Final Exam Review, Q. 1-5

1. Offshore banks, located outside the country of residence of the depositor, in a low tax jurisdiction/tax haven.

2. Offshore banks are convenient for transnational corporations:
a) greater privacy
b) low or no taxation
c) easy access to deposits, less regulation of deposits
d) protection against local or political instability

3. The Cayman Islands, Dutch West Indies, and other pacific islands are used to launder money for the U.S. government and multinational corporations. As a result, individual taxpayers have to bear the burden for Social Security,taxes are not levied at North American or European rates. Nonexistent taxes in Panema and Liberia. Profits fell on paper, not in actuality.

4. 3rd World governments considered private bank loans as an attractive way of financing their economic efforts because they had no alternative means of development.

5. Banks were not careful about monitoring what loans were used for because financial liberalization eased the cross-border movement of money. p. 118