Banking system
The banking system or banking is the totality of a state to supply the economy with money or capital , and for the payment competent private law or public law organized company , including its organizational ties and for this economic sector adopted legal regulations.
General
This sectoral term encompasses the aggregation of companies in the tertiary sector such as credit institutions , investment services companies , financial services institutions and all other types of companies organized under private or public law for which the operational purpose entirely or predominantly includes financial tasks. This monetary sector ensures the supply of money to a national economy. It becomes clear that the banking system plays a central role in the national economy in every country and must therefore be kept functional by effective banking supervision . The functional term sees banking as a financial intermediary who mediates money or capital between creditors and debtors and reconciles their different monetary maturity, amount and risk expectations within the framework of deadlines , lot sizes and risk transformations .
The term banking system is understood more organizationally and institutionally. It shows the order of the banks in a country and the relationship to their environment. A banking system is a dynamic structure that is subject to changes over time. The main factors influencing a country's banking system that change over time are the prevailing social and economic order and the changing payment behavior ( business-to-business , business-to-consumer , public sector ). In a country it includes the breakdown into central banks , commercial banks and their customers , the non-banks . A distinction is made between three systems:
- Separate banking system : "Commercial banks" operate the deposit and credit business, "Investment banks" the securities business. Both subsystems do not compete with each other, but complement each other.
- Universal banking system : all banking transactions are offered to all customer groups. The competition here is very fierce, so there is considerable competition in terms of price and quality .
- Allfinanzgruppen : through vertical and lateral integration , universal banks also took over building societies , insurance companies , asset management and the credit card business .
It was only the bancassurance groups that made the banking system an open system that also allows relationships with other systems. With regard to the functionality of the banking system, there may be more or less intensive relationships ( interbank trade ) or even dependencies ( international banking groups ) between the individual system elements . These interdependencies are capable of triggering a contagion effect , usually in times of crisis , which can affect an entire national and / or international banking system. “Contagion is the transnational transmission of exogenous shocks , comparable to a spillover effect. Contagion arises both in crises and in non-crisis times, whereby Contagion does not necessarily have to be associated with a crisis ”. This contagion effect plays a role in the context of systemic relevance if the bankruptcy of banks, insurance companies or other financial institutions can threaten the stability of the entire financial and banking system.
Universal and separate banking system
Banks may by type in commercial banks (ger .: Commercial Banks ) and investment banks are distinguished.
Universal banking system
In a universal banking system , universal banks and special banks exist side by side.
The German universal banking system is structurally characterized by the three-pillar model , the strict separation into cooperative banks , private banks and savings banks . This system is not permeable. The German Savings Banks and Giro Association prevented the sale of the Berliner Sparkasse to Commerzbank in 2007 . The deposit protection funds are only responsible for a certain group of institutions, and the three-pillar model is also implemented at association level.
The European-style universal banking system can be partially dissolved through specialization. Service providers, which are only partially formally credit institutions, penetrate parts of banking operations (payment transactions, custody of securities, collection for due bank claims) through economies of scale effects.
Separate banking system
If the areas of the commercial banks and the investment banks are organizationally separated, one speaks of a separate banking system .
As a result, special banks in the separate banking system specialize in certain financial products and specialist areas. The separate banking system was in effect in the USA from 1933 to November 1999. The American banking system came closer to the German banking system through the extensive repeal of the segregation banking regulation by the Gramm-Leach-Bliley Act (1999) and the fact that all large investment banks were either taken over by universal banks during the financial crisis of 2007 or their status changed to a universal bank.
Arguments for a separate banking system
- Deposit Security: Greater risks are taken in investment banking . In a separate banking system, refinancing cannot take place via deposits, so that the depositor's deposits are better protected in the separate banking system.
- The commercial banks' advantage in access to cheap credit is a disadvantage for competing investment banks.
- Conflicts of Interest Between Lending and Issuing Support
- Inside information
- Preventing bad credit from being replaced by bad credit .
Arguments against a separate banking system
- more competition in the issuing business
- Risk balancing
- Subsidy possibility
- double credit check
American banking system
Regulatory rules
- Separate banking system: Glass-Steagall Act (1933), repealed by the Gramm-Leach-Bliley Act (1999)
- Branch network limitations: McFadden Act (1927): Prohibition of interstate branching, relaxed by the Riegle-Neal Act (1994)
- Limitation of Activities: Bank Holding Company Act (1956, effective today 1999): Term of the Financial Holding Company (FHC)
Bank types
- Commercial Banks
- Investment banks, security brokers, dealers
- Other non-banks or near-banks such as pension funds or mutual funds ( investment funds )
- Thrift Institutions: Mutual Savings Bank, Credit Unions, Savings & Loan Associations
Institutions
- Federal Reserve System with twelve branches. The Federal Reserve Board is responsible for the supervision of financial holding companies. Supervision is also known as umbrella supervision .
