The Economic Impact of Offshore Banking Centers on the Host Countries

Abstract

Offshore banking centers (OBCs) have developed during the last few decades to the point where they have come to play a major role in the innovative world of international finance. This phenomenal growth can be attributed to several factors: the restrictive policies and regulatory procedures in banking in some industrial developed countries, expansion of international trade, impact of the recycling of petrodollars and the borrowing requirements of developing countries. These phenomena, combined with a telecommunications revolution which enables banking institutions to access large quantities of current financial information and to disseminate it via a global network, have accelerated the growth of the OBCs. In turn, this OBC expansion has contributed to the development of world finance and the world economy in a number of ways.