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City of London Global Financial Centres Index: March 2008
The Global Financial Centres Index (the third in the series) published by the City of London – the corporation promoted London’s financial centre – in partnership with the Z/Yen Group ranks financial centres based on external benchmarking data and current perceptions (i.e. surveys) of competitiveness. In the past, it was though that financial markets developed through serving their domestic markets. Nowadays, it is commonly acknowledged that the traffic between a domestic economy and the global financial community determine the stature of a financial centre. Accordingly, in addition to measuring the quality of the services provided locally, the report is interested in quantifying how effective financial centres are at providing choice and access to global financial services.
The index relies on 62 external indices (38 country-level datasets) and 18,878 assessments (responses to online questionnaire) by 1,236 respondents active in financial markets to describe the competitiveness of financial centres. The report mentions “a strong international group of ‘rater’” (2008: 64). Factors are grouped into five key areas.
- People: all three reports stress how the number factor to a centre’s competitiveness is the availability of good personnel, the quality of life of the city and the flexibility of the labour market.
- Business environment: includes regulation, tax rates, levels of corruption, economic freedom and ease of doing business.
- Market access: covers the levels of securitisation, volume and value of trading in equities and bonds. It is also interested in the strength of connections between financial centres globally.
- Infrastructure: relates mainly to the cost and availability of buildings and office space, as well as the robustness of transportation and communication links.
- General competitiveness: includes price levels, economic sentiment and quality of living.
The ratings for each index is calculated by a ‘factor assessment model’, a proprietary aggregation system created by the Z/Yen Group. It is worth noting that we, on the other hand, have decided to make our sophisticated aggregation tool to the public on our website.
London and New York top the list, though the current financial crisis, including the run on the bank Northern Rock, have reduced London’s lead. Gulf State centres have risen with Dubai heading the way.
