Evolution of the financial services industry in Europe and US

Thesis (S.M.)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate , 2009.This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.Cataloged from student submitted PDF version of thesis.Includes bibliographical references (p. 149-151).The thesis aims to address the long lasting phenomena of evolution of financial services industry both in US and Europe. The topic has never been more emphasized since the Great Depression. The dramatic fact of cost cutting and diminishing the headcount in financial services industry creates question if the geographic location has substantial effect in their business activities. This study is conducted to analyze whether there is substantial change in the geographic preference of financial services industry which can result immigration away from the Metropolitan Statistical Areas (MSAs) like Chicago, New York in US and London, Paris in Europe to smaller MSAs. This thesis presents a quantitative model to find out about the historical trends, correlation with other significant variables and significance of the causalities between the variables. Furthermore, the qualitative part of the thesis will try to explain the motivations behind the change and the accelerations and decelerations of the trend at a certain point of time. The thesis examines and tests the hypothesis in two parts, US and Europe with a comparative approach. In the first section of the thesis, the specialization and concentration variables of US will be computed and ranked by taking 1974 as base year in order to observe the evolution since then for each category and subcategory of sectors. The trends of those variables along the time horizon as well as the correlation to other variables are explained for the top 4 and top 10 MSAs. Moreover, the significance of those variables is tested in order to verify the reliability of the results.(cont.) In the second section, previously selected nine major cities in Europe are selected according to the criteria of availability of continuous data along the time period, level of the finance employment and total employment levels. Although the detailed data related to subcategories of the finance industry were not available, the value added measures of financial industry shed light on productivity measures at each city level. The outcomes of the two studies is compared and contrasted and the reasons of the deviations are investigated. Therefore, the study is also a gateway to project what trends may be expected in the future.by Pinar Boyar and Onur Celen.S.M