Sistemas financieros comparados

Octubre de 2017 Emilio Ontiveros ontiveros@afi.es www.afi.es www.emilioontiveros.com @ontiverosemilio

Objetivo de la lección: Financial intermediaries and markets can alleviate market frictions through producing information and risk sharing in different ways. In practice, the structure of financial systems can be bank-based or market-based, varying across countries. The influence of financial structure on economic growth is dependent on the overall development of the real economy and institutions. The association is also different during crisis periods and non-crisis periods. Market-based systems tend to have an advantage for financially dependent industries in good times but are a disadvantage in bad times. The recent rapid growth of shadow banking benefits economic growth but also poses additional risks to the financial system and real economy. Lectura basica: Fuente: Franklin Allen, Xian Gu, Oskar Kowalewski (2017) Escuela de Finanzas, 2017-2018. Todos los derechos reservados.

BANK VS. CAPITAL MARKET What defines a bank traditionally? Takes deposits (short-term obligations) and makes loans (longterm assets), both on balance sheet What defines a capital market traditionally? Purchase and sale of securities (equity or debt, stocks or bonds), traditionally through an underwriter (market risk, shortterm on balance sheet) in primary market and through a broker (only settlement risk, effectively off balance sheet except for guaranty) in secondary market Fuente: David K. Linnan (2002) Escuela de Finanzas, 2017-2018. Todos los derechos reservados.

Bancos Vs. Mercados. Antecedentes: Hamilton (1781): banks are the happiest engines that ever were invented for spurring economic growth. Gerschenkron (1962) underlined the crucial role of universal banks in German industrialization between the middle and end of the nineteenth century. Calomiris (1995) compared the American and German systems of investment between 1870 and 1914 and argued that the German system was superior. Kennedy (1987) claimed that the failure of British financial intermediaries to behave as German universal banks did hamper British economic performance in the late nineteenth and early twentieth centuries. Bagehot (1873) and Hicks (1969) claimed that financial markets played an important role in the UK s Industrial Revolution. Fuente: Franklin Allen, Xian Gu, Oskar Kowalewski (2017) Escuela de Finanzas, 2017-2018. Todos los derechos reservados.

Caracterización de un Sistema Financiero. Fohlin (2015) A financial system is the set of institutions and markets that gathers excess funds from savers whether households or businesses--and allocates financial capital to those with entrepreneurs and others in need of credit. In the process, the financial system produces information and distributes risk throughout the economy and among its participants. Merton (1993) summarizes even more succinctly the primary function of any financial system: to facilitate the allocation and deployment of economic resources, both spatially and temporally, in an uncertain environment. Well-functioning financial systems must provide several core functions (Merton, 1993; Crane et al 1995): - Clearing and settling payments - Pooling or mobilizing resources - Transferring economic resources, inter-temporally or geographically - Managing risk - Pricing information - Dealing with information and incentive problems Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 5

Three of the key areas of research and debate revolve around the following three topics: 1. The design of financial institutions and systems: Functional versus institutional approaches 2. Why do financial systems differ across countries: legal origins versus political and economic explanations 3. Does financial system design affect an economy s long-run economic growth rates? Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 6

In the literature, the classification of the financial system typically follows a binary approach (Fohlin, 2012). It often focuses on the dependence of savers and firms on banks or capital markets and draws a distinction between countries with market- and bank-oriented systems. a) Bank-oriented systems are those displaying high levels of bank finance, equity holding by banks, long-term relationships, close monitoring and active corporate governance by banks. Typically, bank-based financial systems correspond to countries in which commercial banks are mainly universal. b) Market-oriented financial systems support large, active securities markets, and firms use market-based financing. In market-based financial systems, banks are very often specialized with an important group being investment banks. This oversimplified characterization provides only a partial picture of the financial system, so some authors classify the financial system as relationship-based or arms-length systems, which captures the degree of separation between investor and firm (Rajan and Zingales, 2002). The rapid changes in the financial industry in recent decades have further complicated the distinction. In reality, there is no clear-cut distinction between financial systems, and the classifications fit only in a rough manner empirically Fuente: Franklin Allen, Xian Gu, Oskar Kowalewski (2017) Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 7

