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A Case for Boring Banking and Re-Intermediation
Schackmann-Fallis, Karl-Peter | Gischer, Horst | Weiß, Mirko
Applied Economics Quarterly, Vol. 64 (2018), Iss. 3 : pp. 199–238
4 Citations (CrossRef)
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Schackmann-Fallis, Karl-Peter, German Savings Banks Association (Deutscher Sparkassen- und Giroverband [DSGV]), Berlin (Germany), Executive Member of the Board of the German Savings Banks Association.
Gischer, Horst, Professor of Monetary Economics and Public Financial Institutions at Otto-von-Guericke-University Magdeburg (Germany).
Weiß, Mirko, German Savings Banks Association (Deutscher Sparkassen- und Giroverband [DSGV]), Berlin (Germany).
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Abstract
Abstract
Experience from the recent financial crisis quite clearly revealed the limits of deregulation. Instead of trusting in perfect financial markets, re-intermediation or “boring banking” seems to be a more promising alternative. In our discussion of the steps towards a European Banking Union that have been implemented so far, we seek to expose its shortcomings. Against this backdrop, we discuss whether boring banking is an economically and socio-politically appropriate goal at all. Outlining the economical functions of banks, we investigate whether a widely disintermediated financial system can work without frictions. Additionally, we evaluate the concepts of bank-based and capital-market-based financial systems from the perspective small and medium-sized enterprises. By way of example, the structure of the German banking industry as well as different business models are analyzed in the light of boring banking. We conclude with economic policy recommendations deemed necessary to promote – or at least preserve – traditional loan-making by banks.
JEL classifications: G18; G21; L52
Keywords: banking industry, financial intermediation, business models, European Banking Union
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Karl-Peter Schackmann-Fallis / Horst Gischer / Mirko Weiß: A Case for Boring Banking and Re-Intermediation | 199 | ||
| Abstract | 199 | ||
| 1. Introduction: Will the Change to Re-intermediation and “Boring Banking” be Successful? | 199 | ||
| 2. Economic Functions of Banks and the Sustainability of Disintermediation | 204 | ||
| 2.1 Reduction of Asymmetric Information and Moral Hazard | 204 | ||
| 2.2 Risks Inherent in the Banking Business, and how They are Supposedly Overcome by Disintermediation | 205 | ||
| 2.3 After the Crisis: Is Waiving the Banks’ Traditional Functions an Option? | 207 | ||
| 3. Lending to Small and Medium-Sized Enterprises | 199 | ||
| 3.1 Bank Financing vs. Capital Market Financing for SMEs | 199 | ||
| 3.2 SME Financings, Local Banks, Rural Areas, and Regional Disparities | 199 | ||
| 4. The Banking Market in Germany: Who is Boring? | 199 | ||
| 4.1 Structuring the German Banking Market | 199 | ||
| 4.2 The Public-law Banking Sector in Germany and the Concept of a Financial Services Network | 199 | ||
| 4.3 Lending Structures in the German Banking Market | 200 | ||
| 4.4 Identifying Boring Banking: Analysis of Balance Sheet Structures | 200 | ||
| 4.5 Profitability of Boring Banking | 200 | ||
| 5. Conclusions and Policy Recommendations | 201 | ||
| Bibliography | 201 |