An Empirical Survey of the Changes in the Competitiveness of Global Financial Centres

Abstract

This empirical study addresses the meta-processing of data on the competitiveness of a global financial centre. International financial centres are in open competition with each other as countries and cities around the world have developed financial centres since the early 1980s for the global financial system and the liberalisation of the financial market. London and New York have retained their ‘global-hub’ positions over time according to the Global Financial Centre Index. Systematic assessments in these city-based surveys, however, provide little guidance to large emerging cities by ignoring the provision of demand-side evolution such as GDP growth or FDI. This study augments country-level demand-side factors and also future factors such as innovation in projected estimations. The results point to the view that the status-quo will be challenged by the large cities in emerging countries. Shanghai, for example, would be in the top rank, subject to the multifaceted dimensions of the efficiency and stability of the business environment, although the complexity of non-linearity and asymmetry in locational concentration exists.

Keywords: Global Financial Centre, financial services, FDI, taxation, location decisions

JEL Classification: F20, G15, G28, O16, O19, P52