IDENTIFICATION OF KEY DETERMINANTS OF SUCCESS FOR INTERNATIONAL FINANCIAL SERVICES CENTRES (IFSCS) WITH SPECIAL REFERENCE TO INDIA THROUGH GLOBAL FINANCIAL CENTRE INDEX (GFCIS) ANALYSIS AND FACTOR ANALYSIS

Abstract

The History of International Financial Services Centers (IFSCs) is very long, dating back more than 150 years. Many countries established International Financial Centres (IFCs) to offer International Financial Services (IFS) at various stages of their economic growth. Over time, some of the important hubs for international financial services included London, Tokyo, New York, Hong Kong, Frankfurt and Singapore. These Centers created a large number of jobs and helped the economies of the countries in which they operate to grow. Around 119 centres have been established worldwide to meet the need for international financial services in over 196 countries (GFCI, 2015-2022). India's economy was opened in 1991, but capital account convertibility hasn't been achieved, therefore its influence on the world financial market is viewed as minimal. One of the world's largest economies and a significant consumer of IFS, India very recently announced the creation of IFSC in April 2015. Given how closely the global market is connected via technology, it is essential for India to set up IFSC and appear on the map of the world's financial centre. It is predicted that India is losing US $50 billion year (2015) without an IFSC, and that loss will increase to US $ 120 billion by 2025. This paper identifies key determinants of success for IFSC in India by using the two  analytical tools namely Global Financial Centre Index (GFCI) analysis in global context and the Factor Analysis in Indian context and finds that IFSC in India, though being a new financial service centre, can certainly increase its competitiveness and become a sustainable successful financial centre more quickly by focusing on the factors identified in this study and the economic impact of IFSC growth in India would be profound.