Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- List of conference participants
- Foreword
- 1 Introduction
- 2 Banking competition and European integration
- Discussion
- 3 Banking, financial intermediation and corporate finance
- Discussion
- 4 How (not) to integrate the European capital markets
- Discussion
- 5 European financial regulation: a framework for policy analysis
- Discussion
- 6 Corporate mergers in international economic integration
- Discussion
- 7 Capital flight and tax competition: are there viable solutions to both problems?
- Discussion
- 8 Reflections on the fiscal implications of a common currency
- Discussion
- 9 Currency competition and the transition to monetary union: does competition between currencies lead to price level and exchange-rate stability?
- 10 Currency competition and the transition to monetary union: currency competition and the evolution of multi-currency regions
- Discussion of chapters 9 and 10
- 11 Problems of European monetary integration
- Discussion
- Index
3 - Banking, financial intermediation and corporate finance
Published online by Cambridge University Press: 04 August 2010
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- List of conference participants
- Foreword
- 1 Introduction
- 2 Banking competition and European integration
- Discussion
- 3 Banking, financial intermediation and corporate finance
- Discussion
- 4 How (not) to integrate the European capital markets
- Discussion
- 5 European financial regulation: a framework for policy analysis
- Discussion
- 6 Corporate mergers in international economic integration
- Discussion
- 7 Capital flight and tax competition: are there viable solutions to both problems?
- Discussion
- 8 Reflections on the fiscal implications of a common currency
- Discussion
- 9 Currency competition and the transition to monetary union: does competition between currencies lead to price level and exchange-rate stability?
- 10 Currency competition and the transition to monetary union: currency competition and the evolution of multi-currency regions
- Discussion of chapters 9 and 10
- 11 Problems of European monetary integration
- Discussion
- Index
Summary
Introduction
What is the role of banks and other intermediaries in the provision of finance to industry? More generally, how do financial institutions affect the allocation of funds for investment and the evolution of production possibilities in an economy?
Until very recently, questions of this type received little attention from economic theory. Theoretical work on finance tended to rely rather heavily on the Walrasian paradigm of ‘perfect’, i.e. anonymous, frictionless markets. Within this paradigm, there is no room for a comparative analysis of different institutions because one specific set of institutions, namely the Walrasian market system, is a priori taken as given. Reliance on the Walrasian paradigm with its given set of frictionless markets involves an implicit presumption that comparative institutional analysis can be neglected – say because as a first approximation all potentially interesting institutions achieve roughly the same outcome as a Walrasian market system.
In contrast, the role of institutions in the provision of finance to industry is of great interest to economic historians and development economists. Historians observe that financial systems differ significantly across countries and across periods, so the question arises how these differences between financial systems affected the functioning of the different economies. In certain countries such as Germany, large banks seem to have played a prominent role in the industrial expansion of the late nineteenth century. In other countries such as Britain, banks do not seem to have played such a role. Did the prominence of the large banks in Germany make a positive contribution to economic growth? Does the difference between financial systems explain some of the difference between Germany and British growth rates in the late nineteenth century?
- Type
- Chapter
- Information
- European Financial Integration , pp. 35 - 63Publisher: Cambridge University PressPrint publication year: 1991
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