Germany's Three-Pillar Banking System: Cross-Country Perspectives in Europe

Occasional Papers, June 21, 2004

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Germany's Three-Pillar Banking System: Cross-Country Perspectives in Europe

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Bibliographic details

• Published: June 21, 2004
• Series: Occasional Papers
• DOI: https://doi.org/10.5089/9781589063488.084

Overview

• German banks tend to be less profitable than their foreign counterparts.
• The paper:
  • Estimates the likely effect of the phaseout of state guarantees for public sector banks.
  • Reviews various ways in which public policy could contribute to restructuring public sector banks.
  • Discusses arguments for and against public involvement in banking.

Key findings and observations

• Profitability:
  • German banks are characterized as less profitable relative to foreign peers.
• State guarantees:
  • The paper provides estimates of the likely effect of the phaseout of state guarantees for public sector banks.
• Public policy and restructuring:
  • The paper reviews multiple avenues through which public policy could facilitate restructuring of public sector banks.
• Public involvement debate:
  • The paper discusses the various arguments for and against public involvement in banking.

Analytical focus and data sources

• Comparative perspectives across Europe on Germany's three-pillar banking system.
• Data and references noted in the page metadata include:
  • Fitch IBCA database
  • OECD bank profitability data

Subjects and keywords

• Subjects:
  • Bank soundness, Banking, Commercial banks, Cooperative banks, Economic sectors, Financial institutions, Financial sector policy and analysis, National accounts, Personal income, Public sector, State-owned banks
• Keywords:
  • Baltics, bank, Bank soundness, banks in Germany, Commercial banks, Cooperative banks, Europe, Fitch IBCA database, Germany's banking system, OECD bank profitability data, OP, Personal income, private sector bank, Public sector, public sector bank, public sector bank lending behavior, State guarantee, State-owned banks

Policy implications and questions addressed

• Assess likely financial and market consequences of removing state guarantees for public sector banks.
• Identify policy instruments and reforms that could support restructuring and improved performance of public sector banks.
• Evaluate trade-offs between public involvement in banking and market discipline, efficiency, and fiscal risk.

Content in this bundle

• Germany’s Three-Pillar Banking System
  • Germany’s Three-Pillar Banking System (Markdown version)
  • Germany’s Three-Pillar Banking System (PDF)