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Bertuch-Samuels, A. Why we should embrace institutional diversity in banking. Vierteljahrshefte zur Wirtschaftsforschung, 87(4), 127-139. https://doi.org/10.3790/vjh.87.4.127
Bertuch-Samuels, Axel "Why we should embrace institutional diversity in banking" Vierteljahrshefte zur Wirtschaftsforschung 87.4, 2018, 127-139. https://doi.org/10.3790/vjh.87.4.127
Bertuch-Samuels, Axel (2018): Why we should embrace institutional diversity in banking, in: Vierteljahrshefte zur Wirtschaftsforschung, vol. 87, iss. 4, 127-139, [online] https://doi.org/10.3790/vjh.87.4.127
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Why we should embrace institutional diversity in banking

Bertuch-Samuels, Axel

Vierteljahrshefte zur Wirtschaftsforschung, Vol. 87 (2018), Iss. 4 : pp. 127–139

3 Citations (CrossRef)

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/vjh.87.4.127
Language
English
Pages
13
Keywords

Author Details

Axel Bertuch-Samuels,Former Deputy Director, Monetary and Capital Markets Department, IMF; former IMF Special Representative to the United Nations.

Cited By

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  3. Transforming the scope of the bank through fintechs: toward a modularized network governance

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    https://doi.org/10.1108/JOCM-05-2021-0147 [Citations: 3]

