Geography of finance (or financial geography) is a branch of

economic geography Economic geography is the subfield of human geography which studies economic activity and factors affecting them. It can also be considered a subfield or method in economics. There are four branches of economic geography. There is, primary secto ...

that focuses on issues of financial globalization and the geographic patterns of finance. It studies the effects of state

sovereignty Sovereignty is the defining authority within individual consciousness, social construct, or territory. Sovereignty entails hierarchy within the state, as well as external autonomy for states. In any state, sovereignty is assigned to the perso ...

culture Culture () is an umbrella term which encompasses the social behavior, institutions, and norms found in human societies, as well as the knowledge, beliefs, arts, laws, customs, capabilities, and habits of the individuals in these groups ...

and different kinds of barriers that affect the

spatial distribution A spatial distribution in statistics is the arrangement of a phenomenon across the Earth's surface and a graphical display of such an arrangement is an important tool in geographical and environmental statistics. A graphical display of a spatial d ...

of finance, such as uneven development and financial exclusion, and the global and local connectivity of financial flows and networks. Finally it also researches the creation of new financial centres around the world, both offshore and onshore.

Geography matters

With the continuing process of

globalization Globalization, or globalisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences), is the process of foreign relation ...

, some geographic barriers such as transportation costs of goods and capital are steadily decreasing. However, many other kinds of

geographic distance Geographical distance or geodetic distance is the distance measured along the surface of the earth. The formulae in this article calculate distances between points which are defined by geographical coordinates in terms of latitude and longitude. ...

are still very present and relevant to explain spatial differences. In geography of finance, researchers analyse the effects of this distance on the distribution of the

financial system A financial system is a system that allows the exchange of funds between financial market participants such as lenders, investors, and borrowers. Financial systems operate at national and global levels. Financial institutions consist of complex, ...

across the world. Fields of

research Research is " creative and systematic work undertaken to increase the stock of knowledge". It involves the collection, organization and analysis of evidence to increase understanding of a topic, characterized by a particular attentiveness ...

include

and

education Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty ...

technology Technology is the application of knowledge to reach practical goals in a specifiable and Reproducibility, reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in me ...

, the effects of

tacit knowledge Tacit knowledge or implicit knowledge—as opposed to formal, codified or explicit knowledge—is knowledge that is difficult to express or extract, and thus more difficult to transfer to others by means of writing it down or verbalizing it. This ...

and relational proximity and

politics Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that stud ...

. An interesting issue in the latter is the increasing entanglement of

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

s and

nations A nation is a community of people formed on the basis of a combination of shared features such as language, history, ethnicity, culture and/or society. A nation is thus the collective identity of a group of people understood as defined by t ...

, which is closely related to geography of networks. Furthermore, researcher analyse how and how strongly that current spatial distribution of finance affects the allocation of

funds Funding is the act of providing resources to finance a need, program, or project. While this is usually in the form of money, it can also take the form of effort or time from an organization or company. Generally, this word is used when a firm uses ...

, capital and

credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

across different regions.

Finance matters

The relevance of economic geography is already quite established in the academic world and research on the topic is in full progress. However, geography of finance is now gaining individual focus, especially as the link between the financial economy and the real economy is losing strength. This is emphasized by the existence of

economic bubbles An economic bubble (also called a speculative bubble or a financial bubble) is a period when current asset prices greatly exceed their intrinsic valuation, being the valuation that the underlying long-term fundamentals justify. Bubbles can be ...

, and the fact that the

value Value or values may refer to: Ethics and social * Value (ethics) wherein said concept may be construed as treating actions themselves as abstract objects, associating value to them ** Values (Western philosophy) expands the notion of value beyo ...

of financial transactions is often multiple times larger than the real economy

Recent developments

The

September 11 attacks The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commer ...

that targeted the World Trade Centre in

New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...

drew new attention to the geography of finance. Even though cities have more often been damaged by natural disasters or

terrorist attacks The following is a list of terrorist incidents that have not been carried out by a state or its forces (see state terrorism and state-sponsored terrorism). Assassinations are listed at List of assassinated people. Definitions of terrori ...

, this attack was focused on the financial system and proved to have significant effects. The event led to a rethinking of the global geographical organization of the financial services industry and drew academic attention to the importance of such densely organized financial districts. The

financial crisis of 2007-2008 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fi ...

also led to interesting developments in the geography of finance. It drew new attention to the field, as the crisis showed that local events could cause a global financial crisis that affected small

businesses Business is the practice of making one's living or making money by producing or buying and selling products (such as goods and services). It is also "any activity or enterprise entered into for profit." Having a business name does not separ ...

and local

governments A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...

around the world. The relocation of financial services that had already been occurring was amplified by this crisis, decreasing the importance of major financial centers like Wall Street in lieu of relatively new financial centers elsewhere around the world.

References

{{reflist Economic geography

Geography matters

Finance matters

Recent developments

See also

References