Germany's capital market and corporate governance

Horst Siebert

No 1206, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: Germany's capital market relies on bank-intermediated products and not so much on capital market processes. Two of the pillars in Germany's three-pillar banking system, the savings banks and the cooperative banks, have special statutes and are not exposed to the control of the capital market through the usual threat of a change in ownership. Savings banks enjoy public guarantees. In the financing of firms, bank credits are far more important relative to market products - equity and bonds - than in the Anglo-Saxon countries. Moreover, banks so far have had a dominating position in corporate control through their holdings and their votes in the supervisory board in Germany's two-tier system of corporate governance. In this system block holdings are a relevant element. With the banks themselves under the pressure of changed international conditions, the German system of corporate control has yet to prove its viability.

Keywords: Banking system; capital market; corporate governance (search for similar items in EconPapers)
JEL-codes: G3 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1206

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