Energy Transitions and the Rise and Fall of Great Financial Centers

Introduction

For all their differences, modern nation-states are both the energy transition leaders and financial leaders of their time. They are also home to our great financial centers (GFCs), and the question of the rise and fall of GFCs is a matter of longstanding debate. Existing explanations struggle to explain the timing and forecasting of the rise and fall of GFCs in a systematic manner. No researcher has connected the dots between energy transitions, financial transitions, the role of financial systems, and the rise and fall of great financial centers. My nontraditional hypothesis is that energy transitions drive financial transitions and GFCs.

Core Aims of ENFIN

The core aims of ENFIN are:

1. Create a new field of research integrating elements from comparative institutionalist literature, socio-technological transition research, and research on financial centers.

   a) Integrate the role of energy transitions in the literature on financial centers. I will use cross-national and cross-temporal comparisons to establish the sequences and relationship between energy transitions and financial transitions.

2. Lift the analytical power of socio-technological transition research with regard to the reciprocal logic of low-carbon energy and green finance transitions. I will examine causal mechanisms through inductive process tracing on evidence about the pressures arising from energy transitions on existing financial structures and socio-economic actors’ responses.

3. Investigate the role of institutions in the relationship between green-energy transition and future financial leadership. I will conduct σ-convergence analysis to develop a global database to compare green financial standards by countries and a multigroup latent growth curve (LGC) model to compare and predict growth trajectories of multiple groups (e.g., coordinated market economies, capital market economies, and state-driven economies) in financial systems over time.