The German banking system and its impacts on corporate finance and governance

  • The task of this Paper as originally described in the outline of the current project was to compare the German banking System, as one type of relationship banking , with the Japanese main bank System. This was, of course, not simply meant in the sense of a mere description and comparison of different institutions. A meaningful contribution rather has to look at the functions of a given banking System as a provider of capital or other financial Services to their client firms, has to ask in what respect the one or the other System might be superior or less efficient, and has to analyze the reasons for this. Such a thorough analysis would have to answer questions like, for instance, to what extent investment is financed by (lang or short term-)bank loans, whether German banks have, because of specific institutional arrangements like own equity holdings, seats on Company boards or other links with their borrowers, informational or other advantages that make bank finance eheaper or easier available; how such banks behave with respect to financial distress and bankruptcy of their client firms, and what their exact role in corporate governance is. While preparing this Paper I found that in Order to give reliable answers to these questions there had to be several other conferences comparable to the present one that had to focus exclusively on our domestic System. Hence what this Paper only tan provide for at this moment is a short overview of the German banking System and its special t r a i t s ( Universalbankensystem and Group Banking ; part I), describe and analyse some aspects of bank lending to firms (Part II), and the role of German banks as delegated monitors in widely held firms (Part Ill). A description of the historical development of the specific links between banks and industry and their impact on the economic growth of Germany during the period of the industrialization and later on would be specifically interesting within the framework of a Conference that discusses the lessons and relevante of banking Systems for developing market economies and for transforming socialist economies. However, historical remarks had to be omitted completely, not least because of lack of own knowledge, time and space, but also because this history is already well documented and available in English publications, too.

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Author:Theodor BaumsGND
Parent Title (English):Institut für Handels- und Wirtschaftsrecht (Osnabrück): Arbeitspapiere ; [19]93,2
Parent Title (German):Institut für Bankrecht (Frankfurt, Main): Arbeitspapiere ; Nr. 5
Series (Serial Number):Arbeitspapiere / Johann-Wolfgang-Goethe-Universität, Institut für Bankrecht (5)
Publisher:Institut für Handels- und Wirtschaftsrecht
Place of publication:Osnabrück
Document Type:Working Paper
Year of Completion:1993
Year of first Publication:1993
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/04/11
Page Number:71
Source:Arbeitspapiere // Universität Osnabrück, Institut für Handels- und Wirtschaftsrecht ; 93,2
Institutes:Rechtswissenschaft / Rechtswissenschaft
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
3 Sozialwissenschaften / 34 Recht / 340 Recht
Licence (German):License LogoDeutsches Urheberrecht