xinhua-dow jones international financial centers ...index.xinhua08.com/dqszs/bgxz/201106/p...2010...

Xinhua-Dow Jones International Financial Centers

Development Index （2010）

July, 2010

I

Contents

I. Comprehensive valuation results of the IFCD ....................................................................... 1

(I) Analysis of the comprehensive quality of international financial centers .................... 2

(II) Analysis of development indicators of international financial centers ..................... 10

II. Geographic distribution of global financial centers ............................................................ 21

(I) A general survey of financial centers on the five continents ...................................... 22

(II) Financial centers in America ..................................................................................... 23

(III) Financial centers in Europe ..................................................................................... 24

(IV) Booming Asia-Pacific region .................................................................................. 25

III. Confidence analysis of the financial centers in the emerging economies ......................... 27

(I) Data analysis .............................................................................................................. 27

(II) Reasons for the differentiated confidence indicators ................................................ 29

IV. Introduction to the research approach ............................................................................... 32

(I) Construction of the objective indicator system of IFCD ............................................ 32

(II) Analytical approach of questionnaire survey ............................................................ 40

(III) Comprehensive analytical approach of IFCD indicators ......................................... 41

Appendix ................................................................................................................................. 43

I. Related tables and charts ........................................................................................... 43

II. Analysis of the questionnaires .................................................................................... 46

III Further analysis .......................................................................................................... 50

IV. Objective indicator system and questionnaire ........................................................... 61

2010 Xinhua-Dow Jones International Financial Centers Development Index

1

Report on the XinhuaDow Jones International Financial

Centers Development Index 2010

The innovations of financial systems, financial markets, and financial services have promoted

fast expansion of the international capital markets and constant integration of the international

financial markets, and have further accelerated the process of global economic integration. The

development of finance not only serves as a driver for strong economic growth, but also brings

changes to the locations of the international financial centers. Leadership of international finance,

indicated by cities that are international financial centers, has become a key focus of international

competition.

The purpose of the Xinhua-Dow Jones International Financial Centers Development Index

(IFCD) is to measure and value the development capacity of the global international financial

centers in a scientific and fair way. The design of the valuation system gives weight to financial

market development and the financial ecological environment, considers the complex environment

of cities, countries and regions, and puts emphasis on the growth of international financial centers

as well as their level of maturity.

The internal structure of the Xinhua-Dow Jones International Financial Centers Development

Index concentrates on the financial properties, system functions, interaction with the outside world,

as well as the growth of international financial centers. It will disclose the development situation

and rules of the international financial centers in a multidimensional, deep-rooted and systematic

way, through comparing and analyzing all the indicators qualitatively and quantitatively. A report

on the index will be issued once a year for practical application or scientific research on the

development of the international financial centers and even the respective country and region.

I. Comprehensive valuation results of the IFCD

Based on all-around statistics and analysis, the research group came to a comprehensive


2

ranking of 45 international financial centers. The top ten are New York, London, Tokyo, Hong

Kong, Paris, Singapore, Frankfurt, Shanghai, Washington, and Sydney.

Among the 45 centers, 21 are located in Europe, 14 in the Asia-Pacific region and Africa, and

10 in America (including eight in North America).

Meanwhile, a confidence test of the financial centers in emerging economies shows the world

is generally optimistic about the development capacity of international financial centers in the five

BRICS nations (Brazil, Russia, India, China and South Africa). And Shanghai, followed by Sao

Paulo, Moscow, Johannesburg and Bombay, is taken as most likely to become global leading

international financial center.

(I) Analysis of the comprehensive quality of international

financial centers

The Xinhua-Dow Jones International Financial Centers Development Index, based on

principles of science and fairness, chose 45 famous financial cities as samples, and set up a

comprehensive valuation system combining objective valuation (or objective indicator system)

and subjective valuation (questionnaire survey). The objective indicator system values

international financial centers from five aspects or indicators, i.e. the financial market, growth and

development, industrial support, service, and the general environment, while the questionnaires

collect survey subjects’ opinions to form mutual validation with the objective indicator and

provide some reference for the weight design in the objective comprehensive valuation system.

In order to make sure the sample financial cities and survey subjects are chosen scientifically

and reasonably, this Report applies these standards:

Standards for choosing sample financial cities: choices of experts from the financial sector;

primary operating results on models; rankings of international financial centers by other

institutions; regional distribution of international financial centers.

Standards for choosing survey subjects: participants of the financial sector should account for

about 70% of the total; high-rank executives should account for 60% or so; regional distribution of

survey subjects should be proportionate to the regional distribution of the 45 sample financial

cities; the number of the survey subjects should meet the requirements of statistics.


3

Importance of valuation indicators

In the questionnaires of the Xinhua-Dow Jones International Financial Centers Development

Index, survey subjects gave grades on how important in their opinion each of the five aspects (the

financial market, growth and development, industrial support, service, and general environment) is

to the valuation of the competitiveness of financial centers. One point means “not important,” and

five points means “very important”. This research calculates and compares the comprehensive

grades on the importance of the five aspects with 2,386 valid samples in a comprehensive

valuation method. Comprehensive grade of indicator i is expressed as 5

1i ijjx j f

== ×∑ , and ijf

indicates the proportion of grade j in all the grades for indicator i.

Table 1 Importance Comparison on Financial Market, Growth and Development, Industrial Support, Service, General Environment

1 Point 2 Points 3 Points 4 Points 5 Points Comprehensive Scores Rank

Financial Market 10.5 5.7 10.6 25.4 47.6 3.933 1

General Environment 6.4 6.4 19.3 30.1 37.7 3.860 2

Growth and Development 5.7 8.6 17.1 31.7 36.9 3.855 3

Service 5.4 8.5 21.1 33.3 31.5 3.764 4

Industrial Support 4.3 9.4 24.9 36 25.2 3.678 5

Note：The data from the second column to the sixth column shows the proportion of each index in each score, and the unit is

percentage.

The comprehensive grades on the above five aspects indicate that the top 1 to 5 are, in turn,

the financial market, the general environment, the growth and development, the service, and

industrial support. Comprehensive grades of the five aspects are close to one another. Difference

of two adjacent aspects’ grades is within 0.1 point, and that between the general environment and

the growth and development is only 0.05 point. But the importance of the service and the

industrial support is apparently lower than the former three, which demonstrates the financial

market, the general environment, and the growth and development are generally relatively very

important in the valuation of the competitiveness of financial centers. Comparatively, importance


4

of the service and the industrial support is relatively weaker, although they are commonly taken as

important indicators.

Comprehensive valuation of international financial centers

The above analysis and calculation give the relative weights of the five aspects’ importance

to the valuation of international financial centers. This is followed by comprehensive weighting on

the objective indicators and information from subjective questionnaires according to the five

aspects’ respective weights, so we get a comprehensive valuation result on the competitiveness of

the 45 international financial centers. (See chart 1)


5

88.4

87.7

85.6

81.0

72.8

70.1

64.4

63.8

61.1

59.5

59.4

56.8

55.9

53.6

53.0

52.3

49.6

46.5

45.2

41.0

40.9

40.5

40.5

40.0

39.3

37.2

37.1

37.1

36.0

35.5

35.0

34.8

34.5

34.5

34.2

34.0

33.5

33.0

32.2

31.5

31.0

25.6

25.5

24.1

22.5

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

New York01

London02

Tokyo03

Hong Kong04

Paris05

Singapore06

Frankfurt07

Shanghai08

Washington09

Sydney10

Zurich11

Chicago12

Beijing13

Dubai14

Amsterdam15

Geneva16

San Francisco17

Toronto18

Boston19

Copenhagen20

Munich21

Shenzhen22

Brussels23

Vancouver24

Stockholm25

Luxembourg26

Vienna27

Helsinki28

Oslo29

Melbourne30

Seoul31

Madrid32

Montreal33

Rome34

Moscow 35

Milan36

Dublin37

Osaka38

Sao Paulo39

Bombay40

Taipei41

Buenos Aires42

Budapest43

Lisbon44

Johannesburg45

Chart 1 The General Ranking of Xinhua-Dow Jones International Financial Centers Development

Index


6

In the ranking of the 45 international financial centers, New York ranks No.1, followed by

London, Tokyo and Hong Kong. Among the financial centers on the Chinese mainland, Shanghai

ranks No.8, Beijing No.13 and Shenzhen No.22, all above average. On the whole, the leading nine

cities are all world-famous financial centers with high recognition and wide influence, gathering

large numbers of financial institutions and relevant service industries, which provide financial

services including international capital debit and credit, security issuance, foreign exchange

transactions, insurance, and so on. We categorize the 45 financial centers into four groups based

on their development competitiveness, which can also been seen as the four development stages of

international financial centers.

The first group includes New York, London, Tokyo and Hong Kong, each having a grade of

over 80 points, which can be called mature financial centers. The four cities are global top

financial centers, having apparent advantages in all the five aspects, especially in the industrial

support. The financial industries of these four cities are now in an inner-motive development mode.

Development of the financial industries, playing the leading role, drive the development of

relevant service industries and infrastructure construction, which, in turn, provide better

fundamental services for the development of the financial industry. However, this basic

development mode for international financial centers is slowing down its pace, obviously.

The second group includes five emerging international financial centers that are each graded

between 60 and 80 points, i.e. Paris, Singapore, Frankfurt, Shanghai and Washington. These five

cities are in relatively balanced development in each of the five aspects, although there are definite

gaps between them and the top four cities. These five cities, which established themselves much

more recently compared with the top four international financial centers, have strong growth

momentum and have developed into collection and distribution centers of financial business of

their own countries and neighboring countries in recent decades. They have become international

financial centers in certain specific areas.

The third group includes 15 cities, each with a grade of between 40 and 60 points, which can

be called comprehensive international financial centers. A common trend among the 15 cities is

that their development are mainly supported by relatively strong general environment and service,

instead of relevant industries, which is one reason for the gap between them and the cities in the

second group. These 15 cities, mostly capitals playing the roles of both political center and


7

financial center, have to put in great efforts to develop other industries besides the financial

industry, as well as the macroeconomy. Thus, the overall high economic level, various kinds of

knowledge resources and effective government services provide good opportunities and conditions

for the development of their financial industries. In order to become leading international financial

centers, it is important for these cities to improve industrial support as soon as possible, and make

the development of the financial industry the driver for commercial activities and urban

infrastructure construction.

The fourth group includes 21 cities that are each graded below 40 points. In the objective

indicator valuation system, 40 points is a watershed. Cities graded below 40 points have lower

internationalization level and lower global recognition, and are weaker than cities in the first three

groups in each of the five aspects, especially in the aspect of industrial support. These 21 cities are

financial centers in their respective countries, with relatively fewer international businesses and

financial interactions. However, these cities are rising on their way to becoming international

financial centers.

0

10

20

30

40

50

60

70

80

90

100

Financial CenterDevelopment Index

Financial Market Growth andDevelopment

Industrial Support Service GeneralEnvironment

First Group Second Group Third Group Fourth Group

Chart 2 The Four Groups Comparison of Xinhua-Dow Jones International Financial Centers

Development Index


8

Chart 3 The Ranking of Xinhua-Dow Jones International Financial Centers Development Index in

Europe


the Americas


9


Asia-Pacific and Africa

Chart 6 BCG Matrix of financial market and growth & development, Xinhua-Dow Jones

International Financial Centers Development Index


10

Using the BCG Matrix to analyze the relationship between the level and the growth of

development of the global financial centers, we can divide the financial centers into four areas.

The first area, or the first quadrant in the above chart (up right), can be called the prosperous

area. Financial centers within this area possess large financial markets and strong growth

momentum. Furthermore, cities located above the diagonal line are mostly Asian financial centers,

which obviously have a faster development than those in advanced western markets, and are

becoming new weather vane of global international financial centers.

The second area, or the second quadrant in the above chart (down right), can be called the

mature area. Financial centers within this area are beginning to take shape, with a relatively slower

development. For instance, Toronto, Geneva and Brussels already have a mature and stable

development in the financial industry, but somewhat lack the motivation and capability for

expanding markets and developing overseas businesses.

The third area, or the third quadrant in the above chart (left down), can be called the starting

area, containing almost half of the 45 cities. These cities are still at starting stage to develop

international financial businesses, of relatively smaller size and at a slower pace, although they are

on the way to international financial center status.

