tax havens play a lesser role and OECD policies appear to make a marginal impact.Keywords: tax haven, tax evasion, foreign portfolio investment, tax information exchange agreements, OECD JEL classification: F38, G38, H26We thank John Doukas and an anonymous referee for very helpful comments and suggestions on an earlier draft.

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“…Again, approximately half of the global flows of foreign portfolio investment are routed through offshore financial centres (Palan et al ., ; Palan and Nesvetailova, ).…”

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confidence: 99%

“…See Griffith (). Approximately half of the global flows of foreign direct investment are routed through offshore financial centres (Palan et al, ; Palan and Nesvetailova, ), and the accumulated private financial wealth in registered offshore tax havens was estimated to be between USD 21 and USD 32 trillion in 2010 (Henry, ).…”

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confidence: 99%

Tax Havens, Tax Evasion and Tax Information Exchange Agreements in the OECD

Kemme

Parikh

Steigner

2017

Euro Fin Management

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“…Forming part of the consolidated Lehman structure, LBTBV was formally subjected to the regulatory scrutiny of the US Securities and Exchange Commissionthe SEC (EMTN, 1995, 2000). However, as (Helleiner, 1994;Palan, 1999;Palan & Nesvetailova, 2013;Strange, 1996Strange, , 1998, and the tax avoidance opportunities offered by the historical debris of the British Empire and its offshore interconnections (Maurer, 2008;Roberts, 1994;1995). Comparatively less attention has been paid to the highly specialized subsidiaries and trusts located in the OFCs of Ireland, the Netherlands and Luxembourg, and the function of these OFCs as pass-through jurisdictions or 'conduit centres' (a notable exception is Palan et al, 2010).…”

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confidence: 99%

“…A range of scholars has challenged the allegedly efficient brokerage role of non-banks and argued that shadow banking rather needs to be understood as one of the root causes of the current crisis (Bengtsson, 2013;Lysandrou & Nesvetailova, 2014;Nesvetailova, 2015;Palan & Nesvetailova, 2013;Rixen, 2013;Thiemann, 2014). The fact that such bank-like activities have fallen off the radar of state regulation is particularly highlighted.…”

Section: Introductionmentioning

confidence: 99%

“…This literature provides excellent (macro-level) explanations for the prevalence of debt-led accumulation patterns; yet the specific role of shadow banking in facilitating credit/debt is often not accounted for. Similarly, shadow banking is not prominently discussed in the literature on OFCs (Donaghy & Clarke, 2003;Maurer, 2008;Picciotto, 1999;Roberts, 1995Roberts, , 1994Wójcik, 2013;exceptions are Palan, 1999exceptions are Palan, , 2002Palan & Nesvetailova, 2013;Rixen, 2013). Relatively little has been written about the specialised work division and complementary shadow-banking practices among different offshore financial hubs, while broader trends within capitalism such as overaccumulation and debt-led accumulation structures tend to be ignored (an exception is Bryan et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Lehman Brothers in the Dutch offshore financial centre: the role of shadow banking in increasing leverage and facilitating debt

Fernández

Wigger

2016

Economy and Society

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Credit intermediation outside the regular banking system, or shadow banking, has increased immensely over the past decade. This paper situates this increase against the backdrop of the structural problem of overaccumulation, and thus the absence of profitable reinvestment opportunities in the production sphere, in addition to the scarcity of high-quality collaterals.Zooming in on Europe's offshore world and Dutch conduit structures in particular, the paper illustrates how, on the basis of the Amsterdam-based Lehman Brothers subsidiary (and others), shadow banking enables regular banks to increase leverage and take on excessive debt. It will be argued that the continued expansion of debt at the systemic level, inter alia facilitated by shadow banking, heralds the prospect of a crisis far more dramatic than the one we are currently witnessing.

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