Krieghoff, Niels
(2013)
Banking regulation in a federal system: lessons from American and German banking history.
PhD thesis, London School of Economics and Political Science.
Abstract
This dissertation contrasts the development of the regulatory structure of the American
and German banking systems until the mid-20th century. It explains why the countries'
regulatory structures diverged into diametrically opposite directions, even though both
countries had federal political systems and regularly observed the developments in the
other country. Furthermore, after the Second World War, the American military government was even able to mold the German banking system into an idealized version of the
American one. The thesis also provides an explanation why this assimilation attempt ultimately failed, and why there was a strong institutional persistency between Nazi Germany
and West Germany instead.
The original contributions to knowledge are the following: (1) This thesis offers a novel perspective on the evolution of the structure of American banking regulation by interpreting
it as being largely driven by constitutional conflict (2) it shows that prior to the Banking
Crisis of 1931 there was no intention to introduce a comprehensive regulatory structure
for the banking sector in Germany (3) It provides a reassessment of the origins of the
German Credit Act of 1961 as a non-deterministic process (4) It interprets German banking regulation after the Second World War as a failed Institutional Assimilation, which
provides evidence that the decentralized regulatory arrangement of the American banking
system was held in place by strong states' rights. In the absence of strong states' rights
such a system would not persist and, indeed, in Germany it did not (5) It re-interprets
German post-war economic history as being driven by the need of the German federal government to re-establish supremacy over economic matters. This assigns a new important
role for Ludwig Erhard in German post-war competition history, as being an enabler of
liberalization rather than being a liberalizing force himself.
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