Geographies of Quantitative Finance: American MBA Programmes and Investment Banking in London's Financial District
Funded by: The Nuffield Foundation (2005-2007)
Grant Holder: Sarah Hall
Following the suite of regulatory changes in the early 1980s, labelled ‘Big Bang', financial services in London have increasingly adopted working practices originating in America (Moran 1991). Within London's commercial banking sector, this is reflected in the rise of the American investment banking model at the expense of British merchant banks (Roberts and Kynaston 2001). This is partly due to the increased presence of American firms in London as almost all UK merchant banks have now been taken over by foreign (often American) competitors using the investment banking model (Augar 2001). However, the applicant's previous research shows that this shift from merchant to investment banking is more than simply a change in nomenclature or country of firm ownership and actually reflects fundamental changes in the ways the industry is structured and practised (Hall 2004). Merchant banking was predominately relationship and trust-based industry with business built on long-term client-advisor relationships, whereas investment banking is transaction and cost based. In this model, banks bid aggressively for each client mandate as a one-off piece of business.
To meet this research aim, the project has three major research objectives: (1) to identify and analyse the importance of MBA programmes offered by American business schools in the production of quantitative corporate finance in London's contemporary financial district; (2) to generate new data on the trans-atlantic stretching of quantitative corporate finance knowledge, including a consideration of the mechanisms and agents involved in the transfer between US business school academics and students and London based finance practitioners; (3) to publish and disseminate results to academics in geography and the social studies of finance and relevant practitioner stakeholders.