Offshore Banking : An Analysis of Micro- and Macro-Prudential Issues

Author/Editor:

Luca Errico ; Alberto Musalem Borrero

Publication Date:

January 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper takes a closer look at offshore banking—a pervasive practice that has played a role in recent crises. Offshore banking is an increasingly attractive alternative to the sometimes heavily regulated financial markets of emerging economies. From a microeconomic vantage point, offshore banks seem to exploit the risk-return tradeoff by being more profitable than onshore banks, and in many instances also more leveraged. Risks stemming from offshore activities may be easily transmitted onshore with systemic consequences. Current prudential and supervisory frameworks are broadly adequate for risk management if effectively and universally implemented.

Series:

Working Paper No. 99/5

Subject:

English

Publication Date:

January 1, 1999

ISBN/ISSN:

9781451842166/1018-5941

Stock No:

WPIEA0051999

Format:

Paper

Pages:

56

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