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Adaptation strategies of Luxembourg's financial centre under pressure

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  • SCHULZ Christian
  • WALTHER Olivier

Abstract

The financial crisis has highlighted the vulnerability of International Financial Centres (IFCs). However, very little is known about specialised IFCs, in particular about the impact on their niche activities and the strategies they have developed to return to growth. This article addresses these questions by examining the case of Luxembourg. Firstly, the findings suggest that the increasing concentration of financial services companies has over time created agglomeration economies and contributed to making Luxembourg one of the few global specialist financial centres. IFCs such as Luxembourg are part of a new environment in which competitive advantage will increasingly be based less on regulatory issues and more on the diversity and quality of the services offered. Secondly, the evolution of the financial industry in Luxembourg suggests that a strategy of continuous innovation has been adopted to maintain the comparative competitiveness of the financial centre.

Suggested Citation

  • SCHULZ Christian & WALTHER Olivier, 2010. "Adaptation strategies of Luxembourg's financial centre under pressure," LISER Working Paper Series 2010-26, Luxembourg Institute of Socio-Economic Research (LISER).
    • Handle: RePEc:irs:cepswp:2010-26
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    References listed on IDEAS

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    1. Michael H. Grote, 2009. "Financial Centers Between Centralization and Virtualization," Springer Books, in: Alberto Zazzaro & Michele Fratianni & Pietro Alessandrini (ed.), The Changing Geography of Banking and Finance, edition 1, chapter 13, pages 277-294, Springer.
    2. Alberto Zazzaro & Michele Fratianni & Pietro Alessandrini (ed.), 2009. "The Changing Geography of Banking and Finance," Springer Books, Springer, edition 1, number 978-0-387-98078-2, September.
    3. Michael H. Grote, 2008. "Foreign banks' attraction to the financial centre Frankfurt: an inverted 'U'-shaped relationship," Journal of Economic Geography, Oxford University Press, vol. 8(2), pages 239-258, March.
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