The Structure Of The German Banking System

This Technical Note focuses on banking sector structure in Germany. Germany’s banking system comprises three “pillars”—private commercial banks, public sector banks, and cooperative banks—distinguished by the ownership structure and business orientation. The German banking system includes a large number of institutions in both absolute and relative terms. This note describes the evolution of Germany’s three-pillar banking system. It analyzes capitalization, credit and the intermediation of savings, and bank profitability and efficiency. It also examines the benefits of public involvement and governance in the banking system.

Written by a team of scholars, predominantly from the Centre for Financial Studies in Frankfurt, this volume provides a descriptive survey of the present state of the German financial system and a new analytical framework to explain its workings.

Seminar paper from the year 2010 in the subject Economics - Finance, grade: 1,0, University of East London, course: International Financial Markets and Institutions, language: English, abstract: Germany is a central European country with fourth largest economy in the world after the US, Japan and China. It has 82 million consumers and has a nominal GDP of $ 3.352 trillion. Financial system in Germany is a traditional banks based system. Firms still rely on banks instead of capital markets. In this paper we will analyze the banking system of Germany, its main institutional investors, the Stock and Bond markets and finally the affects of financial crisis in financial sectors and the implementation of Basel II nationally.

The German banking system is characterized by high fragmentation, low profitability and low foreign ownership. Main reason for this is its particular structure that can best be described as forced segmentation. This structure produces local banking markets. The book argues that local bank competition is not as pronounced as national concentration ratios predict and presents a bank pricing study which indicates that local banks, banks located in less densely populated areas and less productive banks tend to charge higher prices for retail bank services than banks that operate nationally. These results as well as lessons drawn from international reforms suggest that the German banking system could benefit from cross-pillar consolidation which promises to export competition from the national to local banking markets. Last but not least, the book analyzes political economy implications of banking reforms and provides suggestions on status quo resolution by identifying ways to facilitate reform implementation in the German banking system.

Seminar paper from the year 2006 in the subject Business economics - Investment and Finance, grade: 1,3, European Business School - International University Schlo Reichartshausen Oestrich-Winkel, course: Seminar Retail Banking, 52 entries in the bibliography, language: English, abstract: German banks have come under pressure for their disappointing profitability. Indeed, rankings of developed nations along profitability indicators place Germany at the end of the scale. Critics attribute that situation mainly to the German banking system being overbanked and overbranched. The purpose of this paper is to analyze that notion and to examine the German market and competitive landscape of the retail banking industry. The analysis contains four sections. The first section compares profitability ratios and indicators of German banks to their peers' performances. The study produces surprising results. Despite the ostensibly high branch density, Germany's banks operate very cost efficiently. Yet it is their inability to generate sufficient income that results in the sluggish net earnings. Consequently, in the second section, the authors examine the German banking system and portray and compare its peculiarities in order to find out if the income problems are inherent to the system. More than in any other country, public banks dominate the market and, together with the cooperative banks, do not follow the economic principle of profit maximization. Moreover, the public banks have also received unjust government subsidies in the form of the maintenance and guarantee obligations. Thus, one presumes that private German banks operate in a very difficult system. The third section then takes a closer look at the market and analyzes the bank density, branch density and competition which the system produces. In the past, waves of intra-group consolidations have occurred. Similarly, branch networks have been thinned out especially by the private banks in an effort to cut costs. The r

Inhaltsangabe:Abstract: The essay is about the English and the German banking system, their characteristics and the implications of these. As the English banking system is defined as a specialised banking system and the German one is known as a universal banking system, these terms are explained in the first chapter. Furthermore, the chapter deals with the history of both systems to make clear why these two banking systems developed into two different directions. After having looked at the differences of the two alternative banking systems, their structure is analysed in more detail in the second chapter. All different kinds of banks existing in England and Germany are identified and their scope of functions and goals are described. In the following some important features of the banking systems, such as short-termism and corporate governance, are analysed in great detail. This means that these features are defined and their causes and consequences are identified and evaluated. After the different banking systems have been described with regard to their structure and features, the objective of the next chapter is, to point out the implications of these systems on companies performance. Therefore it is first of all necessary to define performance and the factors being responsible for a high or low economic performance. Afterwards, the influence of the banking systems on these factors are analysed. The last chapter of this essay shortly describes other existing opinions concerning the structure of the banking systems and their implications on companies performance. Furthermore, the chapter points out some tendencies for the future development of these banking systems. Inhaltsverzeichnis:Table of Contents: LIST OF ABBREVIATIONSI LIST OF FIGURESII LIST OF TABLESII 1.INTRODUCTION1 2.PRESENTING THE TWO ALTERNATIVE FINANCIAL SYSTEMS2 2.1THE GERMAN FINANCIAL SYSTEM AND ITS HISTORY2 2.2THE BRITISH BANKING SYSTEM AND ITS HISTORY3 3.STRUCTURE OF THE BANKING SYSTEMS3 3.1GERMANY3 3.1.1General Information4 3.1.2Universal Banks5 3.1.2.1Private Commercial Banks5 3.1.2.2Savings Bank Sector6 3.1.2.3Cooperative Sector7 3.1.3Specialised Banks8 3.2UK9 3.21.1The Banking System in General10 3.2.2Authorised Banks11 3.2.2.1Retail Banking in the UK11 3.2.2.2Wholesale Banking12 3.2.3Listed Discount Market Institutions14 3.2.4Other Financial Institutions14 4.FEATURES OF THE BANKING SYSTEMS15 4.1PROVISION OF CAPITAL AND FUNDING FOR [...]

This book is both a reference book on Germany's financial system and a contribution to the economic debate about its status at the beginning of the twenty-first century. In giving a comprehensive account of the many facets of the system, it covers corporate governance, relationship lending, stock market development, investor protection, the venture capital industry, and the accounting system, and reports on monetary transmission and the credit channel, regulation and banking competition, the insurance and investment industry, and mergers and acquisitions. Special chapters at the beginning and at the end of the book adopt the financial system perspective, analysing the mutual fit of different features of the financial system; and each of the fifteen chapters addresses particular myths that surround it. The book is invaluable for those who want to understand the German economy and its financial system, promising not only a compilation of facts and statistics on Germany's financial markets and institutions, but also an analysis of its current structure and the determinants of its future development.