Finance Paper Essay Example | Topics and Well Written Essays - 750 words

Finance Paper - Essay Example Bahamas for example has 301 licensed banks whereas the British Virgin Island only has 7. Offshore banking has a countless number of rewards, ranging from low to no taxation, to greater privacy and anonymous accounts, as well as protection against financial instability. With that being said, I would like to emphasize what these banks also offer. Offshore banking has aided terrorist by laundering their financial resources, allowing them to fund terrorist activities that are partially impossible to detect. It also highlighted in the collapse of the company Enron, where the company used offshore banks to avoid paying millions of dollars in US Tax. Offshore financial centers have very significant reasons for their existence. These financial resources provide financial services; these financial services can be divided into three broad groups: (i) Private investments, (ii) Asset protection, (iii) Estate planning (Higgins, 2000). Private investments are the significant part of the offshore f inancial centers. In the private investments, investments are handled and managed with an intention of reducing the potential tax liabilities. Additionally, private investments are done to increase the protection which is granted or provided under the legal confidentiality provisions. Asset protection comes with the use of international jurisdiction. In this category, with the help of international jurisdiction, the residence of client is separated; and asset protection helps protecting the income and assets from political, legal and fiscal risks. Estate planning is about assets and their administration. In estate planning, mostly assets, all types of assets, are properly administrated with the help of legal and fiscal jurisdictions (Higgins, 2000). With the help of financial institutions; like, international business corporations (IBCs), insurance companies, mutual funds, offshore corporations, and some of the recent gaming companies, a large and huge amount of funds are deposited in OFCs. With these available funds, different types of investment are made to generate some economic and financial contributions in the economy. Little work has been done to understand and determine the role and contribution of offshore banking in the creation and generation of employment and employment opportunities. It is the creation and availability of employment opportunities by the OFCs that provide the importance and significance of offshore banks as far as their role for the development of economy is concerned. Any sector is valued and measured in the economy on the basis of its contribution to the economy. Mostly, there are two ways in which this contribution is measured and analyzed: One, the money contribution of offshore banking. This means the amount of tax paid by the offshore banks in the economy determines and measures its value for the economy. There is another contribution given and provided by the offshore banks. That is of economic nature- creation and generatio n of employment opportunities. Various examples are available that clearly indicate and highlight that offshore banks are licensed. After getting license, they have established various branches in different parts of the world. A large amount of investment has been made to make offshore banking functional and useful.