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Regions, cities and finance: the role of capital shocks and banking reforms in shaping the UK geography of prosperity

Author

Listed:
  • Michiel N. Daams
  • Colin Mayer
  • Philip McCann

Abstract

This paper examines the role played by financial markets and, in particular, changes in the price of and access to capital, along with institutional changes in the financial system, in shaping UK regional growth fortunes. This issue has been largely overlooked in debates on UK regional productivity disparities, but new data are now shedding powerful light on it. Using uniquely detailed real‐estate investment data in order to calculate city and regional risk premiums, the demand side re‐emerges as an important part of the story, and this raises profound questions regarding the institutional logic and structure of the UK banking and financial system.

Suggested Citation

  • Michiel N. Daams & Colin Mayer & Philip McCann, 2025. "Regions, cities and finance: the role of capital shocks and banking reforms in shaping the UK geography of prosperity," Fiscal Studies, John Wiley & Sons, vol. 46(4), pages 475-490, December.
    • Handle: RePEc:wly:fistud:v:46:y:2025:i:4:p:475-490
    DOI: 10.1111/1475-5890.70002
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    References listed on IDEAS

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    1. Carrascal-Incera, Andre & McCann, Philip & Ortega-Argilés, Raquel & Rodríguez-Pose, Andrés, 2020. "Uk Interregional Inequality In A Historical And International Comparative Context," National Institute Economic Review, National Institute of Economic and Social Research, vol. 253, pages 4-17, August.
    2. Ben Bernanke, 2022. "Banking, Credit, and Economic Fluctuations," Nobel Prize in Economics documents 2022-3, Nobel Prize Committee.
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    4. McCann, Philip & Yuan, Pei-Yu, 2022. "The Productivity Performance Of Different Types Of Uk Regions And The Challenges Of Levelling Up," National Institute Economic Review, National Institute of Economic and Social Research, vol. 261, pages 79-98, August.
    5. Philip McCann, 2023. "Levelling Up UK regions: scale-related challenges of Brexit, investment and land use," Contemporary Social Science, Taylor & Francis Journals, vol. 18(3-4), pages 298-317, August.
    6. Michiel N Daams & Philip McCann & Paolo Veneri & Richard Barkham & Dennis Schoenmaker, 2024. "Capital shocks and the great urban divide," Journal of Economic Geography, Oxford University Press, vol. 24(1), pages 1-21.
    7. Colin Mayer & Philip McCann & Jacob Schumacher, 2021. "The structure and relations of banking systems: the UK experience and the challenges of ‘levelling-up’," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(1), pages 152-171.
    8. Philip McCann, 2020. "Perceptions of regional inequality and the geography of discontent: insights from the UK," Regional Studies, Taylor & Francis Journals, vol. 54(2), pages 256-267, February.
    9. Hans Degryse & Steven Ongena, 2005. "Distance, Lending Relationships, and Competition," Journal of Finance, American Finance Association, vol. 60(1), pages 231-266, February.
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    12. Sumit Agarwal, 2010. "Distance and Private Information in Lending," The Review of Financial Studies, Society for Financial Studies, vol. 23(7), pages 2757-2788, July.
    13. Michiel N. Daams & Philip McCann & Paolo Veneri & Richard Barkham, 2024. "Capital shocks, the great recession, and UK regional divergence," Regional Studies, Taylor & Francis Journals, vol. 58(12), pages 2256-2275, December.
    14. Degryse, Hans & Matthews, Kent & Zhao, Tianshu, 2018. "SMEs and access to bank credit: Evidence on the regional propagation of the financial crisis in the UK," Journal of Financial Stability, Elsevier, vol. 38(C), pages 53-70.
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    Cited by:

    1. Pedro Carneiro & Francesca Foliano & Sonya Krutikova & Julia Loh & Lindsey Macmillan, 2025. "Not just a North–South divide: the geography of opportunity in England," Fiscal Studies, John Wiley & Sons, vol. 46(4), pages 423-450, December.
    2. Philip McCann & Raquel Ortega-Argilés & Mark Thissen & Ming-Wei Hsu, 2026. "Mercantilist and protectionist shocks on innovation, growth, and economic policy in European regions," Journal of Evolutionary Economics, Springer, vol. 36(1), pages 1-27, April.

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