The fourth area, or the fourth quadrant in the above chart (left up), can be called the emerging

area. Cities in this area, such as Moscow, Bombay, Seoul and Sao Paulo, are all the financial

centers of the emerging economies. With their fast development, they are the rising stars among

international financial centers, despite their modest sizes.

(Ⅱ) Analysis of development indicators of international

financial centers

Analysis on the valuation result of primary indicators and the advantages and disadvantages

of their respective sub-indicators can lea to better understanding of the competition and

development of international financial centers.


11

1. Financial Market

The indicator of Financial Market contains four sub-indicators, i.e. the Capital Market, the

Foreign Exchange Market, the Banking Market and the Insurance Market. Synthesizing the

valuation results on the four sub-indicators of the 45 international financial centers, we get the

ranking of their power in the development of the financial market.

In the valuation of Financial Market, indicator value grades are widely scattered, with the

range between the highest and the lowest at 66 points. Some 24 cities have an indicator value

grade of below 40 points.

In the valuation of the financial market development, four cities are each graded at over 80

points, which generally indicate strong development capabilities in the development of the

financial market. From the objective indicator valuation, of these four cities only Hong Kong

ranks No.13 in the banking market valuation, while the other three cities all rank within the top 10.

In the valuation on Capital Market, Foreign Exchange Market and Insurance Market, London and

New York show all-round power, while Tokyo and Hong Kong are weak in certain markets. From

the results of questionnaires, the four cities enjoy great fame and power in the financial market.

Six cities are each graded between 60 and 80 points, most of which are between 60 and 70

points. From the objective indicator valuation, these six cities are positioned above average in the

four sub-indicators of the Financial Market, while Frankfurt shows some weakness in the forex

and insurance markets, Singapore is relatively weak in the banking market, Zurich in the foreign

exchange and insurance markets, and Washington in the Capital Market. Nevertheless, these cities’

financial markets, highly valued by survey subjects, have a strong potential for future

development.

Altogether 11 cities are each graded at between 40 and 60 points. From the objective

indicator valuation, these cities are ranked at medium positions in the valuation on the four

sub-indicators of Financial Market, but are relatively weaker in the capital market.

The remaining 24 cities, accounting for over 53 percent of the total, each have a grade of

below 40 points. Valuation on the four sub-indicators of their financial market is generally lower

than the medium level, notwithstanding exceptions. However, lack of certain sub-indicators or

lagging development put them in obvious weak positions in the valuation on the sub-indicators of

Financial Market.


12

91.5

89.7

86.5

81.5

68.3

67.6

64.9

63.5

63.3

60.8

57.7

55.5

52.4

48.1

47.7

44.9

44.4

42.2

41.9

41.5

41.4

38.2

36.4

35.9

35.8

34.8

34.8

34.7

34.4

34.4

34.4

34.2

33.9

33.6

33.5

33.0

32.8

32.7

32.3

32.0

31.3

28.7

27.6

26.5

25.7

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

London01

New York02

Tokyo03

Hong Kong04

Paris05

Frankfurt06

Shanghai07

Singapore08

Zurich09

Washington10

Beijing11

Chicago12

Sydney13

Geneva14

Dubai15

Shenzhen16

Boston17

Toronto18

San Francisco19

Amsterdam20

Brussels21

Munich22

Moscow 23

Luxembourg24

Bombay25

Stockholm26

Oslo27

Milan28

Dublin29

Madrid30

Copenhagen31

Montreal32

Seoul33

Taipei34

Vancouver35

Melbourne36

Sao Paulo37

Osaka38

Vienna39

Rome40

Helsinki41

Lisbon42

Buenos Aires43

Johannesburg44

Budapest45

Chart 7 The Financial Market Ranking of Xinhua-Dow Jones International Financial Centers

Development Index


13

2. Growth and Development

The indicator of Growth and Development contains four sub-indicators: Capital Market

Growth, Economic Growth, Innovation Outputs, and Innovation Potential. Synthesizing the

valuation results on the four sub-indicators of the 45 international financial centers, we get the

ranking of their capability in growth and development. Indicator value grades of the 45 cities’

growth and development are relatively concentrated, with the range between the highest and the

lowest at 60 points. However, only nine cities are graded at over 60 points; and there is a wide gap

between cities with above 60 points and those with below 60 points.

The first group contains five cities. From the objective indicator valuation, the top three cities

with strongest growth and development capabilities are all from China. Since the global financial

crisis struck in 2008, developing countries have shown strong momentum in the development of

the innovation capability of the financial market, and have also improved their comprehensive

strength substantially. From the four sub-indicators of Growth and Development, the four cities

except for Tokyo all have strong capability in Innovation Outputs, but are relatively weak in

Innovation Potential, especially Shanghai and Hong Kong, respectively ranking No.33 and No.45

in the valuation on Innovation Potential. However, Tokyo ranks No.3 in the valuation on

Innovation Potential.

The second group contains four cities, each graded between 60 and 80 points. These four

cities show certain weakness in Economic Growth and Innovation Outputs, ranking below the

medium positions in the valuation of these two sub-indicators. Meanwhile, these four cities all

indicate particular strength in a certain sub-indicator. For instance, Singapore and Paris both have

high rankings in Capital Market Growth and Innovation Potential, which add to points in the

valuation on their overall growth and development.

The third group contains 13 cities that are each graded between 40 and 60 points. From the

objective indicator valuation, these cities generally have low rankings in one or two sub-indicators.

Survey subjects’ opinions also prove that these cities need improvement in the aspect of Growth

and Development.

The fourth group includes 23 cities each with a grade of below 40 points. These cities

generally have low rankings in each of the sub-indicators, and some even rank in the last five in

certain sub-indicators.


14

87.4

84.3

83.0

82.9

81.8

77.2

71.5

67.9

66.1

57.3

54.2

54.0

50.1

49.0

46.6

46.0

45.3

45.3

44.4

44.2

42.4

41.5

39.4

38.9

37.5

36.4

35.1

35.0

34.5

33.9

33.4

33.2

33.0

32.8

32.6

32.6

32.2

32.1

31.9

31.8

31.6

28.1

28.0

27.7

27.1

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

Shanghai01

Hong Kong02

Beijing03

New York04

Tokyo05

London06

Singapore07

Dubai08

Paris09

Shenzhen10

Frankfurt11

Sydney12

Washington13

Chicago14

Amsterdam15

Moscow 16

San Francisco17

Seoul18

Zurich19

Sao Paulo20

Bombay21

Boston22

Toronto23

Geneva24

Munich25

Taipei26

Madrid27

Milan28

Brussels29

Rome30

Luxembourg31

Copenhagen32

Vienna33

Vancouver34

Dublin35

Osaka36

Buenos Aires37

Helsinki38

Stockholm39

Melbourne40

Budapest41

Lisbon42

Montreal43

Johannesburg44

Oslo45

Chart 8 The Growth and Development Ranking of Xinhua-Dow Jones International Financial

Centers Development Index


15

According to the ranking of cities based on the four sub-indicators of Growth and

Development, no international financial center has an absolute advantage in all the four

sub-indicators. No international financial center can achieve overall development, but has flaws in

certain aspects.

3. Industrial Support

The indicator of Industrial Support has three sub-indicators, including Business Environment

Support, Basic Urban Conditions, and Urban Infrastructure. The indicator assesses all the three

sub-indicators to evaluate the industrial support capability of the 45 international financial centers.

According to the assessment results, the 45 international financial centers differ a lot by

indicator value, with a grade difference up to 74 points. Only 10 cities scored 60 points or more,

much lower than other sub-indicators.

The first group has four cities, which score above 80 points, indicating strong industrial

support. Generally, the four cities score low in terms of Basic Urban Conditions. Hong Kong is

weak in Business Environment Support, while Tokyo needs to enhance city infrastructure

construction.

The second group has six cities scoring between 60 to 80 points. According to the indicator

value, Singapore and Paris ranked top in all the three sub-indicators, but the other four cities are

relatively weak in certain aspects. Most respondents of the survey speak positively of Industrial

Support of the six cities, placing them relatively high on the list.

The third group has 11 cities scoring between 40 and 60 points. These cities are generally

rather strong in Urban Infrastructure, but relatively weak in Business Environment Support and

Basic Urban Conditions. Sydney, Amsterdam and Seoul show certain strength in terms of the three

sub-indicators, but the survey shows that respondents do not all think positively about their

Industrial Support.

As in the fourth group, 24 cities score less than 40 points, accounting for 53 percent of the

total. Both data analysis and survey of respondents show that they still need to improve their

industrial support conditions to survive as international financial centers.


16

94.6

93.6

93.6

86.2

75.3

73.5

72.1

69.1

61.6

60.0

58.9

55.9

55.6

53.4

51.7

45.9

43.2

43.1

42.2

42.0

41.5

36.9

36.8

36.4

36.1

35.8

35.0

34.2

33.5

33.1

32.7

32.7

32.4

31.9

31.8

31.5

31.5

31.1

30.6

30.1

29.6

22.5

21.7

20.8

20.4

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

New York01

Tokyo02

London03

Hong Kong04

Singapore05

Paris06

Shanghai07

Frankfurt08

Beijing09

Dubai10

Chicago11

Washington12

Sydney13

Zurich14

Amsterdam15

San Francisco16

Toronto17

Geneva18

Boston19

Munich20

Seoul21

Brussels22

Luxembourg23

Vancouver24

Stockholm25

Osaka26

Copenhagen27

Melbourne28

Bombay29

Moscow 30

Helsinki31

Milan32

Oslo33

Taipei34

Dublin35

Montreal36

Madrid37

Rome38

Shenzhen39

Sao Paulo40

Vienna41

Buenos Aires42

Lisbon43

Budapest44

Johannesburg45

Chart 9 The Industrial Support Ranking of Xinhua-Dow Jones International Financial Centers

Development Index


17

According to the city list based on the three industrial support sub-indicators, New York in

North America, Tokyo in Asia and London in Europe show best advantages in terms of all the

three sub-indicators, and are placed on the front of the list. But some other international financial

centers also have advantages in certain aspects.

4. Service

The indicator of Service has three sub-indicators, including Government Service, Intellectual

Capital, and Urban Living Conditions. The indicator assesses all the three sub-indicators to

evaluate the service level of the 45 international financial centers.

According to the assessment results, the 45 international financial centers differ from each

other by indicator value and are inclined to score low. Only 11 cities score more than 60 points,

taking up 24 percent of the total.

Four cities scoring more than 80 points make the first group. They are very competitive in

service. According to data analysis, all the four cities score high in Intellectual Capital. Paris is

especially strong in Urban Living Conditions. At the same time, the survey also shows strong

confidence in these cities’ services.

The second group has seven cities scoring between 60 and 80 points. Generally, these cities

have relatively high service levels. According to data analysis, they score high in all the three

sub-indicators, but Singapore, Sydney and Frankfurt have low scores in Government Service. As

most respondents of the survey speak positively of the three cities, they still rank high by

comprehensive scores.

The third group has 16 cities scoring between 40 and 60 points. They generally have a low

service level. Based on data analysis, these cities are relatively strong in Urban Living Conditions,

but some cities, despite good-looking data, are not favored by survey respondents, thus finally

score low.

As in the fourth group, 18 cities score less than 40 points. Compared with other

sub-indicators, fewer cities are at the bottom group in terms of service. Based on both data

analysis and survey, all the 18 cities are weak in certain sub-indicators, and some are weak in all

the three.


18

90.6

88.0

86.7

80.6

76.9

69.0

67.9

66.1

66.1

66.0

63.4

58.4

58.2

56.7

51.3

51.2

48.4

48.0

47.8

47.4

47.2

45.9

43.2

42.6

42.5

42.4

41.6

39.9

38.2

38.2

37.7

37.2

36.0

34.4

33.8

29.3

27.8

26.9

25.8

24.1

23.8

23.0

22.4

20.2

19.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

London01

New York02

Tokyo03

Paris04

Hong Kong05

Singapore06

Zurich07

Washington08

Geneva09

Sydney10

Frankfurt11

Chicago12

Amsterdam13

San Francisco14

Copenhagen15

Toronto16

Dubai17

Vancouver18

Shanghai19

Boston20

Stockholm21

Vienna22

Helsinki23

Munich24

Brussels25

Rome26

Oslo27

Luxembourg28

Melbourne29

Beijing30

Milan31

Madrid32

Montreal33

Osaka34

Dublin35

Seoul36

Moscow 37

Taipei38

Shenzhen39

Sao Paulo40

Buenos Aires41

Budapest42

Bombay43

Lisbon44

Johannesburg45

Chart 10 The Service Ranking of Xinhua-Dow Jones International Financial Centers

Development Index


19

According to the city list based on the three service sub-indicators, only London shows

overall advantages in terms of all the three sub-indicators, but is still relatively weak in urban

living conditions. Most of the other cities show certain advantages in two aspects but have obvious

weaknesses, which hold back their service.

