New ranking: Frankfurt is among the ten most attractive financial centers

WWhich financial center in the world is the most attractive? Bank managers, marketers, employees and regulators often ask themselves this question. Location decisions made by companies and organizations depend on factors such as financial data and market size, as well as criteria such as infrastructure and attractiveness to employees, and therefore how much money flows to which location and how many workers places have been created there. .

That’s why it has been a thorn in the side of many players in Frankfurt over the years that the most important and best-known financial centers index so far has been created in London, especially since Frankfurt has been performing poorly there lately: the city ranks only 14 -th place. in the current version of the Global Financial Centers Index, it lags far behind not only New York, London and Asian financial centers such as Singapore and Hong Kong, but also Geneva. This is despite the fact that international banks have moved some of their jobs from London to Frankfurt since Brexit.

Scientists offer an alternative

Now the Frankfurt Center for Financial Studies (CFS) at Goethe University, together with the Paris Institute Louis Bachelier, has developed a new ranking, which is also dedicated to financial research. The Open Financial Ecosystem Index, or OFEX for short, is said to differ significantly from its London counterpart in two ways in particular, as CFS Managing Director Volker Brühl explains: “We were interested in a scientifically sound and, above all, transparent presentation,” he says, a finance professor, who complains that London’s criteria are difficult to test and often rely on surveys. The OFEX table, on the other hand, is based on 55 indicators obtained from trusted sources such as the OECD or the World Bank and is understandable to everyone.

The results are much more positive for Frankfurt, with the financial center ranked sixth out of 47 financial centers from 44 countries, just one place behind its biggest rival in continental Europe, Paris. Brühl considers it unproblematic that Paris and Frankfurt, which are responsible for developing the new rating, will also benefit from this. Ultimately, the selection of indicators and sources was approached with an open mind, i.e. without knowing in advance whether they would have a positive impact on the Paris and Frankfurt locations.

Despite this, Bruhl now believes the two cities’ rankings are more realistic: they are in the top ten, but still far behind the three most important financial centers of New York, London and Chicago. “Overall this is good news for Frankfurt.”

Hubertus Wäth, managing director of the financial center initiative Frankfurt Main Finance, thinks the same. Decisions about locating companies are not based solely on rankings, but pre-selection can also be made on this basis, Vaeth said. It is all the more important that Frankfurt is well located here, and this is also important in the external image of the city.

Low attractiveness to employees

In the new ranking, New York received the highest score – 100 points. Especially when it comes to the size of the financial center, which takes into account the market capitalization of companies listed on the stock exchange, derivatives turnover or stock trading volume, New York clearly ranks first in the world. While the American metropolis scored 56 points, Frankfurt scored only 34 points. Frankfurt performs better when it comes to the overall economic environment, which includes, among other things, gross domestic product and political stability. In contrast, employee attractiveness scores are the worst among the world’s 15 largest financial centers. It asks about tax rates, life satisfaction, number of universities and cost of living.

Hubertus Väth doesn’t like the fact that Frankfurt is lagging behind Paris. However, the index is also important in order to compete with the largest competitors in the EU. On the one hand, they want to cooperate with Paris to strengthen the European market, he said. At the same time, we also stand in this market in front of Paris. “And if everyone comes together, we can do it.”

Source: Frantfurter Allgemeine

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