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Corporate governance and current regulation in the German banking sector: an overview and assessment

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  • Köhler, Matthias

Abstract

This paper gives an overview over corporate governance and banking regulation in Germany. Particular attention is put on legal and regulatory changes that were made in response to the financial market crisis. The paper shows that the changes mainly focus on the remuneration of managers and on further professionalizing the supervisory board. Problematic is that several laws that were enacted in the past years to improve corporate governance focus on listed firms. Furthermore, some of the recommendations and suggestions made to improve corporate governance in Germany are not legally binding even for stock corporations. Recent empirical evidence, moreover, suggests that bank shareholders pushed for greater risk-taking and not managers. This contrast with public view that the bank managers are pushed by aggressive remunerations schemes to increase risk-taking and indicates that the recent legal and regulatory changes fail to remove all weaknesses of the German corporate governance system.

Suggested Citation

  • Köhler, Matthias, 2010. "Corporate governance and current regulation in the German banking sector: an overview and assessment," ZEW Discussion Papers 10-002, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:10002
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    Keywords

    Corporate governance; banks; regulation; remuneration schemes; supervisory board;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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