A significant portion of the global economy flows into the hands of a small
group of financial institutions-that much we've known for some time. But in a
new paper, flagged by the New York Times' Economix blog, Stefania Vitali, James
B. Glattfelder and Stefano Battiston name names. Using a methodology based on "
network topology," the Swiss researchers identify which financial actors are at
the core of the global economy.
Top 10 network control-holders
1. Barclay's (Great Britain)
2. The Capital Group Companies (U.S.)
3. Fidelity Investments (U.S.)
4. AXA (France)
5. State Street Corporation (U.S.)
6. JP Morgan & Chase (U..S)
7. Legal & General Group (Great
Britain)
8. Vanguard Group (U.S.)
9. UBS (Switzerland)
10. Merrill Lynch (U.S.)
Altogether, the top 10 firms control 19.45 percent of the global financial
network, and the top 50 firms control nearly 40 percent.
What's most significant, the researchers say, is not that these financial
institutions wield so much power, but that they are highly interconnected.
As they explain, "the interest of this ranking is not that it exposes
unsuspected powerful players. Instead, it shows that many of the top actors
belong to the core. This means that they do not carry out their business in
isolation but, on the contrary, they are tied together in an extremely entangled
web of control."
Tyler Cowen isn't convinced. He counters that the paper doesn't adequately
distinguish between what it calls ownership or control and "financial
intermediation"-in other words, a big portion of the global economy flows
through these firms, but individual shareholders don't wield the same control
over a mutual fund as, say, a commercial firm.
By T Kelly
