- Regulation of banks — Investment business
This chapter assesses whether State-ownership of financial institutions can further systemic stability and allocative efficiency. State-owned financial institutions are not common in most Western developed and capitalist economies. However, the United States and Germany may be seen as partial exceptions among their peer Western economies, with the United States' Government-Sponsored Enterprises (GSEs) and Germany’s State-owned banks. In the United States, the State-ownership conversation has been framed largely in terms of public utility regulation. Likewise, in Germany, where almost half of banking activities are carried out by ‘alternative banks’, there is a certain level of support for the notion that such ‘alternative’ ownership structures have their merits and that, therefore, a good mix of private and non-private ownership structures may well be the most promising approach for pursuing allocative efficiency and overall system stability.
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