 |
Banking Relationships in Germany: Empirical Results and Policy ImplicationsRobert S. Chirinko |
ABSTRACT Expanding the range of activities by banks and other financial intermediaries has attracted much attention in the 1990s. Proponents of universal banking point to the benefits of German system of finance. Germany is the prototypical economy where universal banks, which offer a wide-range of financial services, allegedly exert substantial influence over firms and generate beneficial effects for the economy-wide allocation of credit. Arguments for replacing the specialized banking system currently in place in the United States with a universal banking system rely on a favorable evaluation of the German financial system. An empirical evaluation of banking relationships in Germany, however, has been hindered by a lack of data. This study reports an initial set of results based on a rich dataset containing balance sheet and income statement variables supplemented by measures of ownership concentration and bank influence. Robert S. Chirinko is an associate professor of economics at Emory University and and a visiting scholar at the Federal Reserve Bank of Kansas City. Julie Ann Elston is a Research Fellow, Wissenschaftszentrum Berlin (WZB) and visiting scholar at Stanford University. This paper contains initial results from an ongoing project studying the German economy. The authors thank Andrew Meyer for technical advice concerning data processing, Yongduk Pak for his timely and expert research assistance, and Raghu Rajan and Christian Tuschhoff for their comments and suggestions. All errors, omissions, and conclusions remain the sole responsibility of the authors. The views expressed herein do not necessarily reflect those of the WZB, the Federal Reserve Bank of Kansas City, or the Federal Reserve System.Chirinko e-mail: RCHIRIN@EMORY.EDU.Back to top RWP home |