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Germany's capital market and corporate governance

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  • Siebert, Horst

Abstract

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.

Suggested Citation

  • Siebert, Horst, 2004. "Germany's capital market and corporate governance," Kiel Working Papers 1206, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1206
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    File URL: https://www.econstor.eu/bitstream/10419/3228/1/kap1206.pdf
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    References listed on IDEAS

    as
    1. Marco Becht & Colin Mayer, 2002. "Corporate control in Europe," Revue d'économie politique, Dalloz, vol. 112(4), pages 471-498.
    2. 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, Elsevier.
    3. Barca, Fabrizio & Becht, Marco (ed.), 2001. "The Control of Corporate Europe," OUP Catalogue, Oxford University Press, number 9780199247424, Decembrie.
    4. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
    5. Krahnen, Jan P. & Schmidt, Reinhard H. (ed.), 2004. "The German Financial System," OUP Catalogue, Oxford University Press, number 9780199253166, Decembrie.
    6. Maurer, Raimond H., 2003. "Institutional investors in Germany: Insurance companies and investment funds," CFS Working Paper Series 2003/14, Center for Financial Studies (CFS).
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    Cited by:

    1. Koetter, M. & Bos, J.W.B. & Heid, F. & Kolari, J.W. & Kool, C.J.M. & Porath, D., 2007. "Accounting for distress in bank mergers," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 3200-3217, October.
    2. Bleuel, Hans-H., 2009. "The German banking system and the global financial crisis: causes, developments and policy responses," Duesseldorf Working Papers in Applied Management and Economics 08, Duesseldorf University of Applied Sciences.
    3. Steven M. Mintz, 2005. "Corporate Governance in an International Context: legal systems, financing patterns and cultural variables," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(5), pages 582-597, September.

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    More about this item

    Keywords

    Banking system; capital market; corporate governance;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance

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