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Corporate Control and the Financial System in Germany: Recent Changes in the Role of Banks

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Author Info
Ettore Andreani (University of Rostock)
Abstract

The present paper aims to analyze the major changes in the German system of cross-holdings between banks and industrial or financial companies. After an overview on the role of banks in bank-based versus market-based financial systems, and on the German system of corporate control, we focus our attention on the relationship not only between banks and industrial companies, but also between financial companies in Germany. Discussing the reasons for cross-holdings within the financial sector, we hypothesize that cross-holdings are less efficient than full mergers. We analyze hypotheses about the structure of the "Deutschland AG" and about a different role of cross-holdings at different levels of the German financial system. A test of hypotheses on recent mergers and acquisitions in the German financial system yields that they explain some of the changes in the cross-holdings occurred after 1994. We conclude that instead of the often referred "Macht der Banken" the German financial system is characterized by an increasing importance of insurance companies.

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File URL: http://www.wiwi.uni-rostock.de/fileadmin/Institute/VWL/VWL-Institut/RePEc/pdf/wp037thuenen.pdf
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File Function: First version, 2003
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Paper provided by University of Rostock, Institute of Economics, Germany in its series Thuenen-Series of Applied Economic Theory with number 37.

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Length: 40 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:ros:wpaper:37

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  1. Roe, Mark J, 2002. "Corporate Law's Limits," Journal of Legal Studies, University of Chicago Press, vol. 31(2), pages 233-71, June.
  2. Cornett, Marcia Millon & Tehranian, Hassan, 1992. "Changes in corporate performance associated with bank acquisitions," Journal of Financial Economics, Elsevier, vol. 31(2), pages 211-234, April. [Downloadable!] (restricted)
  3. Julian Franks & Colin Mayer, 2002. "Corporate governance in the UK : contrasted with the US system," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 3(3), pages 13-22, October. [Downloadable!]
  4. Erik Lehmann & Neuberger, Doris, 2000. "Do Lending Relationships Matter? Evidence from Bank Survey Data in Germany," CoFE Discussion Paper 00-04, Center of Finance and Econometrics, University of Konstanz. [Downloadable!]
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  5. Tim Jenkinson & Alexander Ljungqvist, 1999. "The Role of Hostile Stakes in German Corporate Governance," OFRC Working Papers Series 1999fe02, Oxford Financial Research Centre. [Downloadable!]
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  6. Doris Neu Berger, 1998. "Industrial Organization of Banking: A Review," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 5(1), pages 97-118, February. [Downloadable!] (restricted)
  7. Chirinko, R-S & Elston, J-A, 1997. "Finance, Control, and Profitability : An Evaluation of German Bank Influence," Papers 28, American Institute for Contemporary German Studies-.
  8. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, 04. [Downloadable!] (restricted)
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  9. Mitchell Berlin, 2000. "Why don't banks take stock?," Business Review, Federal Reserve Bank of Philadelphia, issue May, pages 3-15. [Downloadable!]
  10. Edwards, Jeremy & Nibler, Marcus, 1999. "Corporate Governance in Germany: The Influence of Banks and Large Equity-holders," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  11. Wenger, E & Kaserer, C, 1997. "The German System of Corporate Governance - A Model Which Should Not Be Imitated," Papers 14, American Institute for Contemporary German Studies-.
  12. Alan D. Morrison, 2003. "The Economics of Capital Regulation in Financial Conglomerates," The Geneva Papers on Risk and Insurance, The International Association for the Study of Insurance Economics, vol. 28(3), pages 521-533, 07. [Downloadable!] (restricted)
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  13. Vitols, Sigurt, 1998. " Are German Banks Different?," Small Business Economics, Springer, vol. 10(2), pages 79-91, March. [Downloadable!] (restricted)
  14. Deeg, Richard, 1998. " What Makes German Banks Different," Small Business Economics, Springer, vol. 10(2), pages 93-101, March. [Downloadable!] (restricted)
  15. Michael Adams, 1999. "Cross Holdings in Germany," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(1), pages 80-, March.
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