英國國家經(jīng)濟和社會研究所-英國商業(yè)投資：經(jīng)濟學(xué)家、經(jīng)理、金融家（英）

National

Instituteof

Economicand

socialResearch

UKBusinessInvestment:Economists,Managers,Financiers

AnIntegratedFramework

toAnalysethePastand

UnderpinProspects

CatherineL.Mann

April2024

PRODUCTIVITY

COMMISSION

PRODUCTIVITY

COMMISSION

TheUKProductivityCommission(TheCommission)wasestablishedbytheNationalInstituteof

EconomicandSocialResearch(NIESR)aspartofTheProductivityInstitute(TPI),whichisfundedbytheEconomicandSocialResearchCouncil(ESRC).TheCommission’smainpurposeistoexamine

theUK’spoorproductivityperformanceandprovidepolicysolutionstoaddresstheshortfall.

TheobjectivesofTheCommissionare:

.tohelpunderstandandcommunicatethepolicyimplicationsofnewacademicresearchrelatedtoUKproductivity;

.tocollectevidencefromkeystakeholdersandprovidesummariesofresearchandevidencewithanemphasisonregionsandthedevolvednations;

.toexaminetheimplicationofplannedpolicies,respondtopolicyinitiativesinWhitehall,elsewhereandoverseas,providepolicyadviceanddeveloppolicyproposals.

National

Instituteof

Economicand

sociaIResearch

NIESRisBritain’slongestestablishedindependentresearchinstitute.Weoperateasacharity,

independentofallparty-politicalinterestsandreceivenocorefundingfromgovernmentor

othersources.Itsmissionisto“carryoutresearchintotheeconomicandsocialforcesthataffectpeople’slives,toimprovetheunderstandingoftheseforces,andthewaysinwhichpolicycan

bringaboutchange”.

TPIisaUK-wideacademicresearchorganisationexploringwhatproductivitymeansforbusiness,forworkersandforcommunities–howitismeasuredandhowittrulycontributestoincreased

livingstandardsandwell-being.

TheProductivityInstituteisfundedbytheEconomic

andSocialResearchCouncil(grantnumberES/V002740/1)

Contents

1.Introduction6

2.EvaluatingFutureCashFlow1

2

3.DefiningtheEquilibriumCostofCapitalandReturnonInvestment1

7

4.AligningtheObjectivesofManagersandFinanciers2

4

5.Uncertainty:AlwaysDetrimental,ThroughMultipleChannelsandTypes

30

6.ObservationsandResearchTopics

32

AboutTheAuthor

TheauthorisaProfessorofthePracticeatBrandeisUniversityandanExternalMemberoftheMonetaryPolicyCommitteeattheBankofEngland.

Acknowledgements

TheviewsexpressedaremyownanddonotreflecttheviewsoftheBankofEngland,theMonetaryPolicyCommittee,orstaff.

UKBusinessInvestment:Economists,Managers,Financiers

TheFour

KeyPoints

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UKBusinessInvestment:Economists,Managers,Financiers

UKbusinessinvestmenthasunderperformed.Researchon

othercountriessuggeststhatwhilethisisnotauniquelyBritishproblem,theUKdoesappeartofacemoreheadwinds.Slow

growthinglobaltrade,inequalitiesandincreaseduncertainties,

andconcentrationofinvestmentbothbyfirmsandbyinstitutionalinvestorsareinfocusfortheUK.

1

Uncertaintyisalwaysdetrimentaltobusinessinvestment,andherethedecisiontoleavetheEUisanimportantfactorsincedomesticgrowthandaccesstoglobalmarkets,alongwith

availablefinancing,wereallaffected.Inthefaceofvariouskindsofuncertainty,researchfindsthatUKmanagersandfirmstip

towardfinancialinvestmentsand/orholdhighercashbuffers,bothdeleteriousforbusinessinnovationandinvestment.

2

TheconcentrationofUKbusinessinvestmentinthelargest,foreign-ownedfirms,togetherwiththeconcentrationof

institutionalinvestors,meansthatanassessmentofthe

relationshipsbetweensize,ownership,andmanagement,aswellasmarketgrowthandglobalexposureisabasicstartingpointforunderstandingthedynamicsofbusinessinvestmentintheUK.

