Luxembourg and Ireland in global financial networks: Analysing the changing structure of European investment funds

Wójcik, Dariusz; Urban, Michael; Dörry, Sabine

doi:10.1111/tran.12517

Cited by 13 publications

(7 citation statements)

References 51 publications

(69 reference statements)

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“…There are only a handful of multinational securities service banks that are not part of the world’s largest banking groups, for example, Allfunds Bank, Northern Trust, and State Street Bank. However, this also suggests that the global asset management industry is embedded in highly specialized ecosystems, especially in the triangle of London, Luxembourg, and Dublin, which have not only undergone a process of consolidation during the past 15 years (Wójcik et al, 2021) but are also linked through financialization processes of global corporations themselves, which can be subsumed under the financial and business services at large (Derudder and Taylor, 2020). Almost three decades ago, O’Connell and Kennedy (1994) already reported that, as an IFC, Dublin’s role was one of concentration on “long-distance” services such as fund management, asset financing, treasury management, insurance and reinsurance activity, and provision of administrative and custodial services—typically banking services that do not always require close physical proximity to customers.…”

Section: Resultsmentioning

confidence: 99%

Hierarchical tendencies, functional specializations, and (in)stability across European banking centers

Musschoot

Derudder

Dörry

2023

European Urban and Regional Studies

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Drawing on conceptual research exploring how evolving geographies of finance inform urban and regional change, we examine the size and functional scope of the presence of leading global banks across functional urban areas in Europe. Based on data for 100 major global banks, we find that their overall presence is proportional to (the square root of) the national gross domestic product. London and Luxembourg host far more banks than can be explained by their national gross domestic product, which can be traced back to their export of banking services. We also analyze the geographies of specialized banking services per city. Corporate and investment banking are mainly explained by national gross domestic product, with London emerging as the most prominent center. Private banking and securities services, in turn, are largely independent of national gross domestic product and rely on the importance of small and specialized economies such as Luxembourg and St Helier (Jersey). The stability of Europe’s banking centers is underpinned by their role as the national banking center and/or their specialization in international banking services, as well as manifested in specialized subnetworks of financial centers.

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Section: Resultsmentioning

confidence: 99%

Hierarchical tendencies, functional specializations, and (in)stability across European banking centers

Musschoot

Derudder

Dörry

2023

European Urban and Regional Studies

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“…As is revealed, circulation and collaboration among elites across the Luxembourgish state, APS firms, asset management companies, and other entities undoubtedly encourage the development of niches, products, and legislation—again, most prominently in the investment-fund and asset management sectors (Dörry, 2016; Weeks, 2020a). At countless occasions over the decades, subsequent governments in Luxembourg have passed “light touch” laws that are almost always written in collaboration with representatives from the OFC, a process that many critics bemoan as “regulatory capture” (Wójcik et al, 2022: 526). Moreover, to examine the boards of directors ( conseils d’administration ) or advisory “working groups” operating within Luxembourg's OFC is to see “structures of governing elites consisting of former politicians, civil servants, and regulators circulating between state institutions and governing bodies of [financial institutions]” (Lai, 2018: 287).…”

Section: Discussionmentioning

confidence: 99%

“…Wójcik et al detail the spatial division of labor of Europe's investment-fund nexus: “U.S. asset management firms [create] and [manage] funds in ultra-low tax Luxembourg and Ireland, and [invest] money through London”; these authors add, “the rise of European investment funds can be seen as an example of European financial integration through Americanisation” (2022: 514).…”

Section: The Rise Of Asset Manager Capitalismmentioning

confidence: 99%

Channeling the capital of others: How Luxembourg came to be asset managers’ “plumber” of choice

Weeks

2023

Environ Plan A

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This article analyzes the development and growth of the administrative practices and structures necessary for leading asset management companies and other firms to create and sell their “product” of choice: investment funds. To investigate this problematic, I turn to the Grand Duchy of Luxembourg, which currently serves as the domicile for over $5 trillion in fund assets. Since the 1980s, Luxembourg's “offshore” financial center has become a leader in providing the “plumbing,” to quote an interviewee of mine, for worldwide asset manager capitalism. On offer in Luxembourg to asset managers are the routine-but-essential tasks such as domiciliation, compliance, calculation of net-asset values, and distributions. After a brief history of the rise of asset manager capitalism and Luxembourg's role in it, I detail the strategies by which the Grand Duchy's financial-center professionals collaborate to devise ways to service the ever-increasing varieties of investment funds for sale today. Having used the Luxembourg financial center as a case study, I conclude the article by arguing that, in order to understand contemporary asset manager capitalism, researchers should pay as much attention to its “collaborating administrators” in locales like Luxembourg as they currently do to its “competing titans of industry” on Wall Street or in the City of London.

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“…In turn, this requires an interrogation of state-society networks, while focusing in on the variegated elite and non-elite dynamics to allow for a meaningful analysis of economic development and institutional transformation. In a recent study, Wójcik et al (2022) demonstrate how both Luxembourg and Ireland have been integrated within the networks of financial and business services transnational firms. The authors spotlight the ways in which a range of actors, including governments and regulatory agencies, intergovernmental organisations and financial and other advanced business services firms, interacted in order to influence the spatial development and functions across the two countries, developing them into key offshore jurisdictions and international financial centres.…”

Section: Conceptualising Elites’ Agency Over Business Services In Ceementioning

confidence: 99%

Elite agency in the growth of offshore business services in Romania

2023

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Processes of outsourcing and offshoring have driven the changing spatial divisions of labour through foreign investment and development of peripheral regions into key offshore destinations for business services. This paper focuses on the role of elites, transnational and domestic, in the transformation of Romania into a major business services offshoring location in Central Eastern Europe (CEE) over the last two decades. The paper reveals the role of elite agency in connecting domestic resources to business services global production networks (GPNs) in order to drive domestic institutional transformation. A lot has been written about the agency of labour; yet there is a gap in our understanding of the agency of elites, specifically how transnational elites articulate with other elites at the national-, meso- and micro-level and produce institutional changes. Drawing on literature on enclave creation and dual economies, the paper illustrates how the alliance between domestic and transnational elites shaped transformation across the sector by implementing labour market flexibilisation and by crafting a ‘sound’ business environment in terms of infrastructure, investment incentives and bureaucratic framework to emulate institutional conditions of the home country. The development of the Romanian business services sector into an ‘enclave economy’ has become dependent on collaborative networks with domestic universities and intermediary organisations, which played a key role in facilitating foreign investment attraction and linking domestic resources to the needs of multinational firms.

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Luxembourg and Ireland in global financial networks: Analysing the changing structure of European investment funds

Cited by 13 publications

References 51 publications

Hierarchical tendencies, functional specializations, and (in)stability across European banking centers

Hierarchical tendencies, functional specializations, and (in)stability across European banking centers

Channeling the capital of others: How Luxembourg came to be asset managers’ “plumber” of choice

Elite agency in the growth of offshore business services in Romania

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