Financial centres in peripheral regions: the effect of the financial services industry on regional economy - the case of the Scottish Financial cluster

In recent times the financial services industry has experienced a major transformation, in which markets and players have been globalised and consolidated. Certain financial centres have concentrated on financial firms and markets, engendering considerable research on the foundations of their pre-eminence. Nevertheless, the growth of financial centres in peripheral regions has not been conveniently analysed, despite the fact that financial activity may play a major role in some economies. This paper provides a thorough survey of state-of-the-art literature, both on the transformation of the financial marketplace, and on the rise of global financial centres, devoting especial attention to the appearance of peripheral financial centres. The Scottish case is studied, among other aspects, through the use of Input-Output multipliers, to determine the dramatic role financial services have to play in this region’s economy. This approach advanced may be adapted to other locations, to help to assess the specific impact of financial centres and to draw attention to possible problems arising from overdependence on their activity.