292 research outputs found
The Governance of the Black Holes of the World Economy: Shadow Banking and Offshore Finance
This paper focuses on regulatory challenges posed by the two interconnected structures of the global financial system – the economy of tax havens (or offshore financial centres), and the shadow banking system. The financial crisis of 2007-09 has revealed that tax havens structures and shadow banking entities play a central role in the practise of financial institutions reliant on financial innovation. Thriving on complexity, opaque networks and driven by arbitrage, the two phenomena pose tremendous challenges to national and international regulators aiming to restore the financial cycle in the recessionary environment. In this paper, we analyse "the state of play" and the current plans for the governance of tax havens, offshore finance and the shadow banking industry. We find that although offshore financial centres and shadow banking are outside the scope of academic economics, they have attracted a lot of attention on the part of financial researchers and regulators. Along with other macro-prudential and system risk concerns, the regulation, or governance of these "black holes" of the global economy is increasingly assuming a central place on the agenda of financial regulators. In what follows, we explore the reasons behind this development
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The Second British Empire: The British Empire and the re-emergence of global finance
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Futurity, Pro-cyclicality and Financial Crises
Nearly a century ago, one of the leading forefathers of the school of evolutionary economics, John R. Commons, coined the term ‘futurity’ to describe an epochal change in the late nineteenth-century advanced economies. Futurity refers to the reorientation of economies towards the future, and specifically to the fledgling practice of treating businesses as ‘going concerns’ and measuring its value in terms of their anticipated future profits. Curiously, the implication of such epochal changes on the performance of the financial system had rarely been discussed, let alone addressed. This article presents a theoretical argument that suggests that futurity encourages pro-cyclical dynamics that are pulling the financial systems in ever more violent and disastrous swings
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Elsewhere, Ideally Nowhere: Shadow Banking and Offshore Finance
If we were to identify one common thread across the nancial system’s stages of evolution, it is the quest for being located for tax and regulatory purposes elsewhere or, ideally, nowhere. Recognising the limits of mainstream economic models in providing a comprehensive explanation of this phenomenon, we draw on the ideas of orstein Veblen and his theory of business civilisation. A Veblenian analysis suggests that dynamics and behaviour in nance that are commonly associated with human failure (greed, exuberance, fraud, incompetence), and which appear to have become widespread practice, should best be understood as sabotage. Finance is awash with techniques designed to sabotage both clients and the governments who enacted regulations that were supposed to protect clients. ese techniques are legal mechanisms, albeit as Veblen writes, not in the spirit of the law.
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Banks as Global Corporations: From Entities to ‘Ecological Habitats’
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Troubling tax havens: tax footprint reduction and jurisdictional arbitrage
Crédit Swiss estimates that global aggregate wealth has reached US 50 billion dollars - whose main purpose and product is the reduction of individual and corporate tax footprint
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The best of both worlds: scale economies and discriminatory policies in London’s global financial centre
From the early 1960s onwards London has managed to vie with New York for the top spot as an international financial centre. Ever since then, London has reigned as a leading global financial hub, despite not having behind it anything like the political or economic backing enjoyed by New York. This paper seeks to explain this phenomenon by building on Kindleberger’s classic analysis of financial centres as international hubs that arise due to economic, geographic and infrastructural advantages, and more recent theories of specialized financial centres which suggest that financial centres deploy discriminatory business practices in order to compete with the scale economy-based centres. Our central claim is that London’s continuing financial supremacy can be traced to the way that the opposing ‘economic’ and ‘political’ sets of criteria necessary for a financial centre are here inextricably fused together in a mutually reinforcing dynamic. Three case studies are used to support this claim: the market for international loans and deposits; the forex (FX) and over the counter (OTC) derivatives markets; and the area of asset and collateral management
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