The German Financial System

The German Financial System

The German Financial System

The German Financial System

Synopsis

This book is both a reference book on Germany's financial system and a contribution to the economic debate about its status at the beginning of the twenty-first century. In giving a comprehensive account of the many facets of the system, it covers corporate governance, relationship lending, stock market development, investor protection, the venture capital industry, and the accounting system, and reports on monetary transmission and the credit channel, regulation and banking competition, the insurance and investment industry, and mergers and acquisitions. Special chapters at the beginning and at the end of the book adopt the financial system perspective, analysing the mutual fit of different features of the financial system; and each of the fifteen chapters addresses particular myths that surround it. The book is invaluable for those who want to understand the German economy and its financial system, promising not only a compilation of facts and statistics on Germany's financial markets and institutions, but also an analysis of its current structure and the determinants of its future development.

Excerpt

This book about the German financial system was written by a group of German academics with a genuine research interest in the topic and a certain sense of how complex reality can be. the book aspires to be comprehensive in its coverage, up to date in its information content, shaped by a unified set of questions and theoretical concepts, inspired by theoretical arguments about the role and structure of financial systems and based on genuine theoretical and empirical research. Last but not least, the book should also be accessible to those who do not read and speak German and who may not be trained economists.

The idea of writing and editing this book was born almost three years ago when, through our own work and through the interaction with fellow academics from other countries, we became aware of three facts.

First, there was, and still is, simply no book on the market which satisfies all of the requirements listed above. Even if we were to disregard the language requirement, there is still no book currently available about the German financial system which compares to the inspiring monographs that cover the British, French, and American financial systems. Thus there was, and in our view still is, a void to be filled.

Second, several colleagues and friends from other countries told us that they knew little about finance in Germany and that they would like to know more, especially since in both academic and popular literature Germany is regularly portrayed as a country with a bank-based financial system. These friends and acquaintances also told us that they would appreciate a book which undertook to look at the German financial system from the perspective of foreign readers and which would, therefore, highlight the special features of the German financial system, assuming of course that such features exist.

The third fact which encouraged us even more to embark on this project was that there are several propositions about the German financial system in recent academic and non-academic literature which cast doubt on what can be regarded as conventional wisdom with respect to Germany. These propositions concern, among others, the role of house banks in Germany, the role of banks as intermediaries, and the financing patterns of non-financial enterprises. For us, these statements are particularly challenging since they are not only contrary to what has been believed for years, but they are also contrary to some of our own recent empirical findings. This made us think that there may be other cases of recent statements about the German financial system which warrant and even require a closer look to be taken.

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