ABSTRACT
Banks are an integral part of modern financial systems as they fulfil important economic functions. Contrary to other financial intermediaries, such as investment societies or insurance companies, they have access to central bank refinancing and they play an important role in the transmission of monetary politics. In order to understand the special role played by the savings and cooperative banks, it is decisive to see the ways in which they are organised and how they exercise activities. This chapter presents the institutional foundations of intermediated economies and discusses the extent to which they have been questioned with the emphasis given to market- mechanisms, stochastic approaches to risk management and the rise of the shareholder value. It thereby draws on the German experience, where the interactions between the financial sector and the real economy have been particularly relationship-intense.
