Year: 2006
Author: Schnabel, Isabel, Hakenes, Hendrik
Credit and Capital Markets – Kredit und Kapital, Vol. 39 (2006), Iss. 2 : pp. 163–181
Abstract
Is there a Need for a "Strong Private German Bank"? On the Desirability of National Champions in the Banking Sector
Top politicians of Germany's main parties publicly propagate the promotion of national champions in the banking sector. Other institutions demand the consolidation of the banking sector as well, pointing to the meagre profitability and the low concentration of German banks. We argue that the formation of national champions is not a reasonable response to the problems faced by the banking sector in Germany because the potential economic benefit comes at substantial costs. In particular, national champions might run the risk of impairing systemic stability if it is expected that such champions will be subject to implicit state guarantees. Any political interference in the consolidation process in the banking sector would make these effects more acute and distort entrepreneurial decisionmaking by banks. For this reason, such interference must be strictly ruled out.
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/ccm.39.2.163
Credit and Capital Markets – Kredit und Kapital, Vol. 39 (2006), Iss. 2 : pp. 163–181
Published online: 2006-04
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 19
Author Details
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