5. General Environment

The indicator of General Environment is composed of three sub-indicators, including

Economic Environment, Political Environment and Openness. The indicator assesses all the three

sub-indicators to evaluate the general environment of the 45 international financial centers.

According to the assessment results, the 45 international financial centers generally score low.

Only 13 cities score more than 60 points, taking up 29 percent of the total.

Only two cities score more than 80 points, which make the first group. New York is

especially strong in Openness, but weak in Political Environment. London is also strong in

Openness, but weak in Economic Environment.

The second group has 11 cities scoring between 60 and 80 points. According to data analysis,

almost all the 11 cities belong to the upper middle class in terms of Economic Environment,

Political Environment, and Openness, although a few cities rank low in certain sub-indicators. The

questionnaire survey also shows that there is an obvious strength in General Environment among

the 45 international financial centers.

The third group has 17 cities scoring between 40 and 60 points, showing a relatively bad

comprehensive environment. Based on data analysis, these cities are relatively strong in openness

and are in the upper middle class in terms of economic environment, but generally show weakness

in political environment. As survey respondents are not firmly positive about the general

environment of these 17 cities, they score relatively low.

And in the fourth group are 15 cities scoring less than 40 points. All the 15 cities are

generally weak in all the three sub-indicators, and they do not have survey respondents’ support,

thus still need further improvement of General Environment.


20

87.2

85.7

79.5

76.4

75.6

72.5

71.3

69.5

67.7

67.7

67.2

65.2

62.5

58.3

56.4

51.4

50.2

49.7

47.2

46.7

46.4

46.1

44.7

44.4

44.3

43.8

43.1

42.9

40.4

40.0

38.9

35.5

34.6

33.0

30.2

29.9

29.3

27.4

26.2

25.9

25.3

23.3

21.8

21.6

18.5

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0

New York01

London02

Tokyo03

Hong Kong04

Paris05

Washington06

Singapore07

Sydney08

Zurich09

Frankfurt10

Amsterdam11

Geneva12

Chicago13

San Francisco14

Toronto15

Copenhagen16

Boston17

Vancouver18

Brussels19

Stockholm20

Shanghai21

Helsinki22

Vienna23

Munich24

Dubai25

Oslo26

Shenzhen27

Montreal28

Melbourne29

Luxembourg30

Beijing31

Madrid32

Dublin33

Rome34

Milan35

Osaka36

Sao Paulo37

Moscow 38

Taipei39

Budapest40

Seoul41

Bombay42

Lisbon43

Buenos Aires44

Johannesburg45

Chart 11 The General Environment Ranking of Xinhua-Dow Jones International Financial

Centers Development Index


21

According to the city list based on the three general environment sub-indicators, only Geneva

and Helsinki show advantages in all the three sub-indicators, though not by wide margins. As the

general environment takes economic, political and diplomatic conditions into account, New York

and London are not on the top of the list, despite a better financial development. In terms of

openness, all the top five cities are US cities, indicating that the US cities are better in outward

development than international financial centers in other countries.

II. Geographic distribution of global financial centers

We listed 45 international financial centers based on the development index. Table 2 shows

the geographic distribution of these financial centers in the world. According to the table, Europe

has the most financial centers, followed by Asia-Pacific and Africa. America has 10 cities listed

here, with eight coming from North America.

Among the top 10 cities, five come from the Asia-Pacific region, reflecting a rapid economic

growth of the region in recent years. As economic growth drives up financial demand, the region

is in urgent need of a new super financial center, to form a stable triangle with North America’s

New York and Europe’s London. Among the top 10, those from North America and Europe are

mainly old international financial centers. For instance, New York, London, Paris and Frankfurt all

have a financial development history of at least a hundred years. Washington is listed in the top 10

due to outstanding government service, economic environment and openness.

Table 2 Global Distribution of the Cities Evaluated

Number of the Cities Evaluated Top Ten Cities

America 10 New York(1), Washington(9)

Europe 21 London(2), Paris(5),Frankfurt(7)

Asia-Pacific and Africa 14 Tokyo(3), Hong Kong(4), Singapore(6), Shanghai(8),

Sydney(10)


22

(I) A general survey of financial centers on the five

continents

Table 3 Distribution of Top Ten Cities in Financial Market

Area Financial Market

America New York(2), Washington(10) Europe London(1),Paris(5),Frankfurt(6),Zurich(9)

Asia-Pacific and Africa Tokyo(3),Hong Kong(4),Shanghai(7),Singapore(8)

Table 4 Distribution of Top Ten Cities in Growth and Development

Area Growth and Development America New York(4) Europe London(6),Paris(9)

Asia-Pacific and Africa Shanghai(1),Hong Kong(2),Beijing(3),Tokyo(5),Singapore(7),Dubai(8), Shenzhen(10)

Table 5 Distribution of Top Ten Cities in Industrial Support

Area Industrial Support America New York(1) Europe London(3),Paris(6),Frankfurt(8)

Asia-Pacific and Africa Tokyo(2),Hong Kong(4),Singapore(5),Shanghai(7),Beijing(9),Dubai(10)

Table 6 Distribution of Top Ten Cities in Service

Area Service America New York(2), Washington(8) Europe London(1),Paris(4),Zurich(7),Geneva(9)

Asia-Pacific and Africa Tokyo(3),Hong Kong(5),Singapore(6), Sydney(10)


23

Table 7 Distribution of Top Ten Cities in General Environment

Area General Environment

America New York(1), Washington(6) Europe London(2),Paris(5),Zurich(9),Frankfurt(10)

Asia-Pacific and Africa Tokyo(3),Hong Kong(4),Singapore(7), Sydney(8)

The top three financial centers in Europe are London, Paris and Frankfurt, which score high

in all the five indicators. Zurich from Europe is also on the top 10 list, with a high level of

Financial Market, Service and General Environment. New York from North America scores high

in all the five indicators, while Washington is especially strong in Service and General

Environment. Asian cities are commonly strong in the Growth and Development and the Industrial

Support. Seven Asian cities are on the top 10 list of the Growth and Development, while six on the

top 10 list of the industrial support. Sydney in Oceania is ranked 10th according to the

International Financial Centers Development Index, also 10th in service and eighth in General

Environment. No African cities are listed as prominent financial centers.

(Ⅱ) Financial centers in America

New York takes the first place in the International Financial Centers Development Index .

Chart 12 shows the value of all the indicators of the top five American cities. According to the

chart, New York is far ahead of the other four cities in all the five aspects. At present, only London

in Europe can match New York, but New York is better than London in Growth and Development,

Industrial Support and General Environment, especially Growth and Development. According to

the survey, 18.9 percent of the respondents put New York in the first place of Growth and

Development, while only 5.2 percent of the respondents put London in the first place. London is a

little better than New York in Financial Market and Service.

Washington is ranked the second among American financial centers, featuring high service

level and good general environment. It is ranked the eighth in the world list of Service, sixth in

General Environment, 10th in Financial Market, 12th in Growth and Development and 12th in

Industrial Support.


24

Chart 12 Indicator Scores Comparisons of the Top Five American Cities

(III) Financial centers in Europe

London takes the first place in Europe, ranking first in Financial Market and Service, second

in General Environment, third in Industrial Support and sixth in Growth and Development.

London is an old international financial center, also an important city in trans-national bank

lending, foreign stock exchange, international bond issuance, foreign exchange, marine insurance

and aviation insurance markets.

Paris, the French financial center, is ranked second in Europe. This is one of the most

important financial centers in Europe, ranking fifth among the 45 cities. Paris is strong in

Intellectual Capital, Government Services, and Urban Living Conditions.

The German financial center Frankfurt is ranked third in Europe, and is also an important

financial center on the continent. It is ranked sixth in terms of financial market development. The

Frankfurt Stock Exchange is one of the world’s most famous stock exchanges. The city has now

more than 300 German and foreign banks and financial institutions, including Deutsche Bank,

European Central Bank, Commerzbank, Citibank and Bank of China.

The Swiss financial center Zurich is ranked fourth in Europe. The city is especially strong in

Service and General Environment. It has many advantages to become an international financial

center. Switzerland has been a neutral country since 1815, thus is able to avoid damaging wars.

Swiss francs are always available for free exchange. In times of international tension, Switzerland,


25

as a sanctuary of foreign hot money, always sees a flourishing gold or foreign exchange trade. The

country has few limits on capital outflow, thus serves as a distribution center of international hot

money. It protects private assets and allows the free flow of capital. The country’s stable political

and economic situation is expected to continue in the future. The Swiss franc is one of the most

stable currencies in the world. Stimulated by the economic recovery and development in Europe

after the Second World War, Zurich continues to grow as a financial center.

The Dutch financial center of Amsterdam is ranked fifth in Europe. It is especially strong in

Service and General Environment, ranking 13th in Service and 11th in General Environment.

Amsterdam used to be an important international financial center when Netherlands was in its

heyday in the 17th century, but lost importance as the country later declined in economic

importance.

Chart 13 Indicator Scores Comparisons of the Top Five European Cities

(IV) Booming Asia-Pacific region

The top five financial centers in Asia, Africa and the Pacific regions are Tokyo, Hong Kong,

Singapore, Shanghai and Sydney, each ranking third, fourth, sixth, eighth and 10th in the list of the

45 cities. The Asia-Pacific region has a short history of financial market development, but the

development has been extremely rapid.


26

Tokyo tops the five cities in terms of financial market, industrial support, service, and general

environment, but is a little weaker in innovation than Shanghai and Hong Kong. Shanghai is

especially strong in Growth and Development, ranking first among the 45 cities, but is weak in

Service and General Environment. It is ranked 19th in Service, and 21st in General Environment.

Hong Kong sees a balanced development in the five indicators, and is especially well in Growth

and Development, second only to Shanghai. Singapore is strong in industrial support and has a

balanced development in the other four aspects, leaving no obvious weakness. Sydney scores high

in service and General Environment, but is ranked at the bottom among the five in terms of

Financial Market, Growth and Development, and Industrial Support.

The Asia-Pacific region has the most cities selected for the International Financial Centers

Development Index, mainly due to its robust economic growth in recent years. The continuous

economic growth stimulated the rapid growth of finance industry. The global financial crisis

starting from the US in 2007 inflicted heavy losses on North America and Europe. In contrast,

Asia, especially China, managed to win world confidence. The Asia-Pacific region is not as much

connected with the US as Europe, thus is less hit by the global financial crisis. Asia-Pacific

financial centers are able to improve their status, compared with North American and European

financial centers, amid the global financial crisis.

Chart 14 Indicator Scores Comparisons of the Top Five Asia-Pacific and African Cities


27

III. Confidence analysis of the financial centers in the

emerging economies

As the representatives of the world’s emerging economies, the BRICS countries, including

Brazil, Russia, India, China and South Africa, are under the world spotlight due to their strong

economic growth. This questionnaire survey designed some questions for these countries in order

to know respondents’ confidence in the BRICS countries’ financial centers. It aimed to find out the

respondents’ confidence in Shanghai, Sao Paolo, Bombay, Moscow, and Johannesburg becoming

global financial centers. The comprehensive evaluation method is adopted in this section’s

research, and the respondents rated their confidence in each city from one to 10 (one stands for no

confidence, and 10 for complete confidence).

The following is the calculation method of the confidence indicator. The comprehensive

confidence indicator of the ith city is10

1i ijjx j f

== ×∑ .The function ijf stands for the

proportion of the rating of j in all the confidence ratings for ith cities.

The following is an analysis of the confidence indicator for the financial centers of the

BRICS countries.

