'We all have reasons for moving …'

That line in a poem by Mark Strand wasn't intended to bring investment bankers directly to mind, but it does. "In a field," he begins, "I am the absence of field." Of, but not part of. Since the financial crisis, with its early and persisting impact on the economy, the City of London – the ancient code for the financial district – has been worried about how new waves of regulation might play out in practice. Would banks, long attracted to London for its liberal approach to commerce and its many (resulting) cultural attractions, vacate the city and move somewhere with lower taxes and less intrusive regulators? Would Bank Tube station become a ghost town, and the state's finances turn into a black hole?

Foreign banks have been in London for a long time, much longer even than recorded in a study at Cass Business School at City University, which examines bankers' decisions on location from the end of World War Two until 1999. It finds that the many attractions of the City are not, in themselves, determinants of the decision to stay or move. In that period banks made almost 2,800 decisions to stay in London. They also made more than 1,800 decisions to withdraw. They found, unsurprisingly, that banks that internalised operations – that is, the engaged actively in the local market – were more likely to stay that those that used London as an outpost. Moreover, the "liability of being an alien" declines with time and experience. The distance from their home market worked against staying. That is, the further away from home they were, they more like they were to close up shop. But they also tend to stay because the structure of the market gives them greater flexibility and with it the ability to "compete on an equal footing" and local and other international rivals. That is, a good market is a virtuous cycle. There are signs here for the policy decisions that develop from the unfolding financial crisis.

We all have reasons for moving, just not all. Some stay to keep things whole.

Source documents: The working paper "Why do foreign banks stay in London?," by Andrew Clare of Cass Business School, Mohamed Azzim Gulamhussen and Carlos Pinheiro, is a 40-page pdf file. The poem "Reasons for moving" by Mark Strand is a short and bittersweet delight.