Kein Folientitel

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The rise (and fall?) of the Financial Center
Frankfurt Locations of Foreign Banks in Germany
1949-2003
Michael H. Grote Johann Wolfgang
Goethe-Universität Frankfurt a.M. Vortrag im
Rahmen der 90-Jahr Feier der Johann Wolfgang
Goethe-Universität Frankfurt 7. Juli 2004
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setting

• national financial players tend to concentrate
• GB London J Tokyo
• D Frankfurt US New York, Chicago
• F Paris etc.
• borders are vanishing
• introduction of Euro
• deregulation
• information and communication technologies
• ubiquitous instant information
• remote access

• what will happen to national financial centers
  in EU?

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literature

• literature on financial centers is focusing on
  static phenomena
• why there are financial centers at all?
  micro-economic view on agglomeration effects
• why do they occur in certain countries?
  macro-economic studies to isolate national factors

• development of financial centers almost absent
  from the literature

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U

• the decline of agglomerations is not very well
  addressed
• new economic geography U-shaped development

share of region 1 ( success)
share of region 1 resp. 2 of manufacturing sector
0,5
historical accident window of opportunity
share of region 2 ( failure)
level of transport costs
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why Frankfurt?

• Frankfurt
• by far the predominant financial center in
  Germany, second in Europe
• got predominant position in Germany only after
  World War II from Berlin, starting virtually
  from scratch
• emerged after a competition between several
  cities
• almost a laboratory case for financial center
  development
• is interesting on its own, but
• serves as a test for theory

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historical accident

• before World War II, Berlin was the leading
  financial center in Germany
• but was not able to continue this function
  afterwards
• three cities were in competition for succession

• Düsseldorf
• by far largest industrial hinterland
  (Ruhrgebiet)
• share of lending activties almost 40 in
  West Germany after war
• functioning payment system

• Frankfurt
• central location
• location of American military
  headquarter
• got seat of central bank in 1948
• starting point for development

• Hamburg
• second biggest center
• large banks had moved departments from
  Berlin
• Reichsbank also
• more stock exchange turnover than all
  others combined after war
• less destroyed than others
• port

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inverted U-shape
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U-shape and U-shape?
?
GER
Frankfurts share of banks at scale
transport cost
EU
?
transport cost
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Thank you for your attention!
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The rise (and fall?) of the Financial Center
Frankfurt Locations of Foreign Banks in Germany
1949-2003
Michael H. Grote Johann Wolfgang
Goethe-Universität Frankfurt a.M. Vortrag im
Rahmen der 90-Jahr Feier der Johann Wolfgang
Goethe-Universität Frankfurt 7. Juli 2004