Thethreeperspectivesonbusinessinvestmentfromaneconomist,amanager,andafinancierareimportantly

intertwined.Withtheavailabilityoffirm-leveldata,investor-leveldata,andmanager-levelassessments,researchcancombinethethreeperspectivestogetaviewofwhatmattersmostforUK

businessinvestment.

3

4

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1.Introduction

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UKBusinessInvestment:Economists,Managers,Financiers

ThatUKbusinessinvestmenthasunderperformedisnotanewobservation.ByvariousassessmentsUKbusinessinvestmenthasbeenweakfordecades,wasparticularlysluggishaftertheGlobalFinancialCrisis,andhasslowedfurthersinceBrexitandCovid(AlayandeandCoyle2023)(Figure1aand1b).Researchonothercountriesalsopointtoacapitaldeepeningproblem.Slowglobaldemandgrowth,reducedcompetitivepressures,higheruncertaintyofvarioustypes,underexploitedagglomerationandnetworkexternalities,inequalitiesofplace,risingfinancialisationandearningsmanagement,andincreasedimportanceofinstitutionalinvestorsarevariouslycitedasculpritsholdingbackbusinessinvestment.AresomeoftheseheadwindsmoreprevalentintheUK?Thisreviewwillnotfullyanswerthisquestion,sinceUK-specificresearchhasnotinvestigatedallthesefactors.Theobjectiveofthisreviewistooutlineanintegratedframeworkforanalysisofbusinessinvestment,reviewliteraturegermanetothatframeworkfortheUKandothercountries,andpointtoresearchgapsthatmightbeparticularlyfruitfulforUK-focusedresearch.

BusinessinvestmentisthefocusforthesecondyearofTheProductivityInstitute’smulti-yearagenda,havingconsideredproductivitygrowthlastyear.Productivitygrowthisaboutthetransformationofproducts,processes,andworkplacepractices,andinallthreeofthesecontexts,businessinvestmentplaysacentralrole,whetherthatbeinvestmentinnewideas,innewlocationsforexpansion,orintechnologytochangeworkplacespracticesandproduction.Inshort,businessinvestmentandproductivitygrowthincreasethepotentialfortheeconomytodeliverhigherlivingstandards.Businessinvestmentisnottheonlyorthewholestory–publicinvestmentandenhancedlabourparticipationandskillsarealsoneeded.ButtheobjectiveofthisreviewistotakeafreshlookatUKinvestmentandpointoutdirectionsfornewresearchtobothassessthepastandofferperspectivesonhowtoimprovetheUKbusinessinvestmentoutlookandoutcome.

Figure1aG7GrossFixedCapitalFormationasashareofGDP(currentprices)

Source:AlayandeandCoyle(2023)InvestmentintheUK:LongerTermTrends.WorkingPaperNo.040,TheProductivityInstitute.

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UKBusinessInvestment:Economists,Managers,Financiers

Figure1bUKBusinessInvestmentasashareofGDP(currentprices)

Source:AlayandeandCoyle(2023)InvestmentintheUK:LongerTermTrends.WorkingPaperNo.040,TheProductivityInstitute

Thisframeworkforassessingtheliteratureintegratesthreeresearchperspectives:thatoftheeconomist,thebusinessmanager,andthefinancialinvestor.Eachoftheseperspectiveshastheoreticalframeworksthatconsiderfactorsrelevantforbusinessinvestment,whichhavebeenwellresearchedintheirownright,althoughmorecouldbedonewithaUKfocus.However,thereislessanalysisofhowtheperspectivesintegrate.Whenwethinkaboutit,analignmentofthesethreeperspectivesdeterminehowmuch,whatkind,andthegeographyofinvestment:‘Real’businessinvestment,suchascapitalequipment,intangibles,orrealestate;versusthecompetinguseoffunds,so-called‘financial’investment,suchascashholdings,M&A,orpayoutsthroughstockbuybacksordividends;andinwhatregionandsector,athomeorabroad.TheliteratureconsideredhereisnotexclusivelyabouttheUK.SomefocusesontheUSorothercountries,andsomeevaluateshypothesesusingcross-countryanalysis.SynthesizingthethreeperspectivesmayoffernewideasforresearchonUKbusinessinvestmentthatcouldsupportafreshpolicyperspective.

Whataresomeofthekeyelementsofeachofthethreeperspectives,theearlynotionsofhowtheyoverlap?

