Regulatory Effectiveness in Onshore & Offshore Financial Centers
44 Pages Posted: 6 Mar 2012 Last revised: 6 Aug 2012
Date Written: March 3, 2012
Onshore jurisdictions, such as the United States, United Kingdom, France and Germany, are critical of offshore financial centers (OFCs), such as Bermuda, the Cayman Islands, and the Channel Islands. Arguments against OFCs include claims that their regulatory oversight is lax, allowing fraud and criminal activity. In this article, we present cross-jurisdictional data, showing that OFCs are not lax. We also provide qualitative analyses of regulatory effectiveness, demonstrating that input-based measures of regulation are inappropriate metrics for comparing jurisdictions. Based on both quantitative input measures and a qualitative assessment, we reject the onshore critique of OFCs as bastions of laxity.
Keywords: offshore financial centers, OFCs, tax competition, financial regulation
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