Changes in Germany's Bank-Based Financial System: A Varieties of Capitalism Perspective

WZB, Markets and Political Economy Working Paper No. SP II 2004-03

35 Pages Posted: 20 Mar 2004

See all articles by Sigurt Vitols

Sigurt Vitols

WZB Berlin Social Science Center

Date Written: March 2004

Abstract

Throughout the 20th century Germany's financial system has been dominated by banks. Recently, however, a number of efforts have been made to increase the role of markets within this bank-based financial system, including regulatory innovations, changes in corporate governance, and a reform of the pension system. This paper finds that, despite these changes, there are a surprising number of continuities in the structure of the financial system. The German financial system can therefore still be characterized as bank-based. An explanation for this based on the Varieties of Capitalism viewpoint is advanced, which emphasizes complementarities and continuities in household savings and investment behavior and in patterns of company sector demand for finance.

Keywords: Financial systems, venture capital, varieties of capitalism

JEL Classification: G3, J5, P5

Suggested Citation

Vitols, Sigurt, Changes in Germany's Bank-Based Financial System: A Varieties of Capitalism Perspective (March 2004). WZB, Markets and Political Economy Working Paper No. SP II 2004-03. Available at SSRN: https://ssrn.com/abstract=517984 or http://dx.doi.org/10.2139/ssrn.517984

Sigurt Vitols (Contact Author)

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin
Germany

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