How Significant is the Alleged Unfair Advantage Enjoyed By State-Owned Banks in Germany?

Posted: 29 Feb 2008

See all articles by S.P. Chakravarty

S.P. Chakravarty

University of Wales System

Jonathan M. Williams

Department of Finance and Accounting; Bangor Business School, Bangor University

Abstract

The European Commission argues that the state-owned banks in Germany enjoy an unfair advantage over the private sector banks in the cost of borrowing funds in the financial markets because of state guarantees that public sector banks are perceived to enjoy. This note demonstrates that the blame for the comparatively poor profitability of private sector banks in Germany cannot be laid at the door of the relatively cheaper funds that the public sector banks can raise in the wholesale markets.

Keywords: Banking, Dispersion, Efficiency, Competition, Privatisation, European Directive

Suggested Citation

Chakravarty, S.P. and Williams, Jonathan M., How Significant is the Alleged Unfair Advantage Enjoyed By State-Owned Banks in Germany?. Cambridge Journal of Economics, Vol. 30, No. 2, pp. 219-226, 2006, Available at SSRN: https://ssrn.com/abstract=904483

S.P. Chakravarty (Contact Author)

University of Wales System ( email )

Bangor, Wales LL57 2DG
United Kingdom

Jonathan M. Williams

Department of Finance and Accounting ( email )

Guildford, Surrey GU2 8DN
United Kingdom

Bangor Business School, Bangor University ( email )

Hen Goleg
College Road
Bangor, Wales LL57 2DG
United Kingdom

HOME PAGE: http://www.bangor.ac.uk/business/staff/jonathan-williams/en

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