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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical summaryThis empirical analysis addresses the attractiveness of European financial centers. The presented research tackles an issue that is fundamental to the understanding of organizational behavior in finance -the rationale in the decision-making process of market participants and its consequences for an economy. The results provide a unique insight into market participants' views on factors that affect the locational attractiveness of a financial center over time, taking into account assessments before, during, and after the financial crisis. This analysis of market participants' views is carried out by explaining their assessment of financial centers' attractiveness with their assessment of central influencing factors.In particular, the results reveal that cluster concentration with a speedy information exchange within dense social networks is a competitive advantage. In comparison, an existing specialized pool of labor without concentration seems not to be relevant, as the human capital factor is relatively mobile in an increasingly integrated Europe. Furthermore, governmental support and parameters of regulation strongly determine a location's attractiveness for financial institutions, whereas the level of taxation seems not to be important on the micro level. Despite some progress in establishing a level playing field in the EU, the financial market is not yet fully harmonized and countries can take different paths in regulation as long as there is scope for interpretation. Hence, even minor differences in financial regulation within the EU may lead to regulatory arbitrage. Overall, financial centers' attractiveness varies over time, in comparison to relatively persistent location factors. The findings do not hinge on differences in market participants' socio-economic background. It is shown that fund companies seem to value the attractiveness of a financial center much more than banks, insurance companies, and corporates. Das Wichtigste in Kürze Lessons of the Financial Crisis for the Attractiveness of European Financial CentersGunnar Lang 1 Centre for European Economic Research (ZEW), Mannheim, GermanyAbstract: This paper analyses fundamental location factors for the financial industry by investigating the economic significance of market participants' assessments of location factors and country-specific characteristics over time. A unique data set allows studying the locational attractiveness of financial centers before, during, and after ...

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:http://ftp.zew.de/pub/zew-docs/dp/dp11085.pdf Non-technical summaryIn this paper, we analyze if the integration of the European mutual funds industry has brought advantages to private and institutional investors. Moreover, we examine the possible determinants of fund fees as well as the effects of domiciliation decisions of fund companies.Investors worldwide invest in more than 65,000 different investment funds, since these are perceived to be liquid and diversified assets with lower cost than direct investments. The fees investors are generally charged include fees for the fund's set-up, portfolio management, custody of the shares, marketing and sales etc. In theory, higher fees result in a lower investment performance. Yet it has been shown that there exists no correlation between higher fund fees and good fund performance. For the fund company, however, higher fees translate directly into higher profits, i.e. there is a conflict of interest between the market participants.As a result of legal and regulatory harmonization in the European financial industry, competition between fund companies has risen greatly over the past few years. In order to benefit from economies of scale, fund companies have concentrated their activities in a single location. This has also led to increased competition between countries seeking to attract these financial institutions. In this respect, Luxembourg and Ireland play a particular global role as specialized financial centers. However, the question arises whether investors really benefit from this market concentration beyond the greater number of investment opportunities.The results show that the fees charged by funds differ significantly across countries and across fund types. It is also shown that funds domiciled in Luxembourg have considerably lower cross-border distribution costs. This advantage is, however, countered by several drawbacks. Generally, funds complying with UCITS policy are most expensive for investors.Furthermore, fees rise with an increase in the number of countries in which the fund is distributed, as additional distribution partners and permits are required. The results do not clearly show that investors pay lower fees for funds from Luxembourg or Ireland than for funds of other countries. All in all, it is shown that the market integration of the European fund industry has reduced costs significantly, due mainly to the concentration of specialists in cl...

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