Clustering in the UK Financial Services:The quest for the enigmatic pecuniary externality

This paper explores the sources of agglomeration externalities in enhancing firmperformance, in particular, the pecuniary externality that supports firms’ bottom line.The fundamental argument on increasing returns leads to the premise that cluster sizehas beneficial influence to firm performance. However, recent arguments suggest thatdiseconomies may set in and the agglomeration of related sectors in a cluster lead tocongestion that is detrimental to firm performance....