Clustering in the UK financial services: the quest for the enigmatic pecuniary externality

Kuah, Adrian (2008) Clustering in the UK financial services: the quest for the enigmatic pecuniary externality. University of Bradford. School of Management. Working Paper Series, 08/30. pp. 1-19.

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This paper explores the sources of regional externalities in enhancing firm performance, in particular, the pecuniary externality that supports incumbents' bottom line. The fundamental argument on increasing returns leads to the premise that cluster size has beneficial influence to firm performance. The enigmatic pecuniary externality is under-researched but often discussed. Cluster size is measured by two cluster strength attributes using an established cluster model. One of these concerning related sectors is found to boost firm financial performance, where sectors in banking, leasing, trust funds, life insurance, and securities benefit from being located with related sectors in the region. The cluster strength attributes are found to work in opposite direction in promoting the growth prospects and financial performance of member firms. Policy makers must now concertedly plan for regional development through achieving critical mass in selective types of related sectors in creating pecuniary externalities, as well as ensuring there is critical mass in the specific sector to promote the growth prospects of firms. This study makes use of cross-sectional data of some 17,000 financial services companies in the UK.

Item ID: 28376
Item Type: Article (Research - C1)
ISBN: 0144-5056
ISSN: 2048-495X
Date Deposited: 11 Aug 2013 23:40
FoR Codes: 14 ECONOMICS > 1401 Economic Theory > 140199 Economic Theory not elsewhere classified @ 30%
14 ECONOMICS > 1402 Applied Economics > 140202 Economic Development and Growth @ 30%
15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1503 Business and Management > 150308 International Business @ 40%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9104 Management and Productivity > 910499 Management and Productivity not elsewhere classified @ 100%
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