The Financial Centre Index (GFCI), the world’s first authoritative index to professionally rank the world’s major financial centers, was launched in March 2007 to evaluate 46 financial centers worldwide, and is updated regularly in March and September each year to show changes in the competitiveness of financial centers. The index focuses on the market flexibility, adaptability and growth potential of each financial center.
The GFC Index divides the factors that make up the competitiveness of financial centers into five core areas: talent, business environment, degree of market development and infrastructure, and overall competitiveness.
In the research model, talent indicators include talent matching, labor market flexibility, business education, human capital development, etc.; business environment refers to the level of market regulation, tax rate, corruption, economic freedom, ease of business transactions, etc.; market development indicators include the level of securitization, the volume and market value of tradable stocks and bonds, the concentration of many financial services-related companies in a financial center, etc. The indicators of market development include the level of securitization, the volume and market value of tradable stocks and bonds, the agglomeration effect of many financial services-related companies in a financial center, etc.; infrastructure refers to the cost and practicality of buildings and offices; overall competitiveness is based on the concept of “the sum of the whole is greater than the sum of the parts”, which creates the overall competitiveness and livability of a city.
Studies of the Financial Center Index have found that a leading financial center must do well in most areas, and success breeds success through success, so agglomeration is a critical factor. And in the latest study, the regulatory and tax environment replaces talent as the competitiveness factor of greatest concern. The Financial Center Index also helps one understand the complexity of international financial business allocation. Past studies had determined that Tokyo would be an important international financial center because of the size of Japan’s large domestic economy, but it now appears that the international financial industry is too complex for the above assumptions to become reality. Another example is that the U.S. economy is at least five times the size of the U.K., but London is able to stand shoulder to shoulder with New York as the most important global financial center, which shows that the domestic market is not the dominant factor for financial centers.