Capital mobilisation and utilisation in latecomer economies: Germany and Italy compared
German-style universal banks are widely believed to improve capital mobilisation and utilisation by stimulating savings, matching savers and investors, and offering business and investment advice to entrepreneurs. Using aggregate and firm-level evidence on deposit taking and branching, banks liability structure, interlocking directorates between banks and industrial companies, and industrial investment patterns, this article investigates the role of universal banks in two European latecomer economies: Germany and Italy. Comparing the impact of these banks permits some distinction between institutional effects and country-specific effects. The findings suggest that universal banking took on differing forms in Germany and Italy, implying that apparently similar institutions can yield divergent economic outcomes depending on the context in which they develop. For both countries, the results also indicate that the universal banks made a modest impact on capital mobilisation, industrial investment, and economic growth.
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