The origins of bank-based and market-based financial systems: Germany, Japan, and the United States
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.
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- Caroline Fohlin, 1998.
"Relationship Banking, Liquidity, and Investment in the German Industrialization,"
Journal of Finance,
American Finance Association, vol. 53(5), pages 1737-1758, October.
- Fohlin, Caroline, 1996. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Working Papers 913, California Institute of Technology, Division of the Humanities and Social Sciences.
- 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.
- 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.
- Fohlin, Caroline, 1997. "Bank Structure and Growth: Insights from British and German Balance Sheets Before World War I," Working Papers 1016, California Institute of Technology, Division of the Humanities and Social Sciences.
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