On the competitiveness, emergence and regional links of financial centres.

Fattouh, Bassam

Abstract

The purposes of this thesis are first, to provide a general framework to analyse the location of financial activity, second, to study the emergence and evolution of banking centres centres and finally, to test empirically several hypotheses related to banking centres and their links with regional economies. In the first part of the thesis, we examine the impact of information asymmetry on the degree of centralisation of banking activity by incorporating spatial factors in a model of credit rationing. We next discuss the main factors that push bank to locate near each other and explore how pecuniary externalities in the form of backward and forward linkages can generate a powerful agglomeration force in the banking industry. We also analyse the path dependence process in financial centres and the conditions under which this process can be broken. In the second part of the thesis, we make an important contribution to the literature by providing an original theoretical framework to explain the emergence and evolution of banking centres. Unlike the existing literature which attributes the emergence of banking centres only to differences in regulatory and tax structure or other inherent geographical attributes, our model emphasises the importance of economies of scale in financial intermediation as being the major determinant of emergence. This allows for an element of indeterminacy in the model and hence other factors such as historical chance or "first mover" advantage can play an important role in determining which country emerges as a financial centre. The theoretical framework is then extended to examine the evolution of cross border banking over time and the determinants of the nature of banking systems; issues which remain unexplored in the literature on banking centres. In the last part of the thesis, we provide an empirical analysis on the main determinants of banks' location using new data series and a novel empirical approach which takes into account the major features of banking centres. Finally, we provide a novel empirical analysis of the links between banking centres' financial development and regional economic activity, using Hong Kong as a study case.

Citation

Fattouh, B. On the competitiveness, emergence and regional links of financial centres. (Thesis). SOAS University of London

• Thesis Type: Thesis
• Deposit Date: Oct 16, 2018
• Publicly Available Date: Oct 16, 2018
• DOI: https://doi.org/10.25501/SOAS.00028469
• Award Date: Jan 1, 1999