The literature usually associates bank-based financial systems with universal banking and market-oriented systems with specialized banking. The three-part financial system paradigm that aligns universal banking, relationship banking, and bank-oriented financing on the one hand, and specialized banking, arms-length lending, and market orientation on the other. Germany, with its dozen or more large-scale universal banks, offers the classic example of universal banking (Fohlin, 2007), but most of continental Europe followed a similar pattern. Universal banks had emerged in Belgium even earlier and in France almost simultaneously. Universal banking spread to several other European countries in the 1890s: Finland, Italy, Spain, Sweden, Ireland and Switzerland. In Italy, the financial system remained compartmentalized until the early 1890s, when it suffered a severe crisis and the failure of many banks. Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 8

1.- Elementos de comparación Orientación a mercados o a intermediarios financieros Mayor o menor participación pública Mayor o menor propensión a innovar y financiar innovación Costes de transacción Exigencias informativas Gobierno corporativo Convergencia gradual Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 9

1.- Elementos de comparación Overview of financial systems United United States Kingdom Japan France Germany Financial Markets: Central Central Developed Fairly Unimportant unimportant Banks: Competitive concentrated External Corporate Governance: Hostile Hostile Main Hausbank Takeovers takeovers bank system system Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 10

2.- Instituciones y mercados Mercados financieros Bolsas Deuda Pública Renta Fija Privada Derivados Sistema bancario Inversión Institucional Seguros Pensiones Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 12

3.- El gobierno de las empresas Corporación empresarial: conceptos y definiciones Estructura de propiedad y control Mecanismos de Gobierno El cuestionamiento de los mismos a la luz de los escándalos recientes Formas especiales de corporación (entidades mutualistas; sin ánimo de lucro, etc.): el caso de las cajas Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 14

4.- Las limitaciones de los mercados Mercados eficientes en cuestión Mercados incompletos Conflictos de intereses entre grupos de accionistas Asimetrías informativas y riesgo moral Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 15

Discusión There is not such a thing as the ideal financial system Banks based Pro: long-term relationship Con: possible misallocation in case of crisis (Rajan-Zingales) Markets (arm-length) Pro: Public information through prices Con: Markets are not perfect Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 16

Discusión Banks solve the free rider problem of atomistic market participants, as they have greater incentives to search for information on valuable projects If they don t do it, nobody will do it They don t have to display the information they collected, so they can take advantage of this monoplistic position. By contrast, private information collection by market participants is immediately revealed in the stock price Takeovers are not always socially beneficial, as they may simply benefit the raider Escuela de Finanzas, 2017-2018. Todos los derechos reservados.

Discusión Banks with close ties to their creditors may have too high an influence on them Banks can extract rents from firms because they have a lot of private information In case of debt renegotiation or liquidity injection, banks have a lot of bargaining power and can extract more of the future profits of the firms -> this may reduce the effort extended by firms to undertake innovative ventures Banks may be more risk averse and favor conservative and slow growth strategies Banks may not be effective gatherers of information in new and uncertain situations (think of venture capital) Main banks may exert influence over corporate decisions or fail to bankrupt distressed firms because of long run ties Escuela de Finanzas, 2017-2018. Todos los derechos reservados.

Discusión It does not matter whether finance comes from banks or markets Bank and market-based finance are complementary: The availability of both systems may spur competition to provide finance Each system may be more appropriate for a certain type of firms: e.g. banks finance low-risk projects, markets high-risk ones Escuela de Finanzas, 2017-2018. Todos los derechos reservados.

