Premium
Changes in Germany's Bank‐Based Financial System: implications for corporate governance
Author(s) -
Vitols Sigurt
Publication year - 2005
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/j.1467-8683.2005.00433.x
Subject(s) - corporate governance , german , business , financial system , stakeholder , investment banking , financial stability , financial sector , investment (military) , finance , accounting , economics , political science , management , law , archaeology , politics , history
Throughout the 20th century, banks have dominated Germany's financial system and also played a key role in corporate governance. Recently, however, a number of efforts have been made to increase the role of markets within this bank‐based financial system, including regulatory innovations and a reform of the pension system. This article finds that, despite these changes, there are a surprising number of continuities in the structure of the financial system. The German financial system can therefore still be characterised as bank‐based. Furthermore, banks have only partially withdrawn from the stakeholder system of corporate governance, and to some extent been replaced by insurance companies. An explanation for these continuities is advanced which emphasises stability in household investment behaviour and in patterns of company sector demand for finance.