Analyses of the financial sector
In many metropolitan areas of Europe, the financial sector (banks, insurance companies and other financial services providers) has developed into an important pillar of value creation and prosperity. In the «Monitoring Financial Centers» project, several competitive financial centers are described and compared. The financial services industry is subdivided into (a) banks, (b) insurance companies and (c) other financial services with a very detailed presentation of the performance and its analysis. In addition to value added and employment, other key figures, such as those used in the financial industry, are also collected. Assets under management, bank balances, issuance volumes, stock exchanges or insurance premiums. Apart from the performance indicators, the market potential and the framework conditions are also identified as relevant variables and their influence on the performance (level and dynamics) is analyzed.
Indicators - performance and framework conditions
How can performance in the financial sector be measured?
What are meaningful and industry-standard indicators to measure performance and competitiveness in the financial sector? In the financial sector, there is a wide gap between the usual economic performance indicators and the indicators used by the majority in the sector itself. Both aspects are therefore taken into account.
What are the influencing factors?
The attractiveness of a location for the financial sector is determined both by supply-side and demand-side factors. On the demand side, what is particularly relevant is the size of the market that can be served from a particular financial centre. This depends first and foremost on the market potential in the narrower sense. This is the volume that is available for servicing by the financial sector. Depending on the sub-sector considered, this can be, for example, the gross domestic product (as a proxy for economic activities), the gross national product (as a proxy for income), the number of wealthy private individuals, the wealth of private individuals, the wealth of institutional investors, the volume of the capital market or the number of companies. This is about the level and growth trend of the domestic market. Although these factors cannot be directly influenced by a location policy, they play a major role in its attractiveness. The natural market boundaries (geographical, national, cultural) are therefore measured and compared.
However, the effective volume of a financial centre's home market is also directly influenced by politics. Regulatory simplifications, for example in capital movements or supervision, can shift the boundaries of the natural home market. Tax legislation also plays an important role, as taxes change the total volume available on the one hand and drive a wedge between the services provided by the financial sector and the customer's benefit on the other. Of particular relevance are taxes on income, capital gains, assets and inheritance.
Which financial centres are relevant?
Apart from the nationwide provision of basic financial services to the population and the economy (retail front of banks and insurance companies), financial services are predominantly provided in a highly concentrated manner. Consequently, national data (e.g. data collected by central banks) are often good indicators for the leading financial centre (e.g. issue volume of shares or bonds). Wherever possible, however, data are collected for the respective financial centre.
The following list provides an overview of the financial centres relevant to the project:
Switzerland: Zurich, Geneva, Ticino, Basel
United Kingdom: London, Edinburgh
USA: New York, (Chicago)
China: Hong Kong, (Shanghai)