A welfare comparison of intermediaries and financial markets in Germany and the US

Franklin Allen, Douglas Gale

    Research output: Contribution to journalArticle

    Abstract

    There is wide variation in the structures of financial systems in different countries. We compare two polar extremes. In one, which we refer to as the 'German model', intermediaries predominate. In the second, which we refer to as the 'U.S. model', financial markets play the major role. Our objective is to contribute to a theoretical framework for the welfare analysis of comparative financial systems. The study is divided into two parts, which focus on financial services provided to households and firms, respectively. On the household side, we consider issues such as cross-sectional and intertemporal risk sharing, noise suppression and the provision of services. On the firm side, we consider information, financing, the market for corporate control, and diversity of opinion.

    Original languageEnglish (US)
    Pages (from-to)179-209
    Number of pages31
    JournalEuropean Economic Review
    Volume39
    Issue number2
    DOIs
    StatePublished - Feb 1995

    Keywords

    • Comparative financial systems
    • Financial markets
    • Intermediaries
    • Welfare analysis

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics

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