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What turns cities into international financial centres? Analysis of cross-border investment banking 2000–2014

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  • Dariusz Wójcik
  • Eric Knight
  • Vladimír Pažitka

Abstract

Globalisation, financialisation and technology have fuelled competition among international financial centres (IFCs), with investment banks playing an important part in the process. This study introduces novel data on cross-border investment banking revenues in 2000-2014 by city, and investigates their determinants. It shows that IFCs emerge from cities that are already leading domestic financial centres, with large, deep, flexible and open labour markets, and a large and internationalised non-financial sector, in countries with strong rule of law and contract enforcement. Stock market returns, corporate- and finance-specific taxation, English as the official language, and legal family of origin do not seem to matter.

Suggested Citation

  • Dariusz Wójcik & Eric Knight & Vladimír Pažitka, 2018. "What turns cities into international financial centres? Analysis of cross-border investment banking 2000–2014," Journal of Economic Geography, Oxford University Press, vol. 18(1), pages 1-33.
    • Handle: RePEc:oup:jecgeo:v:18:y:2018:i:1:p:1-33.
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    Cited by:

    1. Luke Milsom & Vladimír Pažitka & Isabelle Roland & Dariusz Wójcik, 2020. "Gravity in international finance: evidence from fees on equity transactions," CEP Discussion Papers dp1703, Centre for Economic Performance, LSE.
    2. Tom Hashimoto & Vladimír Pažitka & Dariusz Wójcik, 2022. "The spatial reach of financial centres: An empirical investigation of interurban trade in capital market services," Urban Studies, Urban Studies Journal Limited, vol. 59(6), pages 1255-1274, May.
    3. Matthieu Bussière & Robert Hills & Simon Lloyd & Baptiste Meunier & Justine Pedrono & Dennis Reinhardt & Rhiannon Sowerbutts, 2021. "Le Pont de Londres: Interactions between monetary and prudential policies in cross‐border lending," Review of International Economics, Wiley Blackwell, vol. 29(1), pages 61-86, February.
    4. Kirsten Martinus & Thomas Sigler & Iacopo Iacopini & Ben Derudder, 2019. "The role of tax havens and offshore financial centers in Asia-Pacific networks: evidence from firm-subsidiary connections," Asian Business & Management, Palgrave Macmillan, vol. 18(5), pages 389-411, November.
    5. Vladimír Pažitka & Michael Urban & Dariusz Wójcik, 2021. "Connectivity and growth: Financial centres in investment banking networks," Environment and Planning A, , vol. 53(7), pages 1789-1809, October.
    6. Yanxin Liu & Huajiao Li & Jianhe Guan & Xueyong Liu & Yajie Qi, 2019. "The role of the world’s major steel markets in price spillover networks: an analysis based on complex network motifs," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(4), pages 697-720, December.
    7. Philip Arestis & Peter Phelps, 2019. "A panel analysis of Brazilian regional inequality," Environment and Planning A, , vol. 51(7), pages 1558-1585, October.
    8. Hall Sarah & Heneghan Martin, 2023. "Interlocking corporate and policy networks in financial services: Paris-London relations post Brexit," ZFW – Advances in Economic Geography, De Gruyter, vol. 67(2-3), pages 92-104, August.

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    More about this item

    Keywords

    International financial centres; investment banking; labour market; institutions; taxation;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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