Critical analysis of the financial systems in Germany, Japan, the United Kingdom, the U.S. and Australia

Essay by filstaUniversity, Bachelor'sA, April 2004

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There are many varied forms of financial systems, however many countries have financial systems which are similar and may be grouped, and in turn, compared to financial systems in other countries. One such example is the free market based financial system in Anglo-Saxon countries, such as the United Kingdom, or the United States, and the banking dominated financial systems of Germany and Japan. Corporate governance and financial systems play a big role on how financial systems operate. In the UK and US, capital markets dominate the financing of firms, while in Germany and Japan, banks have more power as loan givers and financiers of firms. Another important factor in the differences on these financial systems are the laws and regulatory restraints put on a country. While it is simple to see that there are heavy restraints on banks acting as stakeholders in firms in the UK and US, German and Japanese banks have little or no restrictions.

While the financial systems of each country are unique, it is notable to point that through globalising nature of today's world, differences between financial systems are becoming less every day.

The form of financial systems varies widely. In the United States and the United Kingdom competitive markets dominate the financial landscape, whereas in, France, Germany and Japan banks have traditionally played a more important role.

Do you agree? How does the Australian financial system compare with these two types of systems?

Each country's financial system is unique, each with its own form of governance and regulations, and each with advantages and disadvantages. It is possible however to group and compare certain financial systems with similarities in core functions. For example banking dominated financial systems, and financial systems where competitive markets rule the financial landscape, such as the United Kingdom and the United...