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In Germany, small banks finance small firms. Active government support and a sophisticated refinancing network effectively overcome financial market imperfections.
For many Americans, capitalism is a dynamic engine of prosperity that rewards the bold, the daring, and the hardworking. But to many outside the United States, capitalism seems like an initiative that serves only to concentrate power and wealth in the hands of a few hereditary oligarchies. As A History of Corporate Governance around the World shows, neither conception is wrong. In this volume, some of the brightest minds in the field of economics present new empirical research that suggests that each side of the debate has something to offer the other. Free enterprise and well-developed financial systems are proven to produce growth in those countries that have them. But research also suggests that in some other capitalist countries, arrangements truly do concentrate corporate ownership in the hands of a few wealthy families. A History of Corporate Governance around the World provides historical studies of the patterns of corporate governance in several countries-including the large industrial economies of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States; larger developing economies like China and India; and alternative models like those of the Netherlands and Sweden.
Written by a team of scholars, predominantly from the Centre for Financial Studies in Frankfurt, this volume provides a descriptive survey of the present state of the German financial system and a new analytical framework to explain its workings.
This book analyses the widely-held view of the merits of the 'bank-based' German system of finance for investment, and shows that this view is not supported by evidence from the post-war period. The institutional features of the German system are such that universal banks have control of voting rights at shareholders' meetings due to proxy votes, and they also have representation on companies' supervisory boards. These features are claimed to have two main benefits. One is that the German system reduces asymmetric information problems, enabling banks to supply more external finance to firms at a lower cost, and thus increasing investment. The other is that German banks are able to mould and control managements of firms on behalf of shareholders, and thus ensure that firms are run efficiently. This book assesses whether empirical evidence backs up these claims, and shows that the merits of the German system are largely myths.

Germany

International Monetary Fund. Monetary and Capital Markets Department

Published: 2016-06-29

Total Pages: 118


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This paper evaluates the risks and vulnerabilities of the German financial system and reviews both the German regulatory and supervisory framework and implementation of the common European framework insofar as it is relevant for Germany. The country is home to two global systemically important financial institutions, Deutsche Bank AG and Allianz SE. The system is also very heterogeneous, with a range of business models and a large number of smaller banks and insurers. The regulatory landscape has changed profoundly with strengthened solvency and liquidity regulations for banks (the EU Capital Requirements Regulation and Directive IV), and the introduction of macroprudential tools.
Applying the new economics of organisation and relational theories of the firm to the problem of understanding cross-national variation in the political economy, this volume elaborates a new understanding of the institutional differences that characterise the 'varieties of capitalism' worldwide.
#1 WALL STREET JOURNAL BESTSELLER * NEW YORK TIMES BESTSELLER New York Times finance editor David Enrich's explosive exposé of the most scandalous bank in the world, revealing its shadowy ties to Donald Trump, Putin's Russia, and Nazi Germany “A jaw-dropping financial thriller” —Philadelphia Inquirer On a rainy Sunday in 2014, a senior executive at Deutsche Bank was found hanging in his London apartment. Bill Broeksmit had helped build the 150-year-old financial institution into a global colossus, and his sudden death was a mystery, made more so by the bank’s efforts to deter investigation. Broeksmit, it turned out, was a man who knew too much. In Dark Towers, award-winning journalist David Enrich reveals the truth about Deutsche Bank and its epic path of devastation. Tracing the bank’s history back to its propping up of a default-prone American developer in the 1880s, helping the Nazis build Auschwitz, and wooing Eastern Bloc authoritarians, he shows how in the 1990s, via a succession of hard-charging executives, Deutsche made a fateful decision to pursue Wall Street riches, often at the expense of ethics and the law. Soon, the bank was manipulating markets, violating international sanctions to aid terrorist regimes, scamming investors, defrauding regulators, and laundering money for Russian oligarchs. Ever desperate for an American foothold, Deutsche also started doing business with a self-promoting real estate magnate nearly every other bank in the world deemed too dangerous to touch: Donald Trump. Over the next twenty years, Deutsche executives loaned billions to Trump, the Kushner family, and an array of scandal-tarred clients, including convicted sex offender Jeffrey Epstein. Dark Towers is the never-before-told saga of how Deutsche Bank became the global face of financial recklessness and criminality—the corporate equivalent of a weapon of mass destruction. It is also the story of a man who was consumed by fear of what he’d seen at the bank—and his son’s obsessive search for the secrets he kept.
This is a clear guide to the German financial system. It begins by outlining its historical development, emphasising the growth of close ties between the banking system and industry, and goes on to describe in details the nature of the credit institutions in general and the money and capital markets. The book emphasizes the crucial role played by the autonomy of the Bundesbank and it explains with clear illustrations the instruments available to it to conduct monetary policy. It analyses the type of monetary target adopted by the Bundesbank in the early 1970s and deals with the ‘transferability’ of the West German financial system to other countries. Wherever relevant, parallels and differences between that system and the ones operating in the US and UK are pointed out.
Effective corporate governance, or the set of controls and incentives that drive top management, originates both outside and inside the firm and assures investors who hope to commit their capital. Essential when buying stocks in one's own country, effective corporate governance is even more important abroad, where information can be less reliable and investor influence (or protection) more limited. In this collection of articles from the Journal of Applied Corporate Finance, more than thirty leading scholars and practitioners discuss the possibilities and limitations of global corporate finance and governance systems, whether in Europe and North America or in the emerging markets of Israel, India, Korea, and South Africa. Essays discuss the political roots of American corporate finance; the structural and financial variations between international corporations; control premiums and the effectiveness of corporate governance systems; debt, folklore, and cross-country differences in financial structures; the driving forces behind the East Asian Financial Crisis of 1997; corporate ownership and control in India, Germany, France, and the United Kingdom; financial and economic lessons of Italy's privatization program; changes in Korean corporate governance; sovereign wealth funds; and the new organization of Canadian business trusts. A special roundtable discussion addresses shareholder activism in the U.K.