Banks and the World's Major Banking Centers, 2010

Abstract

We update three earlier articles on the determinants of interpenetration of financial centers by banks by adding the year 2010 to our analyses for 1970 and 1980, 1990, and 2000. In addition, we also re-estimate our model to include data for Beijing/Shanghai, and add those emerging centers for 2010. First, the number of banks in our data and the number of their offices in other centers has fallen by 46% and 24% since peaking in 1990. Second, even so our matrix saw less turbulence than in the prior two decades as density and number of presences in other centers per bank increased. Third, London had regained the first place from New York. Tokyo remains in fifth place after Hong Kong and Singapore. Once one includes Beijing/Shanghai, the Chinese centers now rank first and Tokyo sixth. Fourth, Paris and Frankfurt/Hamburg have regained some centrality. Fifth, our gravity model approach continues to model the data well, with distance between centers continuing to depress interpenetration between centers as it did in 2000. Lastly, the primary effect of introducing Beijing/Shanghai as a center has increased the importance of interpenetration as banks from Beijing and Shanghai are going to centers from which banks are coming to Beijing and Shanghai.