City Research Online

Abstract

This paper rethinks financial embeddedness by examining how transnational banks respond to funding pressures through the infrastructures of offshore financial centres (OFCs). Using handcollected information, we construct a novel dataset of European banks across six Eurozone countries from 2009 to 2015. We show that during the sovereign debt crisis, banks engaged in latent network activation, mobilising offshore conduit arrangements to secure foreign currency funding as market conditions tightened, even when official liquidity support was available. We argue that embeddedness in global finance is dynamic and crisis contingent, since relationships and organisational infrastructures that appear peripheral in stable periods can become decisive under stress. OFCs emerge not as passive enablers of regulatory arbitrage, but as active infrastructures used by global banks to access cross-border liquidity when conventional funding channels become impaired. This has important implications for the governance and oversight of cross-border liquidity flows and off-balance-sheet funding structures.

Publication Type:	Article
Additional Information:	© 2026, The Authors. This is the accepted manuscript of an article published by OUP. Please refer to the publisher’s terms and conditions for information on re-use.
Publisher Keywords:	Offshore finance; global banking; liquidity shocks; regulatory arbitrage; financial crises; cross-border funding
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management H Social Sciences > HF Commerce H Social Sciences > HG Finance J Political Science > JZ International relations
Departments:	Bayes Business School Bayes Business School > Faculty of Finance
SWORD Depositor:	Symplectic Administrator

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