Financial Centres, Capital Market Performance and the Economy

Abstract

This chapter considers the benefits to the economy that could arise from encouraging the use of a wider range of financial services. Financial services contribute both directly and indirectly to economic growth, via the value added in the sector itself, and through the indirect benefits the sector provides for the rest of the economy through more efficient investment, risk allocation, corporate governance and aggregation of savings. First, the most immediate contribution of financial centres, the employment and value added they create, is examined, followed by a consideration of the less direct — and potentially more important — benefits.