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Theeconomist'sperspectiveoninvestmentisbasedonasimpleequation:Whenthepresentdiscountedvalueofthefuturestreamofearningsfromaninvestmentexceedsthecostoffinancingthatinvestment,theinvestmentwillbeundertaken.Complicationsimmediatelyariseinanyempiricalassessmentofinvestmentdriversusingthisequation.Howshouldthefuturestreamofearningsbemeasured?Whatisthecostofcapital?Whatisthehorizonoftheinvestment?Dothemetricsdifferforbusinessinvestmentversusfinancialinvestment,becausetheimplicationsforpotentialoutputandproductivitygrowthofbusinessversusfinancialinvestmentcertainlydodiffer.

Themanager’sperspectiveaddsonissuesofself-interest,agencyandinformation.Insimpleterms,managersultimatelymaketheinvestmentdecisions,andtheyhaveinsideinformationabouttheoperationsofthefirmandpotentialvalueofaninvestmenttothefirm’soperations.Butdotheyhavethesameobjectivesastheownersofthefirm?Orofsocietymoregenerally,onecouldask.Wouldtheirassessmentofthefuturestreamofearnings,orcostofcapital,orhorizonforreturnontheinvestmentmatchthatoftheultimateownersorbeneficiaries?Incentivecompensationschemesandrequirementsfortransparencyofaccountsaredesignedtoaligntheseobjectives.However,evenifthoseobjectivesarealignedandtransparencycomplete,willthisyieldamorerobustbusinessinvestmentoutcome?Iftheownersofthefirm(forexample,stockholders)havehighhurdleratesorshorthorizons,thenbusinessinvestmentwithalonger-termrewardmaysufferrelativetoacompetinguseoffunds.

Moreover,managers’decisionsinteractwiththefinancialinvestor,thethirdperspective.Oneviewofthefinancierissimplyaspassiveintermediarythatprovidesafinancialflowatthemarketpricetothebusinessinvestmentdecisionmadebyincentive-alignedmanagerandowner.Inreality,financiersarenotsopassive.Takingonalittlebitmoreresponsibility,financierscanhelpreducethecostofcapitalviatheirroleasinformationgatherersassessingthequalityofthemanagementandtheirinvestmentdecisions.Moreaggressively,asenforcersofreportingtransparencyand/orbybuildingrelationships,financierscouldimprovedecisionmakingwithinthefirmandbyowners,increasingthelikelihoodthatprofitableinvestments(intheeconomicsense)willbeundertaken.Finally,withincreasedconcentrationoffinancialinstitutions,includingtherisingimportanceofinstitutionalinvestorsasshareholders,financierscaneffectivelyownthefirm,withbusinessinvestmentdecisionsdrivenbytheirobjectivesandattitudestowardscashflows,costofcapital,andinvestmenthorizon.

Beforedelvingintoresearchfindings,itisusefultostartwithacoupleofobservationsabouttheUK.BusinessinvestmentintheUKishighlyconcentratedinafewfirms–lessthan?ofonepercentofallUKfirmsaccountformorethanhalfofallUKbusinessinvestment.Thesefirmsaresubsidiariesofmultinationals,whichhavebeenstableleadersintheUKmarketplacefor15years(Hanappi,MillotandTurban,OECD,2023).FollowingBrexit,however,foreignbusinessinvestmentintheUKappearstobeincreasinglyrelatedtolocalmarketconditions,includinginfrastructure,ratherthanforaugmentingexportpotential.M&Aunderpinnedbyforeignfinancialinstitutionshasfocusedonknowledgeacquisition,whichasanintangibleisfootloosesocouldbeboughtandthenmovedabroad(Driffield,Yuan,andBarragan2023,a,b,c).

Whatabouttheother50percentofinvestment?Whatarethecharacteristicsofthesefirms?IfwewanttounderstandUKbusinessinvestment,weneedtoexploretowhatextentthebehaviouroftheverysmallnumberoflargeinternationalfirmsissimilarordifferentfromthemanyotherUKdomesticfirmsthataccountfortheotherhalfofUKinvestment.

