Bank efficiency and financial centres: Does geographical location matter?

This paper examines the relationship between bank performance and geographical location with respect to the two major global financial centres, New York and London. It provides new insights on the spatial effects of the 2008–2009 Global Financial Crisis (GFC) on the technical efficiency of the top-1000, world-leading banks in terms of total assets. The results reveal that the distance of banks’ headquarters to these financial centres matters. In particular, banks that are located at a bigger distance from New York and London present a lower technical efficiency than banks that are closer to these financial centres. In addition, the results show that the Global Financial Crisis has magnified the effect of distance and the need for banks to be closer to global financial centres during the ‘core’ of that period.