Race for the money: international financial centres in Asia

Abstract

Asia’s emergence as a key player in the global economy is witnessing intense competition within the region to become Asia’s next great international financial centre. Hong Kong, Singapore and Shanghai, among others, are each vying for primacy, attempting to attract dense clusters of financial services firms and reap the lucrative rewards associated with this. This paper explores this emerging competition. It does so from the perspective of attempting to map the parameters necessary to become an international financial centre, particularly the institutional, political and spatial contexts that facilitate the concentration of international financial services. Why and how financial clustering occurs and the factors that determine the location of financial centres is an important public policy concern, both for established centres eager to maintain their competitive position as well as emerging economies keen to identify the policy levers necessary to support financial sector growth. To that end, the paper explores the experiences and strategies of three of Asia’s current contenders; Hong Kong, Shanghai, and Singapore, analyzing the policy architecture, financial sector strategies, institutional mechanisms and spatial geographies undergirding financial sector growth, and the constraints, obstacles and challenges each face in developing and or consolidating their international financial centre.