(I) Data analysis

Table 8 Confidence Comparison on Becoming International Financial Center in BRICS

1

Point

2

Points

3

Points

4

Points

5

Points

6

Points

7

Points

8

Points

9

Points

10

Points

Comprehensive

Scores Rank

Shanghai 3.6 2.8 4.8 5.5 11.7 9.6 15.5 18.8 12.2 15.4 6.844 1

Sao Paulo 5.7 6.1 9.5 13.6 18.5 15 12.3 9.8 4.2 5.1 5.366 2

Moscow 6.2 5.6 9.2 13.5 19.9 15.6 12.1 10.1 4.9 2.8 5.297 3

Johannesburg 6.2 7.0 10.3 12.7 20.2 13.8 14 9.3 3.4 3 5.187 4

Bombay 7.6 7.6 10.6 12.4 19.3 16.2 10.4 8.8 4.2 2.8 5.069 5

Note：The data from the second column to the eleventh column shows the proportion of each index in each score, and the unit

is percentage.


28

Chart 15 Confidence indicator Comparison on Becoming International Financial Center in

BRICS

The above chart shows the composite scores for the confidence of the respondents in each

city’s potential to become global financial center. Shanghai is ranked the first among the five cities,

and its confidence indicator is 1.478 higher than that of Sao Paulo which is ranked the second

among the five cities. Except for Shanghai, the differences among the other four cities’ confidence

indicators are about 0.1. This indicates that Shanghai overwhelms the other four cities in terms of

the confidence indicator. Comparing horizontally, the proportion giving an “8” rating for Shanghai

is 18.8 percent, the highest of all the ratings for Shanghai. And 71.5 percent of the respondents

have high confidence in Shanghai to be a global financial center, and the confidence indicator is

above the average rating of “5”. From vertical comparison, the proportion of “10” rating for

Shanghai is 15.4 percent, higher than the 3 to 5 percent for other four cities. In view of this, the

respondents have strong confidence in Shanghai’s potential to be a global financial center, and the

confidence indicator is clearly higher than the other cities. The confidence indicators for Sao Paulo,

Moscow, Johannesburg and Bombay to become international financial centers are at middle level,

and do not vary much. This indicates that the confidence indicator for the five cities can be

divided into two categories. The first is that the respondents have above-average confidence in


29

Shanghai, while the confidence indicators for the other four cities are at the middle level, lower

than that for Shanghai.

(II) Reasons for the differentiated confidence indicators

Table 9 Scores and Ranking of Each Indicator in Financial Center of BRICS

Indicator

City

Financial Market Growth and

Development Industrial Support Service General Environment

Financial Centers

Development Index

Scores Rank Scores Rank Scores Rank Scores Rank Scores Rank Scores Rank

Shanghai 64.93 7 87.43 1 72.11 7 47.84 19 46.45 21 63.75 8

Sao Paulo 32.82 37 44.21 20 30.09 40 24.10 40 29.32 37 32.17 39

Moscow 36.37 23 46.05 16 33.11 30 27.79 37 27.39 38 34.19 35

Johannesburg 26.45 44 27.67 44 20.42 45 19.05 45 18.52 45 22.47 45

Bombay 35.78 25 42.43 21 33.47 29 22.42 43 23.32 42 31.52 40

0

10

20

30

40

50

60

70

80

90

100

Financial CenterDevelopment Index

Financial Market Growth andDevelopment

Industrial Support Service GeneralEnvironment

Shanghai Sao Paulo Moscow Johannesburg Bombay

Chart 16 Comparisons of Indicator Scores in Financial Center of BRICS

The data given in the Table 9 is based on the calculation of ratings for five indicators in the

questionnaires as well as the objective indicators. The five indicators include the evaluation on

each city’s competitiveness to become the international financial center in terms of Financial

Market, Growth and Development, Industrial Support, Service, and General Environment. Table 9


30

shows the respondents’ evaluation on the competitiveness of the five cities to become global

financial centers. From a comparison between Table 9 and Chart 16, we can see that Shanghai has

significant advantage over the other four cities. Especially in terms of Financial Market, Growth

and Development, and Industrial Support, Shanghai’s ratings are as twice as those for other four

cities. In view of this, the respondents have the highest confidence in Shanghai than the other four

cities.

Located in the entrance of the Yangtze river in the middle of China’s eastern coastal area,

Shanghai is China’s largest industrial base and trade port. It is also China’s economic, finance,

trade and shipping center. Before the middle of last century, Shanghai’s financial industry was

relatively developed, with many foreign and domestic banks there. Now, Shanghai has vast

financial market and a solid financial foundation. One of China’s two stock exchanges, the

Shanghai Stock Exchange, is in Shanghai. Shanghai is now restructuring its industry. Low-end

manufacturing and labor-intensive industries, such as textile and high-pollution industries, have

been relocated to suburban regions or been shut down. Shanghai’s industrial structure has been

improved greatly and the city has gradually built up its core competitiveness. In 2009, the

value-added of the tertiary industry accounted for 59.4 percent of the GDP of Shanghai, and the

value-added of the private sector made up for 47 percent of its GDP. The industrial restructuring

has provided strong support to Shanghai’s efforts to build an international financial center. The

ongoing Shanghai World Expo is offering Shanghai opportunities to carry out exchanges and

cooperation, and helping the city enhance its technology innovation and boost the vigorousness of

its financial market. In terms of the indicators for the establishment of an international financial

center, Shanghai is taking the lead and has great potential to build itself into an international

financial center. Thus, Shanghai is ranked first in the confidence indicator.

Sao Paulo is the largest industrial city in Brazil. It’s Brazil’s electronic industry center, auto

manufacturing base and has Brazil’s largest refinery factory. Its primary industry is very

developed. But its financial sector is lagging behind the industrial development despite of its

booming business. Since Sao Paulo is a manufacturing-oriented city, its support to the financial

sector is relatively weak. Though Sao Paulo is the financial center for Brazil, it is ranked only 36th

and 40th in terms of financial market and industrial support. The respondents have low confidence

in Sao Paulo’s potential to be a global financial center.


31

Moscow is Russia’s largest industrial city and commerce center, with the focus on

machinery manufacturing and metal processing. Similar to Sao Paulo, the industrial sector in

Moscow has put the financial industry in the shade, relatively speaking. Its industrial support for

the financial sector has been weakened. But Moscow has Russia’s largest commerce and financial

institutions. Up to now, nearly 1,000 commercial banks are operating in Moscow. Its economic

banks and trade networks are on growing momentum and Moscow is increasing its government

support. Among the five cities, Moscow only falls behind Shanghai in terms of financial market

and growth and development on the evaluation of the establishment of international financial

center.

Johannesburg is South Africa’s largest city and economic center. It is located in the world’s

largest gold mine area and is in the center of South Africa’s economic hub. Johannesburg lags

behind the other four emerging cities in all indicators, and has large differences with other cities,

as a result of its economic structure. Due to its natural geographical advantages, Johannesburg has

mainly relied on gold mining for economic development. The development of its financial market

is not in line with the focus of the market and government support. Although it is the economic

and financial center of South Africa, Johannesburg is given lower ratings than other cities in

building up an international financial center. Thus the respondents held relatively low confidence

in Johannesburg.

Bombay is India’s commerce and entertainment capital. Many Indian financial institutions

have their headquarters set in the southern region of Bombay, including the Bombay Stock

Exchange, the Reserve Bank of India, the National Stock Exchange, and the India Government

Mint. Many foreign banks and financial institutions also set up branches in this region, which

provides a platform for India’s financial development. Bombay has higher ranks in terms of

financial market, and growth and development, ranked 24th and 21st respectively. The textile

industry is as important as the commerce and entertainment sectors in Bombay. Bombay is the

world’s largest textile export port. Bombay has a diversified industrial structure, and its industrial

support is better than that of Sao Paulo, Moscow, and Johannesburg.

By comparing these five cities’ backgrounds and the evaluation indicators, it can be

concluded that Sao Paulo, Moscow, Johannesburg and Bombay focus their industrial development

on primary industry. They have relatively weak support for their financial sectors. Johannesburg,


32

especially, has a mining-oriented industrial structure, due to its location in the gold mining region.

Its development has mainly been driven by gold mining. Thanks to its industrial restructuring,

Shanghai’s tertiary industry is becoming a rising proportion in its economy, which provides strong

industrial support for the establishment of an international financial center. Shanghai, Moscow and

Bombay have certain foundations for the establishment of financial markets, and these three cities

rank high in terms of financial markets, and growth and development. However, the five cities

have lower ranks in terms of service and general environment than other cities. This indicates that

there is room for improvement in the basic environment and government support in these five

cities. Generally speaking, the confidence indicators for Sao Paulo, Moscow, Johannesburg and

Bombay are quite close to each other. They have relatively balanced development in terms of the

evaluation indicators, but their ratings for each indicator are lower than those of Shanghai’s.

Overall, respondents have higher confidence in Shanghai’s competitiveness of becoming an

international financial center.

IV. Introduction to the research approach

(I) Construction of the objective indicator system of IFCD

The analytical framework of the Xinhua-Dow Jones International Financial Centers

Development Index is compiled by the combination of an objective indicator system and a

subjective questionnaire survey, so as to reach a comprehensive appraisal on the city of

international financial center by objective measures and subjective evaluation.

1. Design principles of the objective indicator system

The design of the indicator system takes the following principles into consideration in order

to evaluate the competitiveness and development potential of various international financial


33

centers in an objective and fair way:

(1) Targeting reflecting the development potential of financial centers. The design of the

Xinhua-Dow Jones International Financial Centers Development Index aims to reflect

development potential of financial centers, and strives to show the development potential in as

complete and accurate a way as possible in terms of indicator selection, weight decision, data

collection, and choice of calculation approach.

(2) The principle of operability. The design of the Xinhua-Dow Jones gives full

consideration to the stability of data sources, standardization and continuity of data, unified

standards, convenience in data collection and calculation, and clarification of the appraisal

indicator’s connotations.

(3) Representativeness of indicators. The selection of each indicator of the Xinhua-Dow

Jones International Financial Centers Development Index strives to reflect features of international

financial centers, and to avoid overlap between indicators. Each indicator is distinct from the

others, so as to guarantee the index has representativeness and comparability.

(4) Relatively independence of indicators. The objective indicators’ connotations of the

Xinhua-Dow Jones International Financial Centers Development Index are clear and relatively

independent. One indicator does not overlap with another, and indicators do not possess reciprocal

causation relations. The entire indicator system closely centers round various connotation levels of

the competitiveness and development of international financial centers.

(5) Indicators are relatively connected. Each indicator of the Xinhua-Dow Jones International

Financial Center Development Indicator system can reflect part of the situation, and indicators

share some connections, so as to ensure the systematic nature of the indicator system. Various

indicators jointly constitute the indicator system, and try to reflect the connotation of financial

centers from as many aspects as possible.

(6) Concision of indicator numbers. The Xinhua-Dow Jones International Financial Centers

Development Index endeavors to rationalize and condense its indicators, intends to show the basic

content of the connotation of international financial centers, and select indicators that are as small

as possible while making sure to give full explanation of problems, thus building the system that is

as concise and accurate as possible.


34

The Xinhua-Dow Jones International Financial Centers Development Index operates a more

scientific and complete design on the basis of learning intensively from the strong points of others

in terms of establishment of the indicator system, calculation model, and selection of original data.

Chart 17 The Design Framework of Xinhua-Dow Jones International Financial Centers

Development Index

2. Structure of objective indicator system

The objective indicator system of the International Financial Centers Development Index is

formed by a three-level indicator system, reflecting the financial development level and current

situation of various regions in five aspects, namely their financial markets, growth and

development, industrial support, service, and general environment. Of the five indicators,

Financial Market is the measure of core development ability of an international financial center;

Growth and Development is a measure of the impetus origin of international financial center;

Industrial Support is a measure of international financial center’s development channel; Service is

a measure of international financial center’s development ability; and General Environment is a

measure of the impact of the immediate environment on the development of an international

financial center.


35

Chart 18 Indicator System of Xinhua-Dow Jones International Financial Centers Development

Index

The Xinhua-Dow Jones International Financial Centers Development Index is formed by a

three-level indicator system(see Appendix IV), of which the level-1 indicator is made up by five

parts, reflecting the financial development level and condition of various regions from the

financial market, growth and development, industrial support, service, and general environment.

