IDEAS home Printed from https://ideas.repec.org/p/zbw/wzbece/fsi01302.html
   My bibliography  Save this paper

The origins of bank-based and market-based financial systems: Germany, Japan, and the United States

Author

Listed:
  • Vitols, Sigurt

Abstract

This paper examines the historical origins of the bank-based financial systems in Germany and Japan and the market-based financial system in the US. It critically examines the "timing of industrialization" (TOI) thesis, i.e. the assertion that variation in the current structure of financial systems can be explained by differences in the timing of the "take-off" phase of industrialization. The first major claim I make is that TOI overstates both the significance of bank-based finance for the rapid industrialization of Germany and Japan and the extent to which the financial systems really were different. Second, I argue that TOI understates the importance of different patterns of state regulation, particularly starting in the 1930s, for explaining postwar differences in the financial systems. The third claim I make is that differences in financial regimes are dependent not only upon the narrow issue of financial regulation but also on the nature of the regulation of labor, including welfare regimes.

Suggested Citation

  • Vitols, Sigurt, 2001. "The origins of bank-based and market-based financial systems: Germany, Japan, and the United States," Discussion Papers, Research Unit: Economic Change and Employment FS I 01-302, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbece:fsi01302
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/44081/1/333898079.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yabushita Shiro & Inoue Atsushi, 1993. "The Stability of the Japanese Banking System: A Historical Perspective," Journal of the Japanese and International Economies, Elsevier, vol. 7(4), pages 387-407, December.
    2. Tamaki,Norio, 1995. "Japanese Banking," Cambridge Books, Cambridge University Press, number 9780521496766, October.
    3. White, Eugene Nelson, 1986. "Before the Glass-Steagall Act: An analysis of the investment banking activities of national banks," Explorations in Economic History, Elsevier, vol. 23(1), pages 33-55, January.
    4. repec:bla:jfinan:v:53:y:1998:i:5:p:1737-1758 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:spo:wpmain:info:hdl:2441/2b86iahfka8nib85jevjn10bsn is not listed on IDEAS
    2. Abrahim Soleimani & William D. Schneper & William Newburry, 2014. "The Impact of Stakeholder Power on Corporate Reputation: A Cross-Country Corporate Governance Perspective," Organization Science, INFORMS, vol. 25(4), pages 991-1008, August.
    3. Till van Treeck, 2008. "The political economy debate on ‘financialisation’ – a macroeconomic perspective," IMK Working Paper 01-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Dima, Bogdan & Dincă, Marius Sorin & Spulbăr, Cristi, 2014. "Financial nexus: Efficiency and soundness in banking and capital markets," Journal of International Money and Finance, Elsevier, vol. 47(C), pages 100-124.
    5. Ram Sharan Kharel Ph.D. & Dilli Ram Pokhrel Ph.D., 2012. "Does Nepal's Financial Structure Matter for Economic Growth?," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 24(2), pages 31-46, October.
    6. Ralf Bebenroth & Diemo Dietrich & Uwe Vollmer, 2009. "Bank regulation and supervision in bank-dominated financial systems: a comparison between Japan and Germany," European Journal of Law and Economics, Springer, vol. 27(2), pages 177-209, April.
    7. repec:hal:spmain:info:hdl:2441/2b86iahfka8nib85jevjn10bsn is not listed on IDEAS
    8. David B. Audretsch & Erik E. Lehmann & Julian Schenkenhofer, 2021. "A Context-Choice Model of Niche Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 45(5), pages 1276-1303, September.
    9. Ram Sharan Kharel, Ph.D. & Dilli Ram Pokhrel, Ph.D., 2012. "Does Nepal's Financial Structure Matter for Economic Growth?," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 24(2), pages 31-46, October.
    10. Labrinidis, George, 2018. "The roots of the Euro," MPRA Paper 86560, University Library of Munich, Germany.
    11. Höpner, Martin & Krempel, Lothar, 2003. "The politics of the German company network," MPIfG Working Paper 03/9, Max Planck Institute for the Study of Societies.
    12. Schenkenhofer, Julian, 2020. "Hidden champions: A review of the literature & future research avenues," UO Working Papers 06-20, University of Augsburg, Chair of Management and Organization.
    13. Ram Sharan Kharel Ph.D. & Dilli Ram Pokhrel Ph.D., 2012. "Does Nepal's Financial Structure Matter for Economic Growth?," NRB Working Paper 10/2012, Nepal Rastra Bank, Research Department.
