Banking on the State: The Political Economy of Public Savings Banks

Germany’s public savings banks – Sparkassen – are a remarkable and puzzling phenomena. No other advanced industrial country relies as heavily on such small, public financial institutions to fuel its economy and how is it that such small institutions can drive one of the biggest and most successful economies in the world?

In theory, their diminutive size should hinder their ability to function in an environment where they compete with the capital and muscle of major international banks. Yet ...