The stability and full development of a financial market is a key aspect and foundation for the

international financial market. Of the Xinhua-Dow Jones International Financial Centers

Development Indicator system, the indicator of Financial Market includes four level-2 indictors

and 16 level-3 indicators, mainly reflecting the scale, stability and maturity of capital market,

foreign exchange market, banking market and insurance market.

Besides the prosperous development of various financial institutions, an international

financial center is supposed to possess a strong potential for growth. Of the indicator system, the

indicator of Growth and Development is to reflect the innovation ability and growth level of

various countries and regions. The indicator includes four level-2 indicators and 14 level-3

Financial Market General

Environment

Growth and Development Service

Industrial Support

General Environment

General Environment


36

indictors, evaluating a city’s growing and development capability from the growing ability of

capital market, growing ability of the economy, the city’s current innovation situation and

innovation potential.

The establishment of an international financial center not only needs the prosperous

development of the financial industry; support and assistance from related industries are also of

paramount importance. The indicator of Industrial Support is to reflect the current situation of

relating industries for the development of financial industry of a country or region. The indicator

is made up by three level-2 indicators and 12 level-3 indicators, evaluating the capability of a

financial supporting system from the commercial environment of a region, a city’s basic

conditions, and the city’s current infrastructure situation.

As a key indicator of a modern service industry, a financial industry’s development depends

heavily on the improvement and provision of relating services. Of the indicator system, the

indicator of Service includes three level-2 indicators and 12 level-3 indicators, reflecting the

ability of providing relating services of a region from government service, intellectual situation of

human resources, and city environment.

An international financial center grows and develops under various environments of the

entire country, so a general environment is a very important indicator affecting the development of

a financial industry. Of the indicator system, the indicator of General Environment includes three

level-2 indicators and 12 level-3 indicators, evaluating the region’s general environment

development in terms of economic environment, political environment, and degree of opening to

the outside.


37

Chart 19 Construction Structure of Xinhua-Dow Jones International Financial Centers

Development Index

3. Analytical approach and framework

(1) Levels of logical analysis

In the design of index application’s analytical approach, a multi-level analytical framework has

been adopted to conduct an all-round analysis on the development situation of the 45 cities as

international financial centers. The first level is a comprehensive evaluation of the International

Financial Centers Development Index, dividing the 45 cities into four types on the different index

scores.

The four types of financial centers are mature financial center, developing financial center,

International Financial Centers Development Index

Growth and

Development

Objective Indicator System Survey System

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

5 level-1 indicators

4 level-2 indicators 16 level-3 indicators





66 level-3 indicators Financial

Market

General

Environment

Service

Growth

Development

Industrial

Support

Financial

Market

0.21

Growth and

Development

0.20

Industrial

Support

0.19

Service

0.20

General

Environment

0.20

Financial

Market

Growth and

Development

Industrial

Support

Service

General

Environment







38

comprehensive financial center, and regional financial center. The emphasis of the second level

analysis is to analyze the advantages and shortcomings of each financial center by breaking down

the International Financial Centers Development Index and analyzing each indicator. The third

level is to find out the regional characteristics of these financial centers, and examine regional

environment’s impact on role of international centers. The last level is to tap the rapidly

developing five BRICS countries’ potential of becoming international financial centers by

reviewing the hot spot of world economic development and development of the five countries’

financial centers, assisted by the confidence survey data collected by Xinhua News Agency’s

global International Financial Centers Development Index survey system.

Chart 20 The Analysis Framework of Xinhua-Dow Jones International Financial Centers

Development Index

(2) Approach of index calculation

The Xinhua-Dow Jones International Financial Centers Development Index is calculated

from the symmetric design competitiveness model of the Renmin University of China’s

competitiveness and evaluation research center (Renmin University of China’s symmetric design

model, in short). The indicator system combines both objective data and a subjective questionnaire

survey. The use of the subjective questionnaire survey is to characterize indicators that are hard to

quantify, and provides a conductive supplement to the objective indicator system. The design of

the model is symmetrical between objective indicators and subjective indicators, acting as a


39

scientific foundation for data collection and organization, and a direct survey in gathering data.

The Renmin University of China’s symmetric model is an authoritative model based on the

research and development of competitiveness theory over the years. The application mode of the

International Financial Centers Development Index is to use lots of indicators, a symmetrical

design, and an equilibrium efficiency composition method.

As the development of an international financial center is a huge system, there are quite a

number of indicators to be described, especially when the scope becomes even wider and the

effect on indicators increases due to globalization and a greater mass of information. The

calculation approach of the Renmin University of China’s symmetric design model can effectively

handle information by symmetric design and setting up a systemic information platform with

unified standards, thus providing important support for deeper research of the development of

international financial centers, which is the core competitiveness of the Xinhua-Dow Jones

International Financial Centers Development Index model.

The calculation of a comprehensive index and level-1 indicators emphasizes the direct and

concise information integration and respect to the structure of the evaluation system. First, data

will be processed to be comparable – that is, to provide the function values in normal distribution

after standardized original data, so as to describe the data properly and avoid impact from extreme

values. After that, indicator evaluation indexes and the comprehensive index are calculated via

two-level summarizing at equal weight, supported by symmetric design.

The so called two-level summarizing at equal weight is to calculate the score value of each

level-2 indicator from level-3 indicators, and then summarize and calculate each level-3 indicator

by the same weight, using above approach. Because each level-2 indicator is measured by

different amount of three-level indicators, it is necessary to distinguish the importance of different

level-2 indicators. Therefore, equal weight calculation is adopted when summarizing the level-2

indicators into level-1 indicators. After obtaining the values of the five level-2 indicators, the

international financial center general index of each region can be calculated by calculating the

average of the five values.

(3) Sample selection and data collection

The Xinhua-Dow Jones International Financial Centers Development Index selects 45


40

international financial centers across the world as samples, and it is an index fully targeted at the

development of global international financial centers.

The objective data of the Xinhua-Dow Jones International Financial Centers Development

Index all come from authoritative third parties, so the data sources are stable and reliable. Besides

this, most of the objective data are average charts from the past three years, thus reducing the

impact from incomparable indicators. Furthermore, reports released by such authoritative

institutions as the World Bank, the World Economic Forum and the International Monetary Fund,

reports by well-known world companies, stock exchanges and authoritative websites, the Renmin

University of China’s international competitiveness and innovation research report, and some

authoritative reports by the Chinese Academy of Social Sciences and Chinese Academy of

Sciences are also introduced, reflecting the integration of world standards and the permeation of

Chinese indicators.

Data from the subjective questionnaire survey comes from Xinhua News Agency’s global

information collection network and AC Neilson’s worldwide survey system. The full use of

Xinhua News Agency’s information collection network effectively guarantees the quality of this

information.

(Ⅱ) Analytical approach of questionnaire survey

Measuring the hard strength of international financial centers by objective indictors provides

the foundation to reflect the development of international financial centers, but it is not a complete

evaluation. As a hub for capital flows, such soft strengths for a financial center as environment,

popularity, and attractiveness cannot be neglected. Therefore, the Xinhua-Dow Jones International

Financial Centers Development Index employs Xinhua News Agency’s global information

collection network and the survey network of Xinhua’s cooperative partner, AC Neilson, and

develops and establishes the global international financial center city questionnaire survey system,

so as to measure an international financial center’s soft strength in a complete and scientific way.

The questionnaire of the Xinhua-Dow Jones International Financial Centers Development


41

Index adopts unified design, and uses two parallel data sources. One is Xinhua News Agency’s

global information collection system, which receives 627 questionnaires, and the other is

questionnaires issued and gathered by AC Neilson, which receives 1,780 questionnaires. After the

data quality examination and cancellation of unqualified questionnaires, altogether 2,386

high-quality effective questionnaires are received, of which 1,759 questionnaires come from AC

Neilson, and 627 questionnaires come from Xinhua News Agency’s global survey system.

(III) Comprehensive analytical approach of IFCD indicators

With regard to the comprehensive application approach of the 66 objective indicators and

subjective indicators obtained via questionnaire survey, the project team holds the Renmin

University of China’s symmetric design model can make full use of objective indicators and

subjective indicators’ comprehensive information and characteristics. When integrating objective

indicators and subjective indicators, the model assigns different weights to show each indicator’s

importance. Therefore, the calculation of the International Financial Centers Development Index

adopts the Renmin University of China’s symmetric model, which grants weight to objective

indicator systems and subjective indicator systems, and obtains a comprehensive evaluation.

The Renmin University of China’s symmetric design model integrates survey data by Xinhua

News Agency and AC-Neilson with calculations based on the outcome of objective indicators.

Taking Neilson’s survey data as an example, the specific integration approach is: each country

gets values of five level-1 indicators out of the calculation results of objective indicators, and the

final analysis outcome of survey data will also arrive at values of the five level-1 indicators. The

arithmetical average of the two values (drawn from objective indicators and survey data) of each

indicator is a country’s final score for the level-1 indicator. After that, the model conducts

weighted averages on the five level-1 indicators, and the weight of each level-1 indicator is the

score of the level-1 indicator calculated from the questionnaire survey.


42

Chart 21 The Research Route Map of Xinhua-Dow Jones International Financial Centers

Development Index

Publishing International Financial Centers Development Index

The Design of Objective

Indicator system of

IFCD Index

Data Collection and

Preprocess

International Financial Centers

Development Condition -

Questionnaire Design

International Financial

Centers Development

Xinhua

International

Financial Centers

Development Index

Survey System

AC Nielsen Survey

Corporation

Integrated Analysis



Questionnaire Survey



Questionnaire Analysis

The Analysis

of Objective Indicator

system of IFCD

Index


43

Appendix

I. Related tables and charts

Table 10 Top 20 Cities in Five Indicators of Xinhua-Dow Jones International Financial Centers

Development Index

Rank Financial Market Growth and Development Industrial Support Service General Environment

1 London Shanghai New York London New York

2 New York Hong Kong Tokyo New York London

3 Tokyo Beijing London Tokyo Tokyo

4 Hong Kong New York Hong Kong Paris Hong Kong

5 Paris Tokyo Singapore Hong Kong Paris

6 Frankfurt London Paris Singapore Washington

7 Shanghai Singapore Shanghai Zurich Singapore

8 Singapore Dubai Frankfurt Washington Sydney

9 Zurich Paris Beijing Geneva Zurich

10 Washington Shenzhen Dubai Sydney Frankfurt

11 Beijing Frankfurt Chicago Frankfurt Amsterdam

12 Chicago Sydney Washington Chicago Geneva

13 Sydney Washington Sydney Amsterdam Chicago

14 Geneva Chicago Zurich San Francisco San Francisco

15 Dubai Amsterdam Amsterdam Copenhagen Toronto

16 Shenzhen Moscow San Francisco Toronto Copenhagen

17 Boston San Francisco Toronto Dubai Boston

18 Toronto Seoul Geneva Vancouver Vancouver

19 San Francisco Zurich Boston Shanghai Brussels

20 Amsterdam Sao Paulo Munich Boston Stockholm


44

Table 11 Scores and Ranking of Five Continents in Xinhua-Dow Jones International Financial Centers Development Index


