| Keynote speech for conference on "Preventing Bank Crises: Lessons from Recent Global Bank Failures," Lake Bluff, Illinois, June 11, 1997 (2007) | |||||||||||||||||
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| anking and finance. It is constructive to consider how and why views have changed since then. Capitalism is broad enough to encompass competing models, including 2 competing models of financial systems. The U.S. model -- shared with the U.K. and so sometimes called the Anglo-American model -- emphasizes arms-length market relationships. For example, it relies heavily on securities markets. To be sure, banks play an important role. But even bank loans tend to be made on arms-length terms. Certainly the government has little to say about where bank credit is allocated. The system that has developed in some Asian countries, on the other hand, has tended to follow more in the footsteps of the Japanese model. Without denying the important differences among these countries, the Asian systems traditionally seem to place greater reliance on bank loans than on securities markets, exhibit high debt/equity ratios, have closer relationships between banks and the companies that b | |||||||||||||||||
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