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The Role of the Deep Financial Centres in Economy Essay

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Deep financial centres exhibit high liquidity of capital. All types of currencies are usually available in such markets. The variety of currencies enables investors to obtain capital easily. Financial centres such as New York have a widely used currency, which is the American dollar.

Other currencies, however, are also available. On the other hand, emerging financial centres may have plenty of one currency, but other types of currency may be scarce. Movement of capital may be impaired by this scarcity leading to low rate of investment.

Deep financial centres are characterised by utilisation of modern technology. Thus, in these centres there is a high level of education among workers such that skilled labour is always available. Constant demand for skilled labour has led to the development of a pool of skilled workers ready for hire.

In emerging financial centres, skilled labour may be scarce. There may be an imbalance because one type of skilled labour is available while another type of labour is scarce. This may prevent investors who require the scarce type of skilled labour from operating in the financial centre.

Since broad financial centres host investors from many countries, they develop a regulatory system that creates a good legal environment for all investors to operate. Legal barriers are usually minimal due to years of compromise for the sake of the increased business activity. The nature of the tax system in the financial centre is also highly flexible to allow the greatest number of investors.

In the emerging financial centres, the tax system may effectively bar some investors from investing in the financial centre. It takes some time for a financial centre to modify laws and tax regimes to create a favourable environment for investment.

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IvyPanda. (2019, August 20). The Role of the Deep Financial Centres in Economy. Retrieved from https://ivypanda.com/essays/financial-centres/

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"The Role of the Deep Financial Centres in Economy." IvyPanda, 20 Aug. 2019, ivypanda.com/essays/financial-centres/.

1. IvyPanda. "The Role of the Deep Financial Centres in Economy." August 20, 2019. https://ivypanda.com/essays/financial-centres/.


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IvyPanda. "The Role of the Deep Financial Centres in Economy." August 20, 2019. https://ivypanda.com/essays/financial-centres/.

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IvyPanda. 2019. "The Role of the Deep Financial Centres in Economy." August 20, 2019. https://ivypanda.com/essays/financial-centres/.

References

IvyPanda. (2019) 'The Role of the Deep Financial Centres in Economy'. 20 August.

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