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Second,financiersintheUKalsoareconcentrated.Institutionalinvestorsaccountfor60percentofmarketcapitalization,splitabouthalf-and-halfintoforeignanddomesticinstitutionalinvestors(Figure2a).TheforeignshareisparticularlyhighintheUK.Thetop3institutionalinvestorsownabout23percentofeachofthelistedfirmsintheUK.(Medina,delaCruz,andTang,OECD,2022(Figure2b));sofinancialexposureisconcentratedtwoways.AninstitutionalinvestorofparticularnoteintheUKisthepensionfund.In2008pensionschemesinvestedabout25percentoftheirassetsinUKcompanystockshares;butthissharefellto2percentby2022.1

Overthesametimeperiod,thenumberoflistedUKfirmsalsofell.Understandingtheincentives,constraints,andfinancialobjectivesofthesevariousinvestorsandhowtheseinteractwiththemanagers’perspectivesisimportanttounderstandbusinessinvestmentintheUK.

Figure2aOwnershipbyinvestorcategoryasashareofmarketcapitalisation,end2020

Source:Medina,delaCruz,Tang.(2022).Corporateownershipandconcentration(No.27).OECDPublishing.

1

.uk/economy/investmentspensionsandtrusts/datasets/ownershipofukshares

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Figure2bOwnershipconcentrationbythetop3institutionalinvestorsatthecompany

level,end-2020

Source:Medina,delaCruz,Tang.(2022).Corporateownershipandconcentration(No.27).OECDPublishing.

Thefollowingsectionsreviewresearchalongthethreethemesofevaluatingcashflows,estimatingcostofcapital,andaligninginvestmenthorizons,takingtheseandthreadingthemthroughthethreeperspectivesofaneconomist,amanager,andafinancier.

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2.EvaluatingFutureCashFlow

Fundamentaltotheeconomist'sequationoninvestmentisevaluatingthefuturecashflowsassociatedwithaninvestment,becausethesecashflowscontributetotheearningsofthefirmandthereforethereturnstothefirm’sowners(throughdirectpass-throughorthroughstockvaluation),aswellastomanagers(throughwagesandincentivecompensationplans).Cashflowscomprisepricesandquantities,andbothareafunctionofproductdemandandthedegreeofcompetitioninthemarketplace.Businessdecisionstoinvestinnewproducts(innovation),complementaryinvestments(toaugmentexistingcapitalandworkers)orexpandcapacity(intonewmarkets)thereforewillbeinfluencedbycharacteristicsofboththebuyerofthefirm’sproductsanditscompetitors.Ofparticularinterestishowtherisingimportanceofintangiblesinbusinessinvestmentandwinner-take-mostnetworkexternalitiesmightaffectthedynamicsofproductdemandandcompetition.

However,evaluatingfuturecashflowisnotjustaboutassessingbusinessinvestmentprospects.Fundsthatcouldbeallocatedtobusinessinvestmentcompetewithalternativefinancialinvestmentssuchascashbuffers,M&A,andpayouts(includingbuy-backs,dividends,andbonuses).EvaluatingthecashflowassociatedwithanM&Ainvestmentisadualtobusinessinvestmentbecausethesetwocouldbeviewedasalternativewaystoachievethesameoutcomeofhighercashflow,butthroughverydifferentmeans,withpotentiallydifferentimplicationsformarketcharacteristicsgoingforward.Forexample,afirmcoulduseitscashflowstopursueaninvestmentinnovationtoupstageacompetitorandexpanditsownmarketandearnings.Alternatively,thefirmcoulduseitsresourcestobuyitscompetitor,whichexpandsitscashflowsandmarketshare,butpotentiallyattheexpenseofinnovationandmarketcompetition.Financialinvestmentssuchasbuy-backs,dividends,andbonusesmaybepreferredtothemanagerandshareholder,dependingontheirtimehorizonanddiscountrate.

a)Marketcharacteristics,competitivepressures,financialcomplementarities

Akeydriverofbusinessinvestmentismarketdemandfortheproductfromhomeandabroad,inwhichthetypeofproductanddegreeofcompetitioncanplayimportantroles.But,thebusinessinvestmentdecisionisnottakeninademandvacuum;availabilityofcomplementaryfactorsofproduction(skills,forexample)alsoarerelevant,asisavailabilityoffinance.