Development Index Rank Financial Market

Growth and

Development Industrial Support Service

General

Environment

America

U.S.A

New York 88.43 1 89.72 82.90 94.58 87.99 87.19

Chicago 56.85 12 55.53 49.00 58.92 58.40 62.54

Boston 45.18 19 44.44 41.55 42.19 47.40 50.23

San Francisco 49.61 17 41.89 45.34 45.93 56.68 58.33

Washington 61.11 9 60.81 50.15 55.88 66.14 72.47

Canada

Toronto 46.46 18 42.15 39.36 43.16 51.23 56.44

Montreal 34.55 33 34.17 28.03 31.50 35.98 42.93

Vancouver 40.04 24 33.52 32.78 36.38 47.98 49.67

Argentina Buenos Aires 25.59 42 27.60 32.25 22.51 23.76 21.62

Brazil Sao Paulo 32.17 39 32.82 44.21 30.09 24.10 29.32

Europe

UK London 87.66 2 91.53 77.17 93.59 90.59 85.66

Dublin 33.46 37 34.42 32.60 31.82 33.79 34.60

Switzerland Zurich 59.37 11 63.26 44.43 53.39 67.90 67.73

Geneva 52.30 16 48.07 38.91 43.15 66.10 65.24

Sweden Stockholm 39.33 25 34.81 31.92 36.07 47.22 46.72

Finland Helsinki 37.07 28 31.27 32.08 32.73 43.20 46.11

Germany Frankfurt 64.37 7 67.58 54.17 69.15 63.43 67.65

Munich 40.92 21 38.22 37.51 41.96 42.61 44.44

France Paris 72.77 5 68.27 66.15 73.54 80.62 75.57

Luxembourg Luxembourg 37.18 26 35.89 33.43 36.78 39.94 39.95


45

Netherlands Amsterdam 53.00 15 41.48 46.62 51.71 58.23 67.25

Belgium Brussels 40.53 23 41.35 34.47 36.93 42.53 47.20

Italy Milan 34.04 36 34.70 34.97 32.73 37.65 30.16

Rome 34.47 34 32.01 33.86 31.11 42.41 33.02

Denmark Copenhagen 41.04 20 34.38 33.21 35.01 51.28 51.40

Austria Vienna 37.13 27 32.31 33.03 29.64 45.94 44.66

Norway Oslo 35.96 29 34.81 27.09 32.45 41.63 43.80

Spain Madrid 34.76 32 34.41 35.13 31.46 37.23 35.50

Portugal Lisbon 24.15 44 28.70 28.06 21.67 20.20 21.81

Hungary Budapest 25.46 43 25.73 31.60 20.81 23.03 25.87

Russia Moscow 34.19 35 36.37 46.05 33.11 27.79 27.39

Asia

Singapore Singapore 70.06 6 63.52 71.46 75.34 69.04 71.29

China

Hong Kong 81.01 4 81.50 84.25 86.23 76.87 76.35

Shanghai 63.75 8 64.93 87.43 72.11 47.84 46.45

Shenzhen 40.53 22 44.9 57.31 30.61 25.84 43.09

Taipei 31.05 41 33.63 36.42 31.95 26.95 26.19

Beijing 55.91 13 57.67 83.00 61.60 38.21 38.92

UAE Dubai 53.59 14 47.66 67.88 60.01 48.45 44.26

Japan Tokyo 85.55 3 86.52 81.77 93.64 86.72 79.50

Osaka 33.02 38 32.70 32.56 35.77 34.35 29.87

India Bombay 31.52 40 35.78 42.43 33.47 22.42 23.32

Korea Seoul 35.02 31 33.89 45.28 41.52 29.28 25.31

Oceania Australia Sydney 59.47 10 52.36 53.97 55.62 65.99 69.54

Melbourne 35.50 30 32.96 31.83 34.19 38.21 40.35

Africa South Africa Johannesburg 22.47 45 26.45 27.67 20.42 19.05 18.52


46

Ⅱ. Analysis of the questionnaires

Data comes from two channels, the global information survey system of Xinhua and AC

Nielsen’s global survey. After examining quality of data and deleting questionnaires with data of

poor quality, we received 2,386 effective questionnaires with high-quality data, of which, 1,759

copies were from AC Nielsen and 627 copies came from Xinhua.

(I) Basic information provided by respondents

1. Job titles

Of the 2,386 questionnaires, the job seniority of respondents is pyramid shaped. Respondents

with senior job titles account for a low proportion of the respondents. Junior employees represent

the highest share, accounting for 47.6 percent of total respondents.

6.8

12.7

32.9

47.6

President of a company or company partner Top-level executives

Middle Management Staff

Chart 22 The Distribution of Respondents’ Occupations

2. Industries worked in by respondents

The highest percentage of respondents falls into the “other industries” category, at 34.1

percent. The smallest proportion is in the “regulatory body /central bank” category that takes a


47

proportion of less than 1 percent. All the remaining industry categories account for between 4 and

9 percent of the respondents each.

Table 12 Distribution of Respondents’ Occupation

Frequency Proportion

Investment Banking 166 7.0

Commercial Banking 210 8.8

Retail Banking 132 5.5

Insurance 206 8.6

Asset Management 144 6.0

Legal Services 97 4.1

Accounting Services 202 8.5

Trade Association 137 5.7

Regulatory Body/Central Bank 19 0.8

Government 147 6.2

Research Institute 98 4.1

Other – Please Specify 814 34.1

Missing 14 0.6

Total 2386 100.0

3. Location of headquarters of respondents’ workplaces

There are 42 cities, where headquarters of the organizations of 15 or more respondents are

located. Except for Parma in Italy, the other 41 cities are all numbered in the 45 cities surveyed.

Table 13 Distribution of Respondents’ Cities

Code City Sample number Proportion

30 Sao Paulo 97 4.1

32 Tokyo 90 3.8

5 Budapest 87 3.6

24 Toronto 86 3.6

4 Paris 82 3.4

45 Sydney 73 3.1

37 Beijing 70 2.9

13 London 70 2.9

2 Vienna 64 2.7

15 Madrid 63 2.6

20 Stockholm 61 2.6


48

29 New York 60 2.5

40 Seoul 59 2.5

38 Shanghai 49 2.1

36 Singapore 46 1.9

23 Buenos Aires 44 1.8

17 Moscow 44 1.8

1 Amsterdam 43 1.8

31 Vancouver 41 1.7

44 Melbourne 39 1.6

42 Hong Kong 39 1.6

16 Milan 38 1.6

35 Bombay 36 1.5

6 Brussels 34 1.4

8 Frankfurt 34 1.4

41 Taipei 33 1.4

14 Rome 31 1.3

7 Dublin 30 1.3

11 Lisbon 29 1.2

39 Shenzhen 29 1.2

10 Helsinki 27 1.1

28 Montreal 26 1.1

33 Osaka 25 1.0

26 Washington 25 1.0

21 Zurich 24 1.0

3 Oslo 22 0.9

18 Munich 22 0.9

9 Copenhagen 21 0.9

19 Geneva 20 0.8

25 Chicago 19 0.8

27 San Francisco 15 0.6

Parma 15 0.6

Other Cities and Missing 524 22.0

Total 2386 100.0

4. Employee numbers

Of the organizations in which the respondents work, those with less than 100 staff and more

than 5,000 staff represent the highest proportions, accounting for 26.0 percent and 28.1 percent

respectively. Organizations with 100 to 500 staff account for 16.9 percent. And the other three

sizes of organization account for about 10 percent each. It shows that scale of surveyed

organizations is relatively even.


49

26.0

16.9

9.98.9

10.1

28.1

less than 100 100-500 500-10001000-2000 2000-5000 more than 5000

Chart 23 The Distribution of Respondents’ Organzation Size

(II) Analysis on questionnaire credibility and validity

1. Credibility analysis

Question 6 allows respondents to estimate the relative importance of the five aspects used in

evaluating the competitiveness of a financial center (importance scoring). Question 7 invites

respondents to give confidence scores to five cities of emerging economies to become global

financial centers. The Cronbach’s Alpha is 0.814 and 0.784, respectively. When Cronbach’s Alpha

is higher than 0.7, it is generally believed that internal consistency of the questionnaires is high.

2. Validity analysis

An analysis of the responses to Questions 6 and 7 shows that the variance contribution ratio

of their first principal component stands at 57.8 and 54.0 percent respectively, all higher than the

benchmark 50 percent, which is believed to correlate with a high validity. This suggests that the

responses to the questionnaire can be treated with a degree of confidence.


50

Ⅲ. Further analysis

(I)Analysis of aspects and importance assessment by respondents

in different industries

Excluding 14 respondents not filling in the industry options from the 2,386 effective

questionnaires, 2,372 effective samples are left. Those respondents that work for investment

banking, commercial banking, retail banking, insurance, asset management, and regulatory

body/central bank organizations, are classified as personnel involved in financial institutions.

Other respondents are classified as non-financial institution staff. Some 878 questionnaires were

returned by financial institution staff and 1,854 from non-financial institution staff.

1. Indicator scores

To assess the responses on the financial center development indicators of the world’s major

cities from people in various occupations, the top 15 cities respectively picked up by financial and

non-financial institution staff were analyzed. This decision was made because respondents gave

higher scores on the top 15 cities (basically above one score), which can avoid severe fluctuation

from low assessment scores.

Table 14 Evaluation on Financial Market by Financial Practitioners and Non-Financial

Practitioners

Rank Financial Practitioner Non-Financial Practitioner Rank

Difference City Score City Score

1 New York 7.42 New York 6.78 0

2 London 6.27 London 5.43 0

3 Tokyo 4.6 Tokyo 4.7 0

4 Hong Kong 3.83 Hong Kong 3.44 0

5 Paris 2.7 Frankfurt 2.36 1

6 Frankfurt 2.42 Paris 2.15 -1

7 Singapore 2.26 Washington 1.97 4


51

8 Shanghai 2.05 Zurich 1.97 1

9 Zurich 2.04 Shanghai 1.9 -1

10 Chicago 1.63 Singapore 1.73 -3

11 Washington 1.52 Beijing 1.62 2

12 Sydney 1.4 Geneva 1.57 3

13 Beijing 1.21 Sydney 1.51 -1

14 Boston 1.11 Chicago 1.32 -4

15 Geneva 1.04 Dubai 1.29 2

Note: Rank Difference is the evaluated rank difference between the top15 cities chosen by Non-Financial Practitioner and

that picked up by Financial Practitioner, and the same as below.

Table 14 shows that, except for a difference of opinion on Boston and Dubai, non-financial

and financial institution staff all believe that the14 cities including New York, London and Tokyo

should enter the world’s top 15 in terms of financial markets. This shows that respondents in

different occupations have a relatively consistent opinion on competent cities in financial markets.

In terms of ranking, respondents reached a consensus that New York, London, Tokyo and Hong

Kong should be among the top four. The biggest difference of opinion on locations only amounts

to a difference in ranking of four. This shows that different respondents hold similar opinions on

the ranking of financial markets. To sum up, non-financial and financial institution staff hold very

consistent opinions on the financial market performance of cities.

Table 15 shows that, in the top 15 cities in terms of growth and development selected up by

non-financial and financial institution staff, 13 cities are the same, and the top 10 cities are totally

the same, showing that respondents hold similar idea on cities with strong growth and

development. But in terms of the ranking of cities, the location difference of Washington and

Amsterdam stands at nine and six respectively, which shows that a difference of opinion exists of

respondents in different occupations on the growth and development of the world’s major cities.

Table 15 Evaluation on Growth and Development by Financial Practitioners and Non-Financial

Practitioners




2 Shanghai 3.92 Tokyo 3.98 3


52


4 London 3.39 Shanghai 3.41 -2

5 Tokyo 3.21 London 3.14 -1

6 Beijing 2.83 Beijing 2.88 0

7 Singapore 2.40 Dubai 2.32 1

8 Dubai 2.16 Singapore 2.22 -1

9 Paris 1.78 Paris 1.8 0

10 Shenzhen 1.73 Shenzhen 1.52 0

11 Sydney 1.70 Frankfurt 1.46 2

12 Bombay 1.45 Sydney 1.39 -1

13 Frankfurt 1.41 Washington 1.29 9

14 Chicago 1.38 Amsterdam 1.14 6

15 Moscow 1.22 Seoul 1.14 1

In terms of industrial support, financial and non-financial institution staff make the total same

selection on the top 15 cities and the biggest ranking location difference only stand at four, which

shows a high consistency of respondents in different occupations on industrial support capacity of

the world’s major financial centers.

Table 16 Evaluation on Industrial Support by Financial Practitioners and Non-Financial

Practitioners




2 London 4.44 Tokyo 3.82 1

3 Tokyo 3.80 London 3.54 -1


5 Singapore 2.53 Shanghai 2.27 2

6 Frankfurt 2.25 Paris 2.03 2

7 Shanghai 2.25 Singapore 1.99 -2

8 Paris 2.09 Frankfurt 1.98 -2

9 Chicago 1.64 Beijing 1.94 2

10 Sydney 1.59 Dubai 1.75 2

11 Beijing 1.56 Washington 1.72 3

12 Dubai 1.50 Chicago 1.56 -3

13 Zurich 1.48 Zurich 1.4 0

14 Washington 1.23 Sydney 1.33 -4

15 Amsterdam 1.16 Amsterdam 1.27 0


53

In terms of service, in the top 15 cities chosen by financial and non-financial institution staff,

13 cities are the same. But the ranking location difference is relatively large, with three cities

having difference above five. This shows that a difference of opinion exists in different

occupations on the service of the world’s major cities.

