Germany's Capital Market and Corporate Governance
Germany’s capital market relies on bank-intermediated products and not so much on capital market processes. Two of the pillars in Germany’s three-pillar banking system, the savings banks and the cooperative banks, have special statutes and are not exposed to the control of the capital market through the usual threat of a change in ownership. Savings banks enjoy public guarantees. In the financing of firms, bank credits are far more important relative to market products - equity and bonds - than in the Anglo-Saxon countries. Moreover, banks so far have had a dominating position in corporate control through their holdings and their votes in the supervisory board in Germany’s two-tier system of corporate governance. In this system block holdings are a relevant element. With the banks themselves under the pressure of changed international conditions, the German system of corporate control has yet to prove its viability.
|Date of creation:||Apr 2004|
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- Becht, Marco & Bolton, Patrick & Roell, Ailsa, 2003.
"Corporate governance and control,"
Handbook of the Economics of Finance,
in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 1, pages 1-109
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