ConsideradetailedstudyoftheUSasaresearchbenchmark.Theinterplayofmarketcharacteristicsandfinancialfactorsloomslargeinmacro-dataanalysisaswellasmicrofirm-leveldataanalysisbyGutierrezandPhilippon(2017andBrookings,2023).Theyfindthattraditionalsourcesoffinancialfrictions,suchascreditavailability,arenotthestorybehindsluggishUSinvestment.Theyfindthattheriseofintangibles,diminishedcompetition,andshort-termmanagerialhorizonexplaintheslowdowninUSbusinessinvestment.Diminishedcompetitivepressurecomesfromtwosources:Reducedproductcompetitionbutalsoconcentratedfinancierownership,viainstitutionalinvestors.Giventhesepressures,firmsareincentivisedtospendtheirearningsonfinancialinvestments(suchasbuybacksanddividendswhichaugmentreturnsimmediately)ratherthanaugmentthefirm’scapitalstock(and,withsomeprobability,earningsinthefuture)throughbusinessinvestment.

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ThefactorsofmarketcharacteristicsandfinancialcomplementaritieshavebeenimportantforresearchersexaminingproductivitygrowthintheUK,withindirectattentiontobusinessinvestment.Riley,Rincon-AznarandSamek(2018)evaluatingsectoraldatafor2011-2015,findthatUKsectorsmostexposedtotheglobalenvironmenthadworseproductivityandinvestmentoutcomesasglobaldemandsoftened.Ontheotherhand,FernaldandInklaar(2022)arguethatlackofbusinessinvestmentwasnotthemostnotabledriveroftheUKoverallproductivityslowdown,ratherpoorperformanceoftheminingsectorwasthemainstory.Coyle(2022)concludedthatslowdowninproductivitygrowthbyfrontierfirms1wasmostrelevantforslowingaggregateproductivitygrowth;theroleforbusinessinvestmentwasnotdirectlyaddressed.Driffield,Lavoratori,Temouri(2021)consideringregionalproductivity(1980to2017)foundthattherewasadecreasingstatisticalabilitytoexplainvariationsinproductivityamongstfirmsbyownership,location,sector,orsize.Theincreasingunexplainedresidual,firm-levelTFP2andtheunexplainedintra-regionalvariationproductivityamongfirmscouldbeduetocharacteristicsofmarketregulationandcompetitionaswellasmanagerialandfinancierdecision-making,whichallwerefactorshighlightedintheUSstudybyGutierrezandPhilippon,citedabove.AfocusonbusinessinvestmentspecificallyusingthedatasetsalreadyassembledforthisworkontheproductivityinUKcouldprovideimportantnewinsightsthatalignsproductivityandbusinessinvestmentresearch.

UKbusinessinvestmenthasbeenaddressedbyCarella,Chen,andShao(2023)usingbothmacroandfirmleveldatawithananalyticalstrategysimilartoGuitierrezandPhilippon,citedabove.Inadditiontothemarketconcentrationandfinancialconstraints,theyalsoexplicitlyaddresshowthedecisiontowithdrawfromthefavourabletradingarrangementwiththeEUhasaffectedUKbusinessinvestment.TheyconfirmthatBrexithashadanegativeeffectonUKbusinessinvestment.However,theyalsoshowthatfirmswithhigherretainedearnings,presenceofexternallong-termcapital,andlowlevelsofindebtednessinvestmore.

Therefore,whereasthedecisiontoleavetheEUisanimportantjuncture,financialfactorsmayhaveexacerbatedtheBrexit-relatedheadwindforsomefirms.AscomparedtotheUSresearchfindings,notedabove,thefinancierappearstoplayaclearerroleintheUKbusinessinvestmentequation.Whatofthemanager?Thedirectionofcausality,frombettermanagedfirmstoavailabilityoffinancetomorebusinessinvestment,andhowthoserelationshipsarerelatedtomarketcharacteristics,arestudiedinindividualresearchhypotheses,discussedmorebelow.

