ABSTRACT
This chapter compares the effects of a bank-dominated financial market structure on the politics of financial policy in Germany and Mexico and asks whether German big banks constitute a counterpart to the Mexican grupos. The German financial system remains the standard case of bank-led finance among developed market economies. In his analysis of the German financial system, Zysman implies that a credit-based, bank-dominated financial structure is conducive to growth-promoting financial policy and successful industrial adjustment. State credibility is modeled according to its ability to control inflation and its temporal commitment to stated financial policies. The degree of policymaking credibility, in turn, affects how private elites weigh alternative economic strategies, or alternative policy preferences. Economic competitiveness may depend, in part, on the degree of industrial and financial market concentration, and the extent of ownership ties between industrial and financial capital.