References

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  13. Demirgüç-Kunt, Asli, Leora Klapper and Dorothe Singer (2017): Financial inclusion and inclusive growth: a review of recent empirical evidence. Policy Research Working Paper 8040. World Bank. Washington, D. C.  Google Scholar
  14. Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar and Jake Hess (2018): The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank, Washington, D. C.  Google Scholar
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  32. Sahay, Ratna, Martin Čihák, Papa N’Diaye, Adolfo Barajas, Ran Bi, Diana Ayala, Yuan Gao,Annette Kyobe, Lam Nguyen, Christian Saborowski, Katsiaryna Svirydzenka and Seyed Reza Yousefi (2015b): Rethinking Financial Deepening: Stability and Growth in Emerging Markets. IMF Staff Discussion Note 15/08. International Monetary Fund, Washington, D. C.  Google Scholar
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  40. World Bank (2018): Global Financial Development Report 2017/2018: Bankers without Borders. World Bank, Washington, D. C.  Google Scholar
  41. Ayyagari, Meghana, Asli Demirgu¨ç-Kunt and Vojislav Maksimovic (2011): Small vs. Young Firms across the World: Contribution to Job Creation, Employment and Growth. World Bank Policy Research Working Paper 5631. World Bank, Washington, D. C.  Google Scholar
  42. Ayadi, Rym, Reinhard H. Schmidt, Santiago C. Valverde, Emrah Arbak and Francisco R. Fernandez (2009): Investigating Diversity in the Banking Sector in Europe: The Performance and Role of Savings Banks. Centre for European Policy Studies, Brussels.  Google Scholar
  43. Ayadi, Rym and Willem Pieter De Groen (2014): Banking Business Models Monitor 2014: Europe. CEPS Paperbacks, 2014. Available at SSRN. https://ssrn.com/abstract=2510323  Google Scholar
  44. Roodman, David (2014): Armageddon or Adolescence? Making Sense of Microfinance’s Recent Travails. CGD Policy Paper 035. Center for Global Development. Washington, D. C.  Google Scholar
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  47. Kotz, Hans-Helmut, and Reinhard H. Schmidt (2016): Corporate Governance of Banks—A German Alternative to the Standard Model. Zeitschrift für Bankrecht und Bankwirtschaft (ZBB)/Journal of Banking Law and Banking (JBB), 28 (6), 427–444.  Google Scholar
  48. Behr, Patrick, Daniel Foos and Lars Norden (2015): Cyclicality of SME lending and government involvement in banks. Deutsche Bundesbank Discussion Paper 39/2015. Frankfurt a. M.  Google Scholar
  49. Berger, Allen N., and Gregory F. Udell (2006): A More Complete Conceptual Framework for SME Financing. Journal of Banking and Finance, 30 (11), 2945–2966.  Google Scholar
  50. Bertuch-Samuels, Axel (2018): Financial Sector Development—The role of effective local banking structures. Background paper for the 2019 UN Inter-Agency Task Force Report on Financing for Sustainable Development. https://developmentfinance.un.org/sites/developmentfinance.un.org/files/Background%20Paper_Financial%20Sector%20Development.pdf  Google Scholar
  51. Beck, Thorsten, Asli Demirgüç-Kunt and Dorothe Singer (2011): Is Small Beautiful? Financial Structure, Size, and Access to Finance. Policy Research Working Paper No. 5806. World Bank, Washington, D. C. https://openknowledge.worldbank.org/handle/10986/3569  Google Scholar
  52. Behr, Patrick, Daniel Foos and Lars Norden (2013): Financial constraints of private firms and bank lending behavior. Journal of Banking & Finance, 2013/37, 3472–3485.  Google Scholar
  53. Deutsche Bundesbank (ed.) (1976): Währung und Wirtschaft in Deutschland 1876–1975. Frankfurt a. M.  Google Scholar
  54. Levine, Ross (1997): Financial development and economic growth: Views and agenda. Journal of Economic Literature, 35 (2), 688–726.  Google Scholar
  55. Levine, Ross (2005): Finance and Growth: Theory and Evidence. Handbook of Economic Growth. In: Philippe Aghion and Steven Durlauf (eds.): Handbook of Economic Growth. Elsevier, 865–934.  Google Scholar
  56. Levine, Ross, and Sara Zervos (1998): Stock Markets, Banks, and Economic Growth.American Economic Review, 88 (3), 537–558.  Google Scholar
  57. Mettenheim, Kurt von, and Oliver Butzbach (2012): Alternative banking: Theory and evidence from Europe. Revista de Economia Política, 32, 580–596.  Google Scholar
  58. Ruiz, Claudia (2013): From Pawn Shops to Banks: The Impact of Formal Credit on Informal Households. Policy Research Working Paper 6634. World Bank, Washington, D. C.  Google Scholar
  59. Sahay, Ratna, Martin Cihák, Papa N’Diaye, Adolfo Barajas, Srobona Mitra, Annette Kyobe,Yen Nian Mooi, and Seyed Reza Yousefi (2015a): Financial Inclusion: Can It Meet Multiple Macroeconomic Goals? IMF Staff Discussion Note 15/17. International Monetary Fund, Washington, D. C.  Google Scholar
  60. Sahay, Ratna, Martin Cihák, Papa N’Diaye, Adolfo Barajas, Ran Bi, Diana Ayala, Yuan Gao,Annette Kyobe, Lam Nguyen, Christian Saborowski, Katsiaryna Svirydzenka and Seyed Reza Yousefi (2015b): Rethinking Financial Deepening: Stability and Growth in Emerging Markets. IMF Staff Discussion Note 15/08. International Monetary Fund, Washington, D. C.  Google Scholar
  61. World Bank (2014): Global Financial Development Report 2014: Financial Inclusion. World Bank, Washington, D. C.  Google Scholar
  62. World Bank (2018): Global Financial Development Report 2017/2018: Bankers without Borders. World Bank, Washington, D. C.  Google Scholar
  63. Faust, Helmut (1977): Geschichte der Genossenschaftsbewegung. Ursprung und Aufbruch der Genossenschaftsbewegung in England, Frankreich, und Deutschland sowie ihre weitere Entwicklung im deutschen Sprachraum. 3rd ed. Frankfurt a. M.  Google Scholar
  64. Petersen, Mitchell, and Raghuram Rajan (1994): The Benefits of Lending Relationships: Evidence from Small Business Data. The Journal of Finance, XLIX (1).  Google Scholar
  65. Schmidt, Reinhard H., Dilek Bülbül and Ulrich Schüwer (2013): The Persistence of the Three-Pillar Banking System in Germany. In Oliver Butzbach and Kurt von Mettenheim (eds.): Alternative Banking and Financial Crisis. Pickering & Chatto, 101–122.  Google Scholar
  66. Love, I., and M. S. Martínez Pería (2012): How Bank Competition Affects Firms’ Access to Finance. Policy Research Working Paper 6163. World Bank, Washington, D. C.  Google Scholar
  67. Sahay, Ratna, Martin Cihák and other IMF Staff (2018): Women in Finance: A Case for Closing Gaps. IMF Staff Discussion Note SDN 18/05. International Monetary Fund, Washington, D. C.  Google Scholar
  68. Demirgüç-Kunt, Asli, Leora Klapper, Dorothe Singer, Saniya Ansar and Jake Hess (2018): The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank, Washington, D. C.  Google Scholar
  69. Demirgüç-Kunt, Asli, Leora Klapper and Dorothe Singer (2017): Financial inclusion and inclusive growth: a review of recent empirical evidence. Policy Research Working Paper 8040. World Bank. Washington, D. C.  Google Scholar
  70. Clarke, Stephen L. (2010): German Savings Banks and Swiss Cantonal Banks, lessons for the UK. Civitas, The Institute for the Study of Civil Society. London.  Google Scholar
  71. Butzbach, Olivier, and Kurt von Mettenheim (2014) Alternative Banking and Theory. Accounting Economics and Law, 5 (2), December 2014.  Google Scholar
  72. Bruhn, Miriam, and Inessa Love (2009): The economic impact of banking the unbanked: evidence from Mexico. Policy Research Working Paper Series 4981. World Bank, Washington,D. C.  Google Scholar
  73. Roodman, David (2012): Due Diligence: An Impertinent Inquiry into Microfinance. Center for Global Development, Washington, D. C.  Google Scholar
  74. Rajan, Raghuram G., and Luigi Zingales (1998): Financial Dependence and Growth. American Economic Review, American Economic Association, 88 (3), 559–586, June.  Google Scholar
  75. Pohl, Hans, Bernd Rudolph and Gu¨nter Schulz (2005): Sparkassen in der Geschichte.Stuttgart.  Google Scholar
  76. Karlan, Dean, Aishwara Ratan and Jonathan Zinman (2014): Savings by and for the Poor: A Research Review and Agenda. Review of Income and Wealth. International Association for Research in Income and Wealth, 60 (1), 36–78.  Google Scholar
  77. Financial Inclusion Experts Group (FIEG) – SME Finance Sub-Group (2010): Scaling-Up SME Access to Financial Services in the Developing World. Report to the G20.  Google Scholar
  78. Simpson, Christopher V.J., Simpson Associates (2013): The German Sparkassen (Savings Banks)—A commentary and case study. Civitas: The Institute for the Study of Civil Society. London.  Google Scholar
  79. Sheng, Andrew, and Xiao Geng (2017): Putting Asia’s Savings to Work in Asia. www.business-standard.com. February 27, 2017.  Google Scholar
  80. Sheng, Andrew (2009): From Asian to Global Financial Crisis: An Asian Regulator’s View of Unfettered Finance in the 1990s and 2000s. Cambridge, Cambridge University Press.  Google Scholar
  81. Schmidt, Reinhard H., Hans Dieter Seibel and Paul Thomes (2016): From Microfinance to Inclusive Banking—Why local banking works. Edited by Sparkassenstiftung für internationale Kooperation. Weinheim.  Google Scholar

