Hierarchical tendencies of capital markets among international financial centers

The dramatic evolution of global finance in the last three decades has seen intensified competition among the world's major cities to become prominent control centers of global financial flows. This paper examines the spatial organization and evolution of capital markets in forty-three world cities from 1980 to 1998. It finds evidence of the strengthening of hierarchical tendencies among world financial and capital cities as they search for ways to differentiate between themselves through financial concentration and productivity. The results also indicate a trend towards the dominance of London and New York in this financial hierarchy, and that top tier cities tend to be characterized by significantly lower levels of market and share concentrations, share trading value, and risks. Finally, important differences in ownership patterns between the capital markets are detected for the top cities of the hierarchy.