Table 17 Evaluation on Service by Financial Practitioners and Non-Financial Practitioners






4 Hong Kong 2.86 Paris 2.34 1

5 Paris 2.52 Hong Kong 2.02 -1

6 Singapore 2.46 Washington 1.83 5

7 Sydney 1.89 Frankfurt 1.8 1

8 Frankfurt 1.81 Singapore 1.76 -2

9 Zurich 1.75 Zurich 1.75 0

10 Chicago 1.70 Sydney 1.73 -3

11 Washington 1.49 Amsterdam 1.69 5

12 Shanghai 1.46 Geneva 1.59 1

13 Geneva 1.43 San Francisco 1.4 2

14 Toronto 1.25 Vancouver 1.34 7

15 San Francisco 1.18 Toronto 1.27 -1

In terms of general environment, in the top 15 cities chosen by financial and non-financial

institution staff, 14 cities are the same. With the exception of the ranking of Washington,

respondents in different occupations gave relatively the same rankings for other major financial

centers. Generally speaking, respondents in different occupations hold relatively similar opinion

on the general environment of the world’s major cities.

Table 18 Evaluation on General Environment by Financial Practitioners and Non-Financial

Practitioners





54



4 Hong Kong 2.71 Paris 2.2 1

5 Paris 2.19 Washington 2.08 8

6 Sydney 2.16 Hong Kong 1.98 -2

7 Singapore 2.14 Sydney 1.86 -1

8 Zurich 1.99 Amsterdam 1.74 2

9 Frankfurt 1.84 Frankfurt 1.74 0

10 Amsterdam 1.66 Singapore 1.65 -3

11 Chicago 1.59 Geneva 1.59 1

12 Geneva 1.57 Zurich 1.55 -4

13 Washington 1.48 Chicago 1.4 -2

14 Toronto 1.47 Toronto 1.38 0

15 San Francisco 1.30 Copenhagen 1.37 2

2. Importance

On the assessment of the importance of the indicators shown in Table 19, a difference of

opinion exists between financial and non-financial institution staff. Financial institution staff

attach more importance on the five aspects than non-financial institution staff. Meanwhile,

respondents in different occupations hold different opinions on the importance of various aspects.

Financial institution staffs believe that general environment is more important than growth and

development, while non-financial institution staff attach more importance to the growth and

innovation of financial cities.

Table 19 Evaluation on Importance of Each Indicator by Financial Practitioner and

Non-Financial Practitioner

Financial Practitioner Non-Financial Practitioner

Scores Rank Scores Rank

Financial Market 4.052 1 3.867 1

Growth and Development 3.892 3 3.812 2

Industrial Support 3.735 5 3.666 5

Service 3.841 4 3.736 4

General Environment 3.990 2 3.790 3


55

(II)Analysis on indicators and indicator importance assessment

by respondents from different regions

Excluding 49 samples not filing in the cities where the headquarters of respondents’

organizations are located from the 2,386 effective questionnaires, 2,337 effective samples are left.

As less headquarters of respondents’ organizations are located in South America, Oceania and

Africa, we combine the three continents and obtain the detailed location of samples in Table 20.

Table 20 Distribution of Respondents’ Headquarters in Each Continent

Area Sample Size Proportion

Europe 1096 47

North America 388 17

Asia 534 23

South America, Oceania and Africa 319 14

Note: The sample sizes of South America, Oceania and Africa are respectively 188, 119 and 112, and the unit of proportion is

percentage.

1. Indicator Scores

From Table 21 it can be seen that, in terms of financial markets, respondents from different

regions all believe that 10 cities including New York should enter the top 15 cities and meanwhile

they pick New York, London, Tokyo and Hong Kong as the four most competent cities in the

global financial markets. This shows that respondents from different regions hold substantially the

same opinion on the competent cities operating financial markets. But obvious regional

subjectivity exists in this assessment. Brussels and Luxemburg, in the top 15 cities chosen by

respondents from Europe, are not mentioned by respondents from other continents; Respondents

from North America think that the financial market of Toronto should rank the fifth place, while

respondents from other continents do not list it into the top 15; Shanghai and Singapore, which

have high rankings in mind of Asian respondents, have an obvious lower ranking among

respondents from other continents; Sidney ranks the fifth among respondents from Oceania, South

America and Africa, but it is believed to rank after the top 10 among respondents from other

continents. Meanwhile, Sao Paulo ranks in the top 15 among respondents from Oceania, South


56

America and Africa.

Table 21 Evaluation on Financial Market by Respondents From Different Areas

Rank Europe North America Asia Other Continents

City Score City Score City Score City Score

1 New York 6.82 New York 7.58 New York 7.57 New York 6.22

2 London 5.92 London 5.17 London 6.18 London 5.15

3 Tokyo 4.66 Tokyo 4.17 Tokyo 5.32 Tokyo 4.25

4 Hong Kong 3.45 Hong Kong 2.69 Hong Kong 4.19 Hong Kong 3.25

5 Frankfurt 2.91 Toronto 2.47 Shanghai 3.40 Sydney 2.52

6 Zurich 2.52 Chicago 2.29 Singapore 3.23 Frankfurt 2.26

7 Paris 2.49 Paris 2.07 Paris 2.36 Washington 2.21

8 Geneva 1.69 Frankfurt 1.77 Washington 1.97 Zurich 2.14

9 Singapore 1.66 Washington 1.65 Frankfurt 1.91 Paris 2.01

10 Washington 1.63 Zurich 1.64 Beijing 1.79 Shanghai 1.94

11 Brussels 1.46 Beijing 1.56 Chicago 1.72 Sao Paulo 1.83

12 Sydney 1.40 Boston 1.51 Zurich 1.16 Beijing 1.76

13 Shanghai 1.28 Shanghai 1.48 Sydney 1.07 Chicago 1.59

14 Luxembourg 1.24 San Francisco 1.47 Dubai 0.92 Singapore 1.49

15 Dubai 1.23 Sydney 1.44 San Francisco 0.88 Dubai 1.34

Of the top 15 cities in terms of growth and development, chosen by respondents from

different regions, nine cities are the same and the top six cities are totally the same, showing that

respondents hold certain similar idea on the growth and development of cities. But obvious

regional subjectivity also exists in the assessments. For instance, more respondents from Europe

pick Zurich, Amsterdam and Moscow, more respondents from North American choose Toronto,

San Francisco and Vancouver, more respondents from Asia choose Shenzhen, Seoul, Bombay and

Paris, and more respondents from South America choose Sao Paulo and Melbourne.

Table 22 Evaluation on Growth and Development by Respondents From Different Areas



1 New York 4.77 New York 5.23 Shanghai 5.63 New York 4.25

2 Tokyo 3.74 Hong Kong 3.84 New York 4.22 Tokyo 3.81

3 London 3.57 Tokyo 3.83 Hong Kong 4.06 Hong Kong 3.58


57

4 Hong Kong 3.33 Shanghai 3.44 Singapore 3.56 Beijing 3.56

5 Shanghai 2.88 London 3.16 Tokyo 3.34 Shanghai 3.19

6 Beijing 2.52 Beijing 2.88 Beijing 3.25 Sydney 2.88

7 Dubai 2.42 Toronto 2.14 London 2.73 Dubai 2.85

8 Paris 2.14 Dubai 1.90 Shenzhen 1.88 London 2.72

9 Singapore 1.97 Singapore 1.87 Dubai 1.85 Sao Paulo 2.56

10 Shenzhen 1.91 Shenzhen 1.79 Seoul 1.82 Shenzhen 2.01

11 Frankfurt 1.78 Chicago 1.77 Bombay 1.77 Singapore 1.95

12 Zurich 1.39 San Francisco 1.66 Paris 1.56 Bombay 1.44

13 Amsterdam 1.37 Vancouver 1.53 Taipei 1.51 Washington 1.34

14 Sydney 1.34 Paris 1.50 Sydney 1.27 Chicago 1.28

15 Moscow 1.27 Sydney 1.32 Chicago 1.20 Melbourne 1.28

In terms of industrial support, respondents from different continents reach consensus on 10

cities to enter the global top 15 and meanwhile, they all believe that New York, Tokyo, London

and Hong Kong are the four most competent cities in industrial support, which shows that

respondents from different regions hold certain similar idea on the cities with strong industrial

support, but regional subjectivity somewhat exists on the assessment.

Table 23 Evaluation on Industrial Support by Respondents From Different Areas




2 London 4.11 Tokyo 3.79 Tokyo 4.66 Tokyo 3.83

3 Tokyo 3.42 London 3.56 London 3.98 London 3.29

4 Hong Kong 2.70 Hong Kong 3.32 Hong Kong 3.66 Hong Kong 2.67

5 Frankfurt 2.65 Chicago 2.64 Shanghai 3.51 Sydney 2.53

6 Paris 2.15 Toronto 2.40 Singapore 3.50 Beijing 2.24

7 Zurich 2.02 Beijing 2.23 Paris 2.18 Singapore 1.99

8 Singapore 1.91 Shanghai 2.14 Beijing 2.18 Chicago 1.95

9 Shanghai 1.80 Frankfurt 1.77 Chicago 1.81 Shanghai 1.93

10 Dubai 1.73 Paris 1.71 Washington 1.57 Sao Paulo 1.88

11 Amsterdam 1.53 San Francisco 1.67 Dubai 1.55 Dubai 1.83

12 Washington 1.40 Vancouver 1.66 Frankfurt 1.38 Frankfurt 1.76

13 Geneva 1.38 Washington 1.65 Sydney 1.36 Washington 1.61

14 Beijing 1.34 Boston 1.61 Seoul 1.29 Paris 1.55

15 Brussels 1.32 Singapore 1.48 Shenzhen 1.24 Toronto 1.41


58

In terms of services, in the top 15 cities chosen by respondents from different continents,

only eight cities are the same. But all the respondents believe that New York, Tokyo and Hong

Kong should enter the top five in terms of service. But big differences exist in the assessment

made by respondents on cities aside from the above-mentioned three. Obvious regional

subjectivity exists. For instance, more respondents from Europe pick Zurich, more respondents

from North American choose Toronto, more respondents from Asia choose Shanghai, and more

respondents from South America choose Melbourne. Big differences exist in assessment by

respondents from different continents.

Table 24 Evaluation on Service by Respondents From Different Areas




2 London 4.06 London 3.93 Tokyo 4.86 London 3.74

3 Tokyo 2.68 Toronto 3.00 Singapore 3.69 Tokyo 3.13

4 Paris 2.62 Tokyo 2.76 London 3.55 Sydney 2.76

5 Zurich 2.31 Vancouver 2.65 Hong Kong 3.40 Hong Kong 2.12

6 Frankfurt 2.15 Hong Kong 2.53 Paris 2.45 Paris 2.02

7 Geneva 1.94 San Francisco 2.23 Shanghai 2.27 Washington 1.83

8 Hong Kong 1.91 Chicago 2.06 Washington 1.90 Chicago 1.81

9 Amsterdam 1.81 Washington 2.02 Chicago 1.57 Zurich 1.72

10 Sydney 1.71 Paris 1.85 Sydney 1.47 Melbourne 1.72

11 Stockholm 1.61 Boston 1.81 Frankfurt 1.43 Singapore 1.60

12 Singapore 1.56 Frankfurt 1.67 Beijing 1.33 Frankfurt 1.55

13 Brussels 1.47 Montreal 1.64 Rome 1.29 Shanghai 1.46

14 Copenhagen 1.47 Sydney 1.62 Osaka 1.26 Geneva 1.43

15 Munich 1.43 Singapore 1.58 Zurich 1.20 Amsterdam 1.41

In terms of the general environment, in the top 15 cities chosen by respondents from different

continents, only seven cities are the same. But all the respondents believe that New York, Tokyo

and Hong Kong should enter the top five. The same as the services, big difference exists on the

assessment made by respondents on cities aside from the above-mentioned three. Obvious

regional subjectivity exists. For instance, of the top 15 cities picked by European respondents, 10

are European cities and only one is North American city New York; while North American

respondents choose 8 North American cities but only pick 3 European cities; Asian respondents


59

choose 5 Asian cities and put Shanghai at the 7th place; respondents from Oceania, South America

and Africa choose three cities located in their continents, and Sao Paulo and Melbourne rank the

7th and 9th place respectively.