AdditionalstudiesaddresstheconsequencesoftheBrexitvote.HaskelandMartin(2023)estimatedthatUKbusinessinvestmentis10percentloweronaccountofBrexit,althoughthroughwhatspecificchannelwasnotproposed.Twootherauthorsdohypothesiseandtestspecificchannels.Gornicka(2018)determinedthathighertradecostsassociatedwithBrexitreducedbusinessinvestment,particularlybyfirmsmostexposedtothehighercosts.Crowley,Exton,andHan(2019)calculatedthat5percentmorefirmswouldhaveenteredtoexportand6percentwouldnothaveexitedfromexportingtotheEUhadBrexitnotcomeintoplay.Sincemarketsizeandmarketcompetitionarerelatedtothedecisiontoundertakebusinessinvestment,thesehighercostsandreducedentryandgreaterexitoffirmsfrombeingexportersarespecificwaysthatBrexitcouldhavereducedbusinessinvestmentintheUK.Bringinginthemanager'sperspective,BloomandvanReenen(2007)showthatweakcompetitioninthemarketplaceiscorrelatedwithpoormanagementpractices,thuslinkingtheeconomist'sviewandthemanager'sviewofhowmuchbusinessinvestmenttodo.Finally,resourcesdevotedtomanagingBrexit-relatedcostscouldhavebeendirectedtowardbusinessinvestmentinstead,withpositiveconsequencesforfirmsandtheUKeconomy.

1Frontierfirmsarethosewiththehighestproductivitygrowthinthesample

2TFPisTotalFactorProductivity,theresidualinanassessmentoftotaloutputrelativetototalinputsusedinproduction.Itisameasureoftransformationofproducts,process,andworkplacepracticesandinthiscontextisameasureofinnovation.

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b)Regions,agglomerationexternalities,andproductandfirmcharacteristics

Asecondtopicthatweavesthroughthethreeresearchperspectivesishowproximityamongfirmsrelatesmanagercapability,financialflows,andbusinessinvestment.Amongtheattractorsforbusinessinvestmentbyanindividualfirm,ormanager,orfinancialinvestoristhepotentialforgainsfromagglomeration,includingofthetypeofagglomerationbasedonlinkingproductionoftradableproductsthroughproductionnetworks.RichUKfirm-leveldata,product-leveldata,andregion-leveldatahasspawnedasetofresearchpapersontheserelationshipsandlinkages.Thenewavailabilityofregion-specificbusinessinvestmentdata(BeckerandMartin2023)opensupanewresearchfronttoevaluatebusinessinvestmenthypothesesattheregionallevel.

ExistingresearchusingUKsub-nationaldatafindsthattradability,skills,andagglomerationbenefitsgohand-in-handwithbusinessinvestmenttogeneratehighercashflows.Tradabilityisnotnecessarilyaboutexportingglobally,butaboutcross-regionalproductreach.OECD(2023)analysingUKcitydynamics,arguesforthecomplementarityofskillmatching,networkinfrastructures,andbusinessinvestment.Superiorskillmatchingisatypeofagglomerationacrossworkersandfirmsoperatingwithinaregion.Networkinfrastructures(suchastransportanddigital)promoteexternaltradability;botharepositivelyassociatedwithbusinessinvestmentoutcomes.Ortega-ArgilesandMcCann(2021)provideanoverviewoflinkagesandtransmissionofinnovativeinvestmentfromoneUKregiontoanother,whichemphasisesbothagglomerationgainsaswellasbenefitscomingfromthecharacteristicsoftheproducts.Oneconcernisthatwhereasthereareagglomerationgains,whichcanbeaccentuatedbytradabilityofproductsincludingthroughbettertradelinkages,thereisalsothepotentialforfootlooseactivitiestoleave.

Ontheotherhand,agglomerationseemstobequitesticky,forbetterorworse.MealyandCoyle(2022),McCannandYuan(2022),Daams,McCann,Veneri,andBarkham(2023)andRiceandVenables(2023)consideragglomerationlegacy,productivity,investment,andfinancialflows.ThefirstpaperappliesthemetricsofeconomiccomplexityusuallydeployedtounderstandcountrydevelopmentpatternstoUKregions.Theyfindthatactivitiesdoagglomerate,butintostriatedpercapitaincomesandgrowthpotentials,e.g‘thosethathath’highervalue-addedactivitiesapparentlygainmorefromagglomeration.ThisisechoedinRiceandVenables(2023)andemphasisedinCollinson,Driffield,Hoole,andKitsos(2022).Thesecondpaperarguesthat‘cumulativecausation’liesbehindthestriatedoutcomes;thatis,businessinvestmentgrowthandagglomerationbenefitsarepositivelycorrelatedandbuildovertime.Thethirdpaperfocusesonfinancialinvestmentandrealestatevaluations,whicharerelevantforbusinessinvestmentdirectly,andindirectlyascollateral.Theyfindthat‘flighttosafety’capitalflowsintoLondonexacerbatedexistingincome-striatedregionalperformance.Insum,researchfindsa