- Technical supervision: Commercial banks are supervised by the FDIC and the OCC , investment banks are supervised by the SEC and CFTC, and federal agencies supervise insurance companies.
history
There is reasonably certain evidence of a beginning banking from the 6th century BC. About the Babylonian banking system, where around 575 BC In Babylon the banking house of Igibi executed payment orders. The Greek trapezites (today a bank in Greece is still called τραπεζα / trapeza) appeared for the first time in the 4th century BC. Chr. And dealt, besides the payment transactions, with the acceptance of deposit money. The Roman counterpart were the Argentarii , who were also allowed to borrow.
The history of banking in China began in the Middle Ages . The “Bancherii” also operated overseas trade ( cambia maritima ) and bills of exchange in Genoa in the 12th century . The Florentine Compagnia dei Bardi , founded around 1250, soon developed into a multinational company with a European branch network.
The first hierarchical structures emerged when the Palmstruch Bank was founded in Sweden in 1656 and is considered the first central bank in the world. Central banks increasingly privileged themselves from the other commercial banks because they exercised the banknote privilege for the state. In 1738, Johan Adam GH Voellinger understood banking to be a "facility whereby the defective and inadequate of metal money is to be replaced and all kinds of abuse or damage resulting from it are to be controlled". The first German central bank was established in 1785 with the Königliche Bank in Berlin, which had started as a giro bank and was renamed Prussian Bank in 1846 .
In England and Wales, the repeal of a prohibition law in 1826 made it possible to set up banks in the legal form of corporations , so that by 1850 a total of 99 banking companies had 576 branches and 327 private banks had 518 branches. As a result of a concentration process, the number of private banks there shrank to 29 in 1913 with only 147 branches. The possibility of mobilizing capital and long-term credit was the most important prerequisite for increasing industrialization . After the penultimate world economic crisis, from February 1932 (until 1999) the Glass-Steagall Act stipulated the separate banking system ( special banking system ) in the USA , which forced the banking market to be segmented into " Commercial Banking ", " Investment Banking " and the depository sector .
Crises in the banking system
Banking crises have always been part of a national or international economic crisis ; they triggered it or were a consequence of other causes of the crisis. One of the first banking crises was obviously the Bernese banking crisis of 1720, triggered by speculative bubbles in London and Paris . Only banking crises followed, which were part of a national or even international economic crisis such as the economic crisis of May 1837 , the economic crisis of August 1857 , the world economic crisis of October 1929, the German banking crisis of June 1931, the savings and loan crisis in the USA from March 1985, the Swedish banking crisis of 1990 or the global financial crisis from August 2007. Newer national crises were also accompanied by banking crises such as the Asian crisis from March 1997. As a result, the Russian crisis started in May 1998 , the Argentina crisis began in January 1999 In the euro zone , it was not only very high national debts that caused the PIIGS crisis from April 2010 , in which the Greek crisis turned out to be the most disastrous to date. The PIIGS crisis was followed by the euro crisis , which required numerous bank bailouts.
Banking in Science
The banking system and banking system is the subject of knowledge in banking management and banking law . These two scientific disciplines pursue three scientific goals:
- Descriptive objective : This pursues a systematic recording and representation of the essential part of the banking / banking law reality of banking as an object of knowledge with the help of the empirical-deductive research method. The description is of particular importance in banking structure theory and banking business theory.
- Explanation goal : It pursues the scientific explanation and justification of experienceable and comprehensible banking economic / banking law phenomena in an intersubjectively understandable way. Explanatory models should form systems of empirically based hypotheses that should serve to reveal functional and causal relationships in the banking system.
- Design goal: The knowledge gained in pursuing the aforementioned goals is used here as an instrument for designing the reality of banking operations / banking law. The aim is to transform scientific knowledge into practically applicable maxims of action and behavior for banking practice, banking regulation and legislation .
See also
- Bank failure
- National banking systems:
Web links
Individual evidence
- ↑ World Bank, 2000, o. P.
- ↑ Thomas Hartmann-Wendels / Andreas Pfingsten / Martin Weber, Bankbetriebslehre , Springer, 1998, pp. 61–66
- ↑ The Conseil national de la Résistance had also introduced this measure in France in 1944, here it was ended in 1984. See Dominique Plihon, Le Monde diplomatique , German, March 2013, p. 11
- ↑ a b Bruno Buchwald, Die Technik des Bankbetriebs , 1924, p. 2
- ↑ Johan Adam GH Voellinger, doctrine on money, banking and exchange nature , 1738, p 273rd
- ↑ Michael North, A Little Story of Money , 2009, p. 166.