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The best of both worlds: scale economies and discriminatory policies in London’s global financial centre

Lysandrou, P., Nesvetailova, A. & Palan, R. (2017). The best of both worlds: scale economies and discriminatory policies in London’s global financial centre. Economy and Society, 46(2), pp. 159-184. doi: 10.1080/03085147.2017.1359915


From the early 1960s onwards London has managed to vie with New York for the top spot as an international financial centre. Ever since then, London has reigned as a leading global financial hub, despite not having behind it anything like the political or economic backing enjoyed by New York. This paper seeks to explain this phenomenon by building on Kindleberger’s classic analysis of financial centres as international hubs that arise due to economic, geographic and infrastructural advantages, and more recent theories of specialized financial centres which suggest that financial centres deploy discriminatory business practices in order to compete with the scale economy-based centres. Our central claim is that London’s continuing financial supremacy can be traced to the way that the opposing ‘economic’ and ‘political’ sets of criteria necessary for a financial centre are here inextricably fused together in a mutually reinforcing dynamic. Three case studies are used to support this claim: the market for international loans and deposits; the forex (FX) and over the counter (OTC) derivatives markets; and the area of asset and collateral management.

Publication Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in Economy and Society on 21 Sep 2017, available online:
Publisher Keywords: City of London; bank lending, capital markets, foreign exchange, OTC derivatives, liquidity, collateral, asset management, offshore financial centre
Departments: School of Policy & Global Affairs > International Politics
Text - Accepted Version
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