Concept of offshore Financial Centers

This paper proposes a new definition of Offshore Financial Centers (OFCs) and develops a statistical method to differentiate between OFCs and non-OFCs using data from the Coordinated Portfolio Investment Survey (CPIS), the International Investment Position (IIP), and the balance of payments. The suggested methodology identifies more than 80 percent of the OFCs in the study sample that also appear in the a priori list used by the IMF to conduct its OFC assessment program. The methodology distinguishes OFCs based strictly on their macroeconomic features and avoids subjective presumptions on their activities or regulatory frameworks. The study also identifies three new countries meeting OFC criteria.Offshore financial centers;Financial stability;financial services, statistics, portfolio investment, equation, survey, standard deviation, financial statistics, financial derivatives, financial system, financial sector, international financial statistics, statistic, standard deviations, statistical significance, financial intermediation, financial markets, outliers, international financial system, correlation, financial assets, equations, financial institutions, interest rate ceilings, money market, international financial markets, statistical method, stock valuations, independent variable, outlier, independent variables, hedging, empirical framework, international banks, derivatives trading, statistical data, international currencies, international capital, instrumental variables, domestic capital, computation, money market rates, hedge funds, international standards, financial economics, statisticians, bond, financial policies, surveys, hedging instruments, hedge, domestic financial markets, financial systems, international money market, reserve requirements