Referencias: Banco Mundial. Blog: All about finance: http://blogs.worldbank.org/allaboutfinance/ Allan, F. Gale, D., Comparing Financial Systems, MIT Press, Cambridge (Mass), 2000 Banco Central Europeo: Financial stability Review, semestral, https://www.ecb.europa.eu/pub/fsr/html/index.en.html Barth, James R., Caprio, Gerard y Levine, Jr., Ross. NBER working paper series. BANK REGULATION AND SUPERVISION IN 180 COUNTRIES FROM 1999 TO 2011. Working Paper 18733 http://www.nber.org/papers/w18733 National Bureau of Economic Research Beck, Thorsten y Feyen, Erik. Benchmarking Financial Systems. Introducing the Financial Possibility Frontier The World Bank, Development Economics, Office of the Senior Vice President and Chief Economist. September 2013 Berges, Angel, Ontiveros, Emilio y Valero, Francisco José. La Unión Bancaria desde una perspectiva española. Fundación Alternativas y Fundación ICO. Documento de trabajo Opex nº 71/2012. Enero 2013 Berges, Angel, Ontiveros, Emilio y Valero, Francisco José. La Unión Bancaria: avances e incertidumbres para el año 2014. Fundación Alternativas. Documento de trabajo Opex nº 75/2014. Enero 2014 Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 50

Referencias: Berges, Angel y Ontiveros, Emilio. Financiación de la economía. Bancarización frente a mercados. Un nuevo modelo económico para España. Mediterráneo económico nº 25. Colección Estudios Socioeconómicos. Fundación Cajamar. Mayo 2014 Bernanke, Ben (sesiones): http://www.federalreserve.gov/newsevents/lectures/about.htm Čihák, Martin, Demirgüč-Kunt, Asli, Feyen, Erik y Levine, Ross. Financial Development in 205 Economies, 1960 TO 2010. Working Paper 18946 http://www.nber.org/papers/w18946 National Bureau of Economic Research Demirguc-Kunt, Asli, Feyen, Erik y Levine, Ross The evolving importance of banks and securities markets (NBER Working Paper Series. Working paper 18004) http://www.nber.org/papers/w18004. National Bureau of Economic Researh Demirgüç-Kunt, A. Levine, Ross, Financial Structure and Economic Growth. A Cross-Country Comparison of Banks, Markets and Development, Cambridge (Mass), The MIT Press, 2001. Easterly, William y Levine, Ross, 2012 The European origins of economic development (NBER Working Paper Series. Working paper 18162) http://www.nber.org/papers/w18162. National Bureau of Economic Researh Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 51

Referencias: Fohlin, Caroline (2015) Financial Systems and Economic Development in Historical Perspective, Forthcoming (2015) in Claude Diebolt and Michael Haupert (Eds.), Handbook of Cliometrics, Springer Verlag. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2524109 Fundación Estudios Bursátiles Finance Glossary Bancaja, IVF, Fundación de Estudios Bursátiles y Financieros, Thomson Reuters Levine, Ross, 2004 Finance and Growth: Theory and Evidence (NBER Working Paper Series. Working paper 10766) http://www.nber.org/papers/w10766. National Bureau of Economic Researh Levine, Ross, 2004. Bank-based or market-based financial systems: Which is better?. Journal of Financial Intermediation 11, 398-428. - Merton, Robert C. y Bodie, Zvi,2005 Design of financial systems: towards a synthesis of function and structure Journal of Investment Management. Vol. 3. Nº 1 pp.1-23 - Merton, R. Bodie, Z., A Conceptual Framework for Analyzing the Financial Environment, Harvard University Press, 1995 Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 52

Referencias: - Ontiveros, Emilio, 2013 «Bancarización declinante, Blog Finanzas a las nueve, El País, 20 de junio - Rajan, R. Zingales, L., Banks and Markets: The Changing Character of European Finance, CRSP Working Paper No. 546 january 2003. Available at SSRN: http://ssrn.com/abstract=389100 - World Economic Forum The Financial Development Report, 2012 - Wray, L.R, Financial Markets Meltdown. What Can We Learn from Minsky?, The Levy Economic Institute, 2008 Escuela de Finanzas, 2017-2018. Todos los derechos reservados. 53