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Protection of domestic bank ownership in France and Germany: The functional equivalency of institutional diversity in takeovers

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  • Michel Goyer
  • Rocio Valdivielso del Real

Abstract

We investigate the character of the market for corporate control (i.e. takeovers) in French and German banking. The key feature of this character is the marked ability of French and German banks to resist unsolicited takeover bids, especially - although not exclusively- those from foreign competitors. We present an institutional perspective to account for the restrained character of takeovers in French and German banking. Our perspective is composed of two elements. First, institutional arrangements are important since they structure power relations among firm stakeholders by providing opportunities, as well as imposing constraints, to influence the decision-making process in which takeover transactions take place. Second, institutional arrangements provide firm stakeholders with several potential opportunities, not just one, to block unsolicited bids since takeover contests are composed of sequences of decisions for which approval is needed at each stage. French and German banks have used different mixes of institutional arrangements, themselves located at different stages of takeover transactions, to secure restrained markets for corporate control. Our institutional analysis, in turn, also illustrates an important shortcoming of banking sector protectionism, namely the contribution of protection from unsolicited takeover bids to the building of banks carrying systemic risks.

Suggested Citation

  • Michel Goyer & Rocio Valdivielso del Real, 2014. "Protection of domestic bank ownership in France and Germany: The functional equivalency of institutional diversity in takeovers," Review of International Political Economy, Taylor & Francis Journals, vol. 21(4), pages 790-819, August.
    • Handle: RePEc:taf:rripxx:v:21:y:2014:i:4:p:790-819
    DOI: 10.1080/09692290.2014.910539
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    References listed on IDEAS

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    1. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521118590, September.
    2. Jonathan Story & Ingo Walter, 1997. "Political Economy of Financial Integration in Europe: The Battle of the Systems," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262692031, April.
    3. Blyth, Mark, 2013. "Austerity: The History of a Dangerous Idea," OUP Catalogue, Oxford University Press, number 9780199828302.
    4. Culpepper,Pepper D., 2011. "Quiet Politics and Business Power," Cambridge Books, Cambridge University Press, number 9780521134132, September.
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    1. Michel Goyer & Miguel Glatzer & Rocio Valdivielso del Real, 2022. "The management of the Eurozone in crisis times: Actors, institutions and the case of bailout packages," European Journal of Industrial Relations, , vol. 28(1), pages 7-25, March.
    2. Bulfone, Fabio, 2020. "The political economy of industrial policy in the European Union," MPIfG Discussion Paper 20/12, Max Planck Institute for the Study of Societies.
    3. Shawn Donnelly & Ioannis G. Asimakopoulos, 2020. "Bending and Breaking the Single Resolution Mechanism: The Case of Italy," Journal of Common Market Studies, Wiley Blackwell, vol. 58(4), pages 856-871, July.

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