Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 Introduction
- 2 A theoretical framework for analysing the effects of the financial system on economic performance
- 3 The significance of bank loans in the finance of aggregate investment in Germany
- 4 Legal forms of enterprise in Germany, and their implications for the role of the German financial system
- 5 The structure of the German banking system
- 6 Bank supervisory board representation and other aspects of German bank lending to firms
- 7 German bank behaviour when firms are in financial distress
- 8 The ownership structure of large German firms, and its implications for German banks' corporate control role
- 9 Do German banks act as delegated exercisers of equity's control rights?
- 10 Conclusion
- Bibliography
- Index
1 - Introduction
Published online by Cambridge University Press: 02 November 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- 1 Introduction
- 2 A theoretical framework for analysing the effects of the financial system on economic performance
- 3 The significance of bank loans in the finance of aggregate investment in Germany
- 4 Legal forms of enterprise in Germany, and their implications for the role of the German financial system
- 5 The structure of the German banking system
- 6 Bank supervisory board representation and other aspects of German bank lending to firms
- 7 German bank behaviour when firms are in financial distress
- 8 The ownership structure of large German firms, and its implications for German banks' corporate control role
- 9 Do German banks act as delegated exercisers of equity's control rights?
- 10 Conclusion
- Bibliography
- Index
Summary
Conventional wisdom about German banks and investment finance
Banks play a major role in the German system of finance for investment, so much so that it is often characterised as being a ‘bank-based’ system. This is a reflection of the fact that German banks are typically universal ones. The term ‘universal bank’ is normally taken to refer to a bank providing a complete range of commercial and investment banking services (see Schneider, Hellwig and Kingsman, 1978), but is sometimes extended to mean a bank which also has close links with, and influence over, non-banks (see Krummel, 1980; World Bank, 1989, p. 50). The ‘bank-based’ German system of finance for investment is widely regarded as having made an important contribution to the successful performance of the German economy during the ‘economic miracle’ following the Second World War. A representative view of the role played by German banks in the German economy in this period is the following statement by Hallett (1990,p. 83):
The banks helped to rebuild German industry … after 1948. Firms rely extensively on loan, as against equity, finance, and the banks exercise an important monitoring role through their representatives on the Supervisory Board … the role of the banks tends to counter ‘short-termism’, and provides a mechanism for reorganising management in good time, when a company starts running into trouble.
As this quotation illustrates, the German system of finance for investment is commonly perceived to be one which has two main distinguishing features.
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- Banks, Finance and Investment in Germany , pp. 1 - 21Publisher: Cambridge University PressPrint publication year: 1994
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