City connectivity in the office networks of the world’s largest banking firms

ABSTRACT

This visualisation specifies a possible map of international financial centres (IFCs) at the nexus of relational approaches to financial centres and approaches looking at the geographies of corporate organisation in finance. We chart interactions between the offices of 75 of the world’s largest banking firms and aggregate these at the city scale to estimate cities’ centrality in global finance. The three most connected cities are Hong Kong, New York and London but the map, above all, shows overlapping polycentric patterns. The map is intended as a starting point for critical interrogation and formative research into finance and space.

KEYWORDS:

• International financial centres
• world city network
• producer services firms
• financial services firms
• global banking
• Hong Kong
• London
• New York

JEL:

• F36
• P25

As is well known, there is no broadly agreed-upon definition of international financial centres (IFCs), which makes their empirical identification inherently ambiguous (Cassis & Wójcik, 2018). A further source of ambiguity is that IFC research is often couched in concepts that are either somewhat narrower (such as international banking centres, see Musschoot et al., 2023) or somewhat more encompassing (such as global cities, see Sassen, 2019). This more encompassing approach highlights that a city’s centrality in the world of finance often goes hand in hand with a prominent role in corporate globalisation at large (Taylor & Derudder, 2022), as shown by Van Meeteren and Bassens (2016) in their analysis of the joint role of London’s investment banks and a range of related knowledge-intensive business services firms in the issuance of Eurobonds.

Here, we draw on research combining a more restricted and a more encompassing perspective: we draw on our research into world city networks (Taylor and Derudder, 2016) to chart interactions between city offices of the world’s largest banking firms to specify a possible map of IFCs. Details about the model rationale, its assumptions, its specification and principal data are provided in Derudder and Taylor (2018). Here, we summarise their main features. In early 2022, for each of the 75 most valuable brands identified in Brand Finance’s Banking 500, we obtained information about their offices’ size and extra-locational functions across 689 cities. This information was standardised across firms and used as input into a network model to estimate a city’s centrality (Figure 1).

Figure 1. City connectivity in the office networks of the largest banking firms.

Node-based world map showing all cities with a connectivity score > 0 in their exact geographical position. The map thus displays the worldwide geographical distribution of IFCs, with further details on uneven patterns of connectivity shown by varying nodes in terms of colour and size.

The map shows the 238 cities that have a connectivity > 0. Colours reflect cities’ ranks and node sizes reflect the magnitudes of cities’ overall connectivities. Hong Kong, New York and London are the three most connected cities. Their connectivity is almost on par, echoing the well-known Time Magazine 2008 cover story suggesting that NYLONKONG are ‘three connected cities driving the global economy’ (Elliott, 2008). However, in practice, the geography of IFCs is much more polycentric. On the one hand, each of the three cities is part of a broader zone of intense connectivity, with northern America (Toronto, Los Angeles and Chicago), western Europe (Paris, Luxembourg and Frankfurt) and Pacific Asia (Beijing, Singapore and Shanghai) having multiple well-connected IFCs. On the other hand, beyond these regions, there are also several well-connected IFCs, most notably Sydney, Dubai, Sao Paulo, Johannesburg and Mumbai. There are, however, myriad other geographies to discover, including the tendency towards urban primacy beyond the largest national markets (Ioannou & Wójcik, 2021) and obvious voids with semi-abandoned Moscow as the only remaining Russian city.

This map is neither ‘the’ map of IFCs nor an end-product that speaks for itself. Its principal value is that it is a useful starting point for critical interrogation and further research into the finance and space nexus. Here we mention two possible examples but our hope is, above all, that readers come up with alternatives and complements. First, the map could be used as a starting point for more refined typologies of IFCs, as suggested by Tschoegl (2000) and Cassis and Wójcik (2018). This could inter alia imply other specifications of crucial actors in finance, adding geographical dimensions of client, arena, product and position in value chains, as well as considering how these are shaped by geopolitics, geographies of regulation, infrastructure networks and value chains. Importantly, this could not only lead to a more refined understanding of the actors’ location strategies but help to incorporate emerging dimensions of global finance, such as FinTech and RMB internationalisation, that have the potential to fundamentally unsettle this map (Lai & Samers, 2021; Töpfer & Hall, 2018). Second, and to some degree complementing the previous point, because this is a cross-sectional analysis focusing on relative ranking/size, it does not give insight into (some of) the other changes that have been taking place in the global landscape of IFCs. For example, 2022 is the first data gathering since we started tracking cities’ global connectivity in 2000 where we did not notice a wholesale rise of connectivity in general and extra-regional connectivity in particular, while the previous fast rise of Chinese cities seems to have come to a halt (cf. Derudder & Taylor, 2016). Our map does not allow the gauging of what may be these first signs of deglobalisation but it can be used as a yardstick for assessing such changes.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author(s).