Urban Geographies of Financial Convergence: Situating Indian Financial Centers across Global Production and Financial Networks

Abstract

Recent advancements in the global production networks (GPNs) literature seek to better emphasize the role of finance by identifying where and how global financial networks (GFNs) intersect with GPNs. Financial centers (FCs) operate as key sites for articulating financial convergence, understood as the merging of financial and nonfinancial sectors enacted by cross-sectoral investments. Yet, how such entanglement both feeds on and impacts intercity networks, affecting metropolitan hierarchies, remains largely overlooked. Using a novel data set of 12,147 intersectoral, cross-border and domestic merger and acquisition deals involving finance and insurance firms throughout the period of 2000–20, this article unpacks the sectoral dynamics that underpin the intersection of GFNs with GPNs at the city level in India, the fifth largest economy in the world. Our longitudinal and multiscalar analysis demonstrates how uneven patterns of financial convergence, structured around the rising entanglement between finance and information technology (IT), have reshaped intercity networks and affected the landscape of FCs in India. If Mumbai remains India’s financial capital, Bangalore and New Delhi gained power in domestic and international flows, well ahead of other Indian cities. The article emphasizes how the IT firms, as recipients of transnational investments, and central governments, through direct interventions and state-hybrid investors, operate as key drivers in articulating GFNs with GPNs through intercity networks, changing urban geographies of finance, raising methodological and conceptual questions for future research on financial geography.

Key words:

• global financial networks
• global production networks
• information technology
• finance
• Mumbai
• Bangalore
• New Delhi
• India

Acknowledgments

The article has benefited from funding from the European Research Council (European Union’s Horizon 2020 research and innovation programme; Grant Agreement No. 681337). The article reflects only the authors’ views, and the European Research Council is not responsible for any use that may be made of the information it contains. We also want to thank Karishma Malhotra and Louis Hudson for their precious assistance with the collection of the data. We thank the reviewers for their insightful comments, which helped improve and strengthen this article, and are grateful to Jim Murphy and Hilary Laraba for their careful editing of the article.

Notes

1 GaWC, 2020, https://www.lboro.ac.uk/microsites/geography/gawc/world2020t.html.

2 https://www.kaggle.com/datasets/arjunprasadsarkhel/forbes-top-200020172021?select=Forbes-2021.xlsx.

3 World Bank, 2023, https://data.worldbank.org/indicator/NY.GDP.DEFL.ZS?locations=US.

4 Reserve Bank of India, 2015, Notification No. FEMA.354/2015-RB, https://rbidocs.rbi.org.in/rdocs/notification/PDFs/N354038F78D787024D098442BF66A57F111A.PDF.

5 Reserve Bank of India, 2021, Annual Report 2020–2021, https://m.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1278.

6 Reserve Bank of India, 2021, Annual Report 2020–2021, https://m.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1278.