Table 25 Evaluation on General Environment by Respondents From Different Areas




2 London 3.92 London 3.49 London 3.99 London 3.61

3 Paris 2.36 Toronto 3.46 Tokyo 3.73 Sydney 3.17

4 Zurich 2.24 Vancouver 2.62 Singapore 3.45 Tokyo 2.68

5 Tokyo 2.18 Tokyo 2.47 Hong Kong 3.37 Washington 2.18

6 Frankfurt 2.13 Chicago 2.21 Paris 2.28 Hong Kong 2.08

7 Amsterdam 2.02 San Francisco 2.19 Shanghai 2.08 Sao Paulo 1.87

8 Hong Kong 1.98 Washington 2.11 Washington 1.88 Paris 1.79

9 Geneva 1.87 Sydney 2.02 Sydney 1.81 Melbourne 1.77

10 Copenhagen 1.77 Montreal 1.96 Chicago 1.63 Chicago 1.64

11 Sydney 1.75 Boston 1.92 Frankfurt 1.52 Zurich 1.62

12 Brussels 1.64 Hong Kong 1.85 Beijing 1.37 Toronto 1.56

13 Oslo 1.61 Paris 1.79 San Francisco 1.26 Shanghai 1.54

14 Washington 1.58 Amsterdam 1.49 Amsterdam 1.26 Amsterdam 1.54

15 Stockholm 1.51 Frankfurt 1.42 Zurich 1.16 Singapore 1.53

2. Importance

On the assessment on indicator importance shown by Table 26, no obvious divergence exists

among respondents from different regions. Asian respondents think highly of the five indicators

than respondents from other continents and they attach more importance on the general

environment. Respondents from different regions hold similar opinion on the importance of

various indicators. Respondents from Europe and North America believe that financial market is

more important than other indicators.


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Table 26 Evaluation on Importance of Each Indicator by Respondents From Different Areas

Europe North America Asia Other Continents

Scores Rank Scores Rank Scores Rank Scores Rank

Financial

Market 3.89 1 3.89 1 4.10 2 3.92 2

Growth and

Development 3.76 3 3.82 3 3.98 3 4.00 1

Industrial

Support 3.60 5 3.68 4 3.91 5 3.62 5

Service 3.69 4 3.67 5 3.95 4 3.87 3

General

Environment 3.76 2 3.83 2 4.12 1 3.80 4

(III) Summary

After analyzing the indicator assessment and indicator importance assessment of financial

center development by respondents in different occupations and from different regions, the

following conclusions emerge:

1. Whatever the competence of cities in terms of the various indicators of financial center or

the rank of the city, financial and non-financial institution staff do not hold wildly different

assessments, though their opinions vary about the importance of the various indicators.

2. Respondents from different regions to some extent hold similar ideas on the assessment of

two indicators -- financial markets and industrial support. But, affected by regional subjectivity,

divergence exists on the assessment result. Big differences exist on the assessment of the three

indicators of growth and development, service, and general environment for financial center cities

by respondents from different regions, and regional subjectivity casts deep influence. But small

differences exist on assessment of the importance of indicators by respondents from different

regions.

From the above analysis it can be seen that the assessment made on financial centers by

respondents in different occupations and from different regions diverge to some extent. These two

indicators ought to be taken into account when distributing the questionnaires, especially regional

subjectivity, to obtain even more effective and trustworthy results.


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IV. Objective indicator system and questionnaire

（I）Questionnaire on the competitiveness of financial center

Dear Sir/Madam:

We are doing a research on the competitiveness of international financial center. The following questionnaire is designed in order to get an objective, fair and reasonable result. It will take a few minutes to finish. Please forgive any inconvenience for you. Your reply is of great importance for our project. The information you provide will, of course, be held in the strictest confidence. Sincerely thank your support!

1 What is your job title/main area of responsibility?

A. President of a company or company partner B. Top-level executives

C. Middle Management D. Staff

2 In which industry is your organization

A . Investment Banking B. Commercial Banking C .Retail Banking

D .Insurance E. Asset Management

F. Legal Services G.. Accounting Services H. Trade Association I. Regulatory Body/Central Bank J. Government K. Research Institute L. Other – Please Specify

3 In which city is the headquarters of your organization located? 4 Approximately how many employees does your organization have worldwide?

A fewer than 100 B 100 to 500 C 500 to 1000 D 1000 to 2000


62

E 2000 to 5000 F more than 5000

5 There are 45 cities in the following table:

Europe

1 Amsterdam 2 Vienna 3 Oslo 4 Paris

5 Budapest 6 Brussels 7 Dublin 8 Frankfurt

9 Copenhagen 10 Helsinki 11 Lisbon 12 Luxembourg

13 London 14 Rome 15 Madrid 16 Milan

17 Moscow 18 Munich 19 Geneva 20 Stockholm

21 Zurich

America

22 Boston 23 Buenos Aires 24 Toronto 25 Chicago

26 Washington 27 San Francisco 28 Montreal 29 New York

30 Sao Paulo 31 Vancouver

Asia

32 Tokyo 33 Osaka 34 Dubai 35 Bombay

36 Singapore 37 Beijing 38 Shanghai 39 Shenzhen

40 Seoul 41 Taipei 42 Hong Kong

Other 43 Johannesburg 44 Melbourne 45 Sydney

(1) In terms of scale , stability and maturity, reflecting the development of financial market(including the capital market \foreign exchange market \banking market \ insurance market and so on ), which are the top 10 cities from your perspective ? ( write down the city number only ,to begin with the most excellent one ) ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

(2) In terms of growth and development (including growth of capital market\ city innovation and potential\ growth of economy), which are the top 10 cities from your perspective? ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ (3) In terms of industrial support (including the business environment support \city conditions\city infrastructure), which are the top 10 cities from your perspective? ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ (4) In terms of service (including the government service\ intellectual capital\ urban living conditions), which are the top 10 cities from your perspective?


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____ ____ ____ ____ ____ ____ ____ ____ ____ ____ (5) In terms of general environment (including the political environment\ economic environment \ openness), which are the top 10 cities from your perspective? ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ 6 Please give your comments on the importance of the five aspects in evaluating the competitiveness of financial centre (tick √ in the corresponding position,"1"=" not very important", "5"=" the most important")

1 2 3 4 5

Financial market

Growth and

development

Industrial support

Service

General

environment

7 How much confidence do you have on the following cities in the emerging economies to be the global financial center ? ("1"="have no confidence" and "10"="have complete confidence")

A.Shanghai ______________

B.Sao Paulo ______________

C.Bombay ______________

D Moscow ______________

C Johannesburg ______________

8 Do you have any other comments ?

_________________________________________________________________________________________

_________________________________________________________________ Thank you for your time and cooperation!!


64

（II）Objective indicator system

Table 27 Data Source of objective Indicator system

Level-1 Indicator Level-2 Indicator Level-3 Indicator Data Source Website

Financial Market

Capital Market

Total Value of Share

Trading WFE http://www.world-exchanges.org

Total Value of Bond

Trading WFE http://www.world-exchanges.org

Total Volume of

Commodity futures

Trading

WFE http://www.world-exchanges.org

Total Volume of

Stock Futures

Trading


Stock Market's

Significance in the

National Economy


Internationalization

of Securities

Markets


Foreign

Exchange Market

Foreign Exchange

Derivatives

Turnover


Foreign Exchange

Reserves pinggu.org http://www.pinggu.org/bbs

Exchange Rate

Volatility MasterCard

http://www.mastercardworldwide.com/ins

ights

Banking Market

Number of Major

Bank The Banker http://www.thebanker.com

Major Bank Assets The Banker http://www.thebanker.com

Central Bank

Assets To GDP WFE http://www.world-exchanges.org

Bank Assets To

GDP WFE http://www.world-exchanges.org

Insurance Market

Insurance Premium WFE http://www.world-exchanges.org

Growth of

Insurance PremiumWFE http://www.world-exchanges.org


65

Insurance Services

Network MasterCard

http://www.mastercardworldwide.com/ins

ights

Growth and

Development

Capital Market Growth

Growth Rate of

New Bonds WFE http://www.world-exchanges.org

Growth Rate of

Listed CompaniesWFE http://www.world-exchanges.org

Growth Rate of

Share Trading WFE http://www.world-exchanges.org

Economic

Growth

Five Year Average

Growth Rate of

GDP

Global Urban

Competitiveness

Project

http://www.gucp.org

Three Year Average

Growth Rate of

Residential Income

UBS http://www.ubs.com

Three Year Average

Growth Rate of

General Price Index


Growth Rate of

Taxes and Social

Security


Innovation

Outputs

Three Year Average

Growth Rate of

Domestic

Purchasing Power


Added Value of

High-tech Products

to Added Value of

Manufacturing

Centre for International

Competitiveness http://www.cforic.org

Five Year Average

Growth Rate of

Government R & D

Expenditures



Five Year Average

Growth Rate of

Government R & D

People



Innovation

Potential

Technology and

Innovation

Global Urban

Competitiveness

Project

http://www.gucp.org

Employment in

High-Tech Services

per 1,000

inhabitants




66

Per Capita

Expenditure on

R&D performed by

Government



Industrial

Support

Business

Environment

Support

Strength of

Manufacturers

Global Urban

Competitiveness

Project

http://www.gucp.org

Strength of Traders

and Retailers

Global Urban

Competitiveness

Project

http://www.gucp.org

Strength of IT

Companies

Global Urban

Competitiveness

Project

http://www.gucp.org

Strength of

High-Tech

Companies

Global Urban

Competitiveness

Project

http://www.gucp.org

Strength of

Financial Services

Providers

Global Urban

Competitiveness

Project

http://www.gucp.org

Number of

Multinational

headquarters

Global Urban

Competitiveness

Project

http://www.gucp.org

Basic Urban

Conditions

Geographical

Location

Global Urban

Competitiveness

Project

http://www.gucp.org

City Population

Density wikipedia

http://en.wikipedia.org/wiki/Population_d

ensity

Cost of Renting

Office UBS http://www.ubs.com

Urban

Infrastructure

Cargo Throughput

Global Urban

Competitiveness

Project

http://www.gucp.org

Airline carriers

Global Urban

Competitiveness

Project

http://www.gucp.org

IT InfrastructureWorld Economic

Forum http://www.weforum.org

Service

Government

Service

Services

Employment

Proportion

Global Urban

Competitiveness

Project

http://www.gucp.org

Government

Response

Capability Index

Global Urban

Competitiveness

Project

http://www.gucp.org


67

Digital GovernanceGlobal E-Government

Development Report

http://www2.unpan.org/egovkb/global_re

ports/05report.htm

Intellectual

Capital

Financial Services

Employment

Percentage

Global Urban

Competitiveness

Project

http://www.gucp.org

Per Capita Public

Expenditures on

Higher Education



Population

Education Level

Global Urban

Competitiveness

Project

http://www.gucp.org

Number of

Universities

Global Urban

Competitiveness

Project

http://www.gucp.org

Urban Living

Conditions

Per Capita GDP

Global Urban

Competitiveness

Project

http://www.gucp.org

Cost of Living

Global Urban

Competitiveness

Project

http://www.gucp.org

Quality of Living

Index Mercer HR http://www.mercerhr.com

Unemployment

Rate Index



Crime Statistics

Global Urban

Competitiveness

Project

http://www.gucp.org

General

Environment

Economic

Environment

Ease of Doing

Business World Bank

http://www.doingbusiness.org/economyr

ankings

Total Foreign Trade

Volume

CIA-The world

facebook

https://www.cia.gov/library/publications/t

he-world-factbook/

Consumer Price

Index IMF http://www.imf.org

Economic Freedom

Index Fraser Institute

http://www.freetheworld.com/release.htm

l

Economic

Extrovert Degree

World Economic


Political

Environment

Happiness Planet

Index NEF http://neweconomics.org/

Political Risk Index Exclusive Analysis Ltd http://www.exclusive-analysis.com

Corruption IndexTransparency

International http://www.transparency.org

Openness

Social

Globalization Index

KOF-Index of

Globalization http://globalization.kof.ethz.ch


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Networked

Readiness Index

World Economic


Global

Competitiveness

Index

World Economic


Foreign Direct

Investment UNCTAD http://www.unctad.org

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