Kiel Working Papers, Kiel Institute for World Economics
No 1206:
Germany's Capital Market and Corporate Governance
Horst Siebert
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; (follow links to similar papers)
JEL-Codes: G3; (follow links to similar papers)
46 pages, April 2004
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