    14. Julian Schenkenhofer, 2022. "Hidden champions: a review of the literature & future research avenues," Management Review Quarterly, Springer, vol. 72(2), pages 417-482, June.
    15. Ingrid Groessl & Rolf von Luede & Jan Fleck, 2013. "Genesis and Persistence of Trust in Banks," Macroeconomics and Finance Series 201307, University of Hamburg, Department of Socioeconomics.
    16. Nakabayashi, Masaki, 2019. "Ownership structure and market efficiency," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 61(C), pages 189-212.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Konishi, Masaru, 2005. "Bond underwriting syndicates organized by commercial banks: evidence from prewar Japan," Journal of the Japanese and International Economies, Elsevier, vol. 19(3), pages 303-321, September.
    2. Makoto Kasuya, 2007. "Bond Markets and Banks in Inter-War Japan," STICERD - International Studies Paper Series 521, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    3. Kasuya, Makoto, 2007. "Bond markets and banks in inter-war Japan," LSE Research Online Documents on Economics 6873, London School of Economics and Political Science, LSE Library.
    4. Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.
    5. Barry Eichengreen, 2008. "Origins and Responses to the Current Crisis," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 9(4), pages 6-11, December.
    6. Okazaki, Tetsuji & Sawada, Michiru & Yokoyama, Kazuki, 2005. "Measuring the Extent and Implications of Director Interlocking in the Prewar Japanese Banking Industry," The Journal of Economic History, Cambridge University Press, vol. 65(4), pages 1082-1115, December.
    7. Guinnane, Timothy W., 2001. "Delegated Monitors, Large and Small: The Development of Germany's Banking System, 1800-1914," Center Discussion Papers 28447, Yale University, Economic Growth Center.
    8. Nicholas Crafts & Peter Fearon, 2010. "Lessons from the 1930s Great Depression," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 285-317, Autumn.
    9. James R. Barth & Gerard Caprio Jr. & Ross Levine, 2001. "Banking Systems around the Globe: Do Regulation and Ownership Affect Performance and Stability?," NBER Chapters, in: Prudential Supervision: What Works and What Doesn't, pages 31-96, National Bureau of Economic Research, Inc.
    10. João Santos, 1998. "Commercial Banks in the Securities Business: A Review," Journal of Financial Services Research, Springer;Western Finance Association, vol. 14(1), pages 35-60, July.
    11. VAN OVERFELT, Wouter & ANNAERT, Jan & DE CEUSTER, Marc & DELOOF, Marc, 2007. "Do universal banks create value? Universal bank affiliation and company performance in Belgium, 1905-1909," Working Papers 2007001, University of Antwerp, Faculty of Business and Economics.
    12. Rappoport, Peter & White, Eugene N., 1993. "Was There a Bubble in the 1929 Stock Market?," The Journal of Economic History, Cambridge University Press, vol. 53(3), pages 549-574, September.
    13. George J. Benston, 1994. "Universal Banking," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 121-143, Summer.
    14. Chavaz, Matthieu & Elliott, David, 2020. "Separating retail and investment banking: evidence from the UK," Bank of England working papers 892, Bank of England, revised 18 Feb 2021.
    15. Stefano Battilossi, 2009. "Did governance fail universal banks? Moral hazard, risk taking, and banking crises in interwar Italy1," Economic History Review, Economic History Society, vol. 62(s1), pages 101-134, August.
    16. Dwyer Jr., Gerald P. & Samartín, Margarita, 2009. "Why do banks promise to pay par on demand?," Journal of Financial Stability, Elsevier, vol. 5(2), pages 147-169, June.
    17. Simon H. Kwan & Elizabeth Laderman, 1999. "On the portfolio effects of financial convergence - a review of the literature," Economic Review, Federal Reserve Bank of San Francisco, pages 18-31.
    18. Michael D. Bordo, 1989. "The Contribution of "A Monetary History of the United States, 1867-1960" to Monetary History," NBER Chapters, in: Money, History, and International Finance: Essays in Honor of Anna J. Schwartz, pages 15-78, National Bureau of Economic Research, Inc.
    19. Asher A. Blass & Richard S. Grossman, 1998. "Who Needs Glass‐Steagall? Evidence From Israel'S Bank Shares Crisis And The Great Depression," Contemporary Economic Policy, Western Economic Association International, vol. 16(2), pages 185-196, April.
    20. Barry Eichengreen, 1989. "The US Capital Market and Foreign Lending, 1920–1955," NBER Chapters, in: Developing Country Debt and the World Economy, pages 237-248, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:wzbece:fsi01302. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/wzbbbde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.