Abstract

The contribution of institutionally diversified financial sectors to more sustainable growth and financial stability—in particular the role of effective local banking structures—is not always fully appreciated, whether in the context of development cooperation or in policy discussions in the advanced economies. At the same time, a growing number of studies—ranging from analyses of the drivers of financial inclusion in developing countries to assessments of various banking groups’ performance during and after the global financial crisis (GFS)—find that financial institutions whose business models focus on local economies, retail and relationship banking do, indeed, have a positive impact on economic development, growth and financial stability. Those findings are also supported by a closer examination of the factors, which contributed to the successful evolution of the German savings banks and cooperative banks over a period of more than 200 years. These factors include: the concentration of their banking activities on a limited geographical region while working as a network of cooperating autonomous institutions; the prioritization of savings mobilization; a mandate to serve the economic and social wellbeing of the local region, while remaining profitable and financially viable over the long run, rather than narrowly focusing on profit maximization. Similar success factors can also be observed in the context of financial institution building and the deliberate promotion of locally oriented and people-focused microfinance and banking institutions in several developing economies.

Table of Contents

Section Title Page Action Price
Axel Bertuch-Samuels: Why we should embrace institutional diversity in banking 1
Summary 1
Zusammenfassung 1
1 Introduction 2
2 The role of access to financial services and effective bankinginstitutions in the process of saving & borrowing and fosteringgrowth & stability 2
2.1 Macroeconomic effects of financial inclusion 2
2.2 The fundamental role of savings 4
2.3 Credit and its importance for small business 4
2.4 Financial sector structure in the context of development and growth 5
2.5 Financial sector diversity and financial stability 6
3 The example of the savings and cooperative banks in Germany’s“3-Pillar System of Banks”: Longevity of diversity in banking demonstrated 8
4 Conclusion 1
References 1

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