Have you ever wondered, Which is the Financial Capital of the World? A quick answer – New York City! Let’s learn all about the financial capital and what factors contribute towards ranking it as the leading financial hub.
Financial Capital – Significance
The world financial capital is a place positioned strategically in an environment with a reputable stock exchange and financial institutions. It is packed with both insurance companies and trading companies.
Moreover, the place is flooded with the most advanced commercial systems, the best-in-class infrastructure, and the latest communication method. Their legal system is fully supported by their political system. It also provides huge opportunities for business owners because of its location.
Why New York City is called Financial Capital of The World?
The Global Financial Centers Index has ranked New York City as the world’s financial capital. This is due to the connection of the city with the financial world. Home to many of the world’s biggest banks, credit rating companies, organizations, insurance companies, hedge funds, credit rating agencies, and many more.
The city has a great impact on education, art, commerce, and the fashion world. It also showcases their significance in research, technology, finance, entertainment, and media.
Financial Capital – Factors to Contribute
Some of the factors that contribute towards making a financial capital:
1. Geographical Factors
The geographical location of New York City and its development play an excellent role in its ranking. Hudson river located in the city is passable and has a low freezing state than other rivers in the country. The city is the heart of European merchants and its ports have shown to be more suitable than those in other cities.
The building of the Erie Canal between 1817-1827 has added a boost to the geographical advantage of the city. The construction of Black Ball Lines in 1818 has also made it an attractive place for many people.
The Erie Canal is connected to the Great Lake of North America. It also joins the Appalachian Mountains and the Hudson River. This has made it one of the fastest-growing places in America.
The Black Ball Lines provides the first commonly used transatlantic flight which makes the city a central transport hub for the country. Erie Canal has also made the city the country’s commercial trade center.
The first port for the entrance of immigrants was built in New York. This made the city a suitable place for them to settle. This increases the number of occupants in the city which increases its commercial activities It also helps to improve its manufacturing process.
2. Economical Factors
NYC has the most extensive corporation in the country and the world which makes billions of dollars every day. These include Pfizer, UnitedHealth Group, PricewaterhouseCoopers, Verizon, Historic TW, PepsiCo, RCA, Deloitte, Hearst, IBM, and Northwell Health.
The New York Stock Exchange is located on Wall Street, making the city the permanent headquarters of the United Nations. This further extended its influence and recognition. Manhattan is also one of the world’s centers for finance, culture, and banking.
3. Cultural Factors
The cultural diversification in the city has increased its cultural boom. 40% of the population are immigrants with over two hundred spoken languages. This makes it a perfect fit for the headquarters of the United Nations.
4. Financial Factors
The development of call loans has funded the city’s stock trading. This has been of great benefit for stock traders who are allowed to acquire loans from banks and use them to invest. Plus, they can use their tradable financial instruments as collateral.
The loan is used for trading in the security market and banks also receive interest. This development becomes a win-win for both the banks and the stock market.
Other Leading Global Financial Cities
Some other leading Global Financial Cities include:
1. London
UK centre for investment, countless market opportunities, unparalleled cultural and historical significance, London no doubt is one of the perfect places for business. And it’s not surprising that it is one of the most visited city in the world. It’s foreign exchange trading is the largest in the world. Plus a turnover of over 100 billion dollars every year. London has one of the biggest bond markets and insurance services. The legal system of the city plays a significant role in the growth of the city.
The city’s gold and silver market are the largest in the world. Its ethnic diversity of the city paves way for many innovations and attracts several corporations. It has the largest stock exchange in Europe.
London is home to the Bank of England which is one of the most populous and oldest banks in the world. This Bank is the lender of last resort and is responsible for issuing currency in the United Kingdom. Plus it supervises all monetary policy.
2. Chicago
Chicago gains its popularity through its financial market for derivatives. This was established in 1848 by the Chicago Board of Trade. The city has a diverse economy that includes printing, manufacturing, managing, food processing, information technology, and others. It has one of the largest cannabidiol in the country.
The FInancial services company in Chicago is responsible for clearing all the option contracts of the country. It houses over 300 companies and the headquarters for many Financial Times.
Illinois is filled with over 400 companies and most of them are established in Chicago. The Chicago stock exchange and other global corporations are located in the city.
3. Singapore
The city is known for its prominent insurance firms and has a diverse industry that includes electronics, logistics, biomedical sciences, Cybersecurity, mechanical engineering, Human Resources, and many more. It is one of the biggest financial centers in the world.
The city has a great financial market with a stable economy that is complemented by its sound legal rules and regulations. Its workforce is regulated and an excellent settlement for many Indians and Chinese.
4. Hongkong
As a leading international financial centre, Hongkong is home for many investment management companies. The city has a great infrastructure and a well-organized judiciary system.
its Stock Exchange is one of the highly ranked in the world and has a favorable tax system. The city is the trading channel between China and other countries for many centuries. Hongkong has an outstanding telecommunication service.
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New York City – Financial Capital
New York without doubt has utilized its unique economic, financial and geographical factor to attain the world financial capital. What do you think? Feel free to share your feedback!