Banking on Germany?

Fear, J. (2003) Banking on Germany? Harvard Business School Cases, 9-703-028.

Abstract

Explores the causes and consequences of transforming Germany's bank-oriented financial system into one more oriented to capital markets. The economics of globalization, international accords such as Basel II, EU financial policies, and Germany's own regulatory reforms struck to the heart of its traditional, relationship-banking model. The outcry against these reforms grew so great that the German chancellor, Gerhard Schroder, announced that Basel II was not acceptable for Germany, especially because it affected the financing of Mittelstand (small and medium-size firms), the backbone of the German economy. With the economy stagnating, unemployment rising, job creation stalling, bankruptcies reaching record rates, the budget deficit rising, and German banks increasingly suffering from a simultaneous structural and earnings crisis, German banks and businesses wondered what the future had in store for them.

• Item Type: Articles (Other)
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Fear, Professor Jeffrey
• Authors: Fear, J.
• College/School: College of Social Sciences > School of Social and Political Sciences > Economic and Social History
• Journal Name: Harvard Business School Cases
• Publisher: Harvard Business School Publishing