New York City is the financial capital of the world, housing the largest banks and hedge funds. Concerns exist regarding potential relocation of the financial industry if Zohran Mamdani, a self-described socialist, is elected mayor. Historical mismanagement in the city previously did not deter the financial sector, however, today’s ability to trade virtually has diminished the significance of New York’s clustering benefits. Notable firms like AllianceBernstein and Citadel have established offices outside of the city, indicating a trend of firms relocating due to remote trading capabilities.
New York City has survived more than a few spells of mismanagement-in the 1960s and 1970s, and again in the late 1980s. Poor management made the city almost uninhabitable, yet the financial industry remained.
Trading can happen from anywhere. The New York Stock Exchange's market share of stock trading has dropped to 10 percent today, and most exchanges are electronic and can operate from anywhere.
In the past five years, there have been a handful of large financial firms that have set up shop outside of New York. The first to leave was AllianceBernstein, an asset manager, which built a brand-new headquarters in Nashville.
Industries tend to cluster in specific locations, but when business can be conducted virtually, the clustering benefits all but disappear.
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