Investment banking centres since the global financial crisis: New typology, ranking and trends

Abstract

Financial centres are central to contemporary capitalism, but research on their development has been impeded by methodological challenges related to data availability. This paper offers a new typology of financial centre activity. Based on the nationality of parent companies of financial service providers operating in a centre, and the nationalities of their customers, we distinguish between domestic, export, import and platform activities. Second, we compile a unique dataset of investment banking deals worldwide, which allows us to apply the new typology and introduce the first ever ranking of top financial centres based on the actual investment banking activity conducted in these centres. Our findings confirm the dominance of New York and London as global financial centres, with New York focused on domestic activities, and London on export and platform activities. Our data also show that, overall, investment banking activity has fallen dramatically since 2007, with 60% of the decline concentrated in New York, and a further 30% in Zurich, London, Frankfurt, Amsterdam and Edinburgh combined. As a result, the dominance of investment banking by New York and London has diminished, contributing to a trend that predates the crisis, explainable by the increasing shares of Asian centres, with Tokyo and Chinese cities in the lead.