On 1 July 1990, some 16 million East Germans awoke to a new set of laws, a new currency, and a new banking system. The East German commercial banking system was purchased by the two largest West German banks, the Deutsche Bundesbank became the central bank, and soon all that remained of the East German banking system were its local Savings Bank and Credit Cooperatives. As a result, expectations were high that its economy would soon catch up with West Germany, especially since the West German banking system had been credited with playing a leading role in the Federal Republic's successful reconstruction after 1945. A major recession followed.
Using Germany as a focal point, this book asks whether foreign banks can solve the problems involved in creating a well-functioning market economy. Drawing on extensive interviews, as well as a range of English and German sources, it argues that there are no quickfix solutions to transition to a market economy. The German case is also accompanied by a broader review of the situation in Central and Eastern Europe. The findings contain lessons for academics, policy-makers and bankers in all countries undergoing financial development and deepening.
'An interesting new perspective on the role banks played during reunification. Clearly a valuable contribution to the current debate on the mistakes that were made following the fall of the Berlin wall.' - Dr. Oliver R.A. Prill, Financial Institutions Group, McKinsey & Co
'The wholesale transplant of West German institutions to East Germany after reunification offers a series of laboratory-style experiments rarely encountered in macroeconomic history. Robins' study of the banking sector is both pioneering and comprehensive, an invaluable snapshot of financial transition.' - Professor Peter Oppenheimer, Christ Church, Oxford
'As scholar and banker, Dr Robins contributes outstandingly to the debate on the deindustrialization of the Eastern Länder after unification by showing that successors to the GDR state banks - chiefly the Bundesbank and the two large West German commercial banks - were institutionally inadequate to supply the risk capital needed, leaving the East a profound drain on the tax-payer of the West.' - Professor Michael Kaser, Institute for German Studies, University of Birmingham
List of Tables
List of Figures
Preface
Foreword
Introduction
The Banking System in the Transition: A Conceptual Framework
Context and Approach of the Investigation
Economic, Institutional, and Banking Development After GEMSU
Overall Financial Flows and Bank Activities
The Hausbank System in the East After GEMSU
The East German Experience in Perspective
Appendices
Bibliography
Index
GREGG S. ROBINS is currently managing director for Citibank's International Personal Banking business in Switzerland. He was previously Global EMU Director for the Citibank Private Bank. Dr Robins has published articles in the Oxford International Review, Problems of Communism and the Investors Chronicle. In this book Dr Robins is expanding on his earlier work on the subject. He received a doctorate degree in management studies from Oxford University, where he had previously earned his master's degree in Russian and East European studies. His undergraduate degree in economics is from Rice University in Houston, Texas.
Description
On 1 July 1990, some 16 million East Germans awoke to a new set of laws, a new currency, and a new banking system. The East German commercial banking system was purchased by the two largest West German banks, the Deutsche Bundesbank became the central bank, and soon all that remained of the East German banking system were its local Savings Bank and Credit Cooperatives. As a result, expectations were high that its economy would soon catch up with West Germany, especially since the West German banking system had been credited with playing a leading role in the Federal Republic's successful reconstruction after 1945. A major recession followed.
Using Germany as a focal point, this book asks whether foreign banks can solve the problems involved in creating a well-functioning market economy. Drawing on extensive interviews, as well as a range of English and German sources, it argues that there are no quickfix solutions to transition to a market economy. The German case is also accompanied by a broader review of the situation in Central and Eastern Europe. The findings contain lessons for academics, policy-makers and bankers in all countries undergoing financial development and deepening.
Reviews
'An interesting new perspective on the role banks played during reunification. Clearly a valuable contribution to the current debate on the mistakes that were made following the fall of the Berlin wall.' - Dr. Oliver R.A. Prill, Financial Institutions Group, McKinsey & Co
'The wholesale transplant of West German institutions to East Germany after reunification offers a series of laboratory-style experiments rarely encountered in macroeconomic history. Robins' study of the banking sector is both pioneering and comprehensive, an invaluable snapshot of financial transition.' - Professor Peter Oppenheimer, Christ Church, Oxford
'As scholar and banker, Dr Robins contributes outstandingly to the debate on the deindustrialization of the Eastern Länder after unification by showing that successors to the GDR state banks - chiefly the Bundesbank and the two large West German commercial banks - were institutionally inadequate to supply the risk capital needed, leaving the East a profound drain on the tax-payer of the West.' - Professor Michael Kaser, Institute for German Studies, University of Birmingham
Contents
List of Tables
List of Figures
Preface
Foreword
Introduction
The Banking System in the Transition: A Conceptual Framework
Context and Approach of the Investigation
Economic, Institutional, and Banking Development After GEMSU
Overall Financial Flows and Bank Activities
The Hausbank System in the East After GEMSU
The East German Experience in Perspective
Appendices
Bibliography
Index
Authors
GREGG S. ROBINS is currently managing director for Citibank's International Personal Banking business in Switzerland. He was previously Global EMU Director for the Citibank Private Bank. Dr Robins has published articles in the Oxford International Review, Problems of Communism and the Investors Chronicle. In this book Dr Robins is expanding on his earlier work on the subject. He received a doctorate degree in management studies from Oxford University, where he had previously earned his master's degree in Russian and East European studies. His undergraduate degree in economics is from Rice University in Houston, Texas.
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