Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-cd9895bd7-gxg78 Total loading time: 0 Render date: 2024-12-27T07:37:15.582Z Has data issue: false hasContentIssue false

7 - Developments in the Israeli Capital Market, 1995–2017

Toward an Efficient Financial Intermediation

from Part II - Reforms and Their Effects

Published online by Cambridge University Press:  04 February 2021

By
Doron Avramov ,
Efrat Dressler  and
Lior Metzker
Edited by
Avi Ben-Bassat ,
Reuben Gronau  and
Asaf Zussman
Avi Ben-Bassat
Affiliation:
Hebrew University of Jerusalem
Reuben Gronau
Affiliation:
Hebrew University of Jerusalem
Asaf Zussman
Affiliation:
Hebrew University of Jerusalem
Get access

Summary

The last twenty years in Israel have given rise to dramatic economic developments with special focus on financial markets. Such developments have become feasible due to changing macro-economy paradigms following the 1983 crisis in the Israeli banking system. A prominent paradigm shift evolved around the diminishing role of the government in financial markets. The period we survey in this chapter is characterized by continuing this trajectory. In addition, the surveyed period has promoted structural reforms attempting to: (i) diminish the overwhelming banks’ controlling power, (ii) form an off-bank credit market, (iii) break the centralized controlling structure in the economy, and (iv) mitigate the conflict of interests between major and minor holders in public companies. Moreover, the local economy has widely been opened up to the global environment. Major steps include the adoption of international norms in financial reporting and corporate governance, the full liberalization in the foreign currency market, and the adoption of an equal taxation among financial investments. We examine all these structural reforms and their outcomes on the Israeli financial markets and present the upcoming reforms in the retail credit market.

Keywords

financial intermediationstructural reformscapital marketscorporate governance
Type
Chapter
Information
The Israeli Economy, 1995–2017
Light and Shadow in a Market Economy
 , pp. 205 - 237
Publisher: Cambridge University Press
Print publication year: 2021

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Achdut, L., and Spivak, A. (2010). The Pension System in Israel After 15 Years of Reforms. Publications of the Economics and Society Program 8, The Van Leer Jerusalem Institute. www.vanleer.org.il/en/publication/pension-system-israel-after-15-years-reforms. [In Hebrew]Google Scholar
Ashraf, R., Jayaramen, N., and Ryan, H. Jr., and Harley, E. (2009). Conflicts of Interest and Mutual Fund Proxy Voting: Evidence from Shareholder Proposals on Executive Compensation. Unpublished manuscript, Georgia Tech University.Google Scholar
Bank of Israel. Bank of Israel Annual Report: Statistical Appendix. Various years. Jerusalem: Bank of Israel.Google Scholar
Bebchuk, L. A., Cohen, A., and Hirst, S. (2017). The Agency Problems of Institutional Investors. Journal of Economic Perspectives, 31(3), 89–102.CrossRefGoogle Scholar
Ben-Bassat, A. (2002) The Obstacle Course to a Market Economy in Israel. In Ben-Bassat, A. (ed.), The Israeli Economy, 1985–1998: From Government Intervention to Market Economics. Cambridge, MA: MIT Press, 1–60.Google Scholar
Ber, H., Yafeh, Y., and Yosha, O. (2001). Conflict of Interest in Universal Banking: Bank Lending, Stock Underwriting and Fund Management. Journal of Monetary Economics, 47, 189–218.CrossRefGoogle Scholar
Capital Market, Insurance and Savings Authority, Regulation and Legislation - Investment Management. [In Hebrew]Google Scholar
Capital Market, Insurance and Savings Authority, Regulation codex, Chapter 5, part 1. [In Hebrew]Google Scholar
Cohen, O. (2017). Measuring Corporate Governance Quality in Concentrated Ownership Firms. Working paper.Google Scholar
Cvijanovic, D., Dasgupta, A., and Zachariadis, K. E. (2016). Ties that Bind: How Business Connections Affect Mutual Fund Activism. Journal of Finance, 71(6), 2933–2966.CrossRefGoogle Scholar
Davis, G. F., and Kim, E. H. (2007). Business Ties and Proxy Voting by Mutual Funds. Journal of Financial Economics, 85(2), 552–570.CrossRefGoogle Scholar
Gottlieb, D., and Blejer, M. I. (2002) Liberalization in the Capital Account of the Balance of Payments. In Ben-Bassat, A. (ed.), The Israeli Economy, 1985–1998: From Government Intervention to Market Economics. Cambridge, MA: MIT Press, 243–280.Google Scholar
Hamdani, A., and Yafeh, Y. (2013). Institutional Investors as Minority Shareholders. Review of Finance, 17(2), 691–725.CrossRefGoogle Scholar
Klein, D. (2003). 1983 Israel Bank Stock Crisis on the Background of the Macro-Economic Management Concepts and the Changes in the Capital Markets: Then and Today. Bank of Israel. https://en.wikipedia.org/wiki/1983_Israel_bank_stock_crisis.[In Hebrew]Google Scholar
Sasi-Brodesky, A. (2017). Recovery Rates in the Israeli Corporate Bond Market 2008–2015. Discussion Paper 2017.07. Jerusalem: Bank of Israel Research Department.Google Scholar
Schwartz, E. (2012). The Change in the Provident Funds Management Fees Delivered to the Pension Sub-committee in the Finance Committee. The Knesset, Research and Information Center, Budget Supervision Division, Jerusalem. [Hebrew]Google Scholar
Spivak, A. (2002). The Pension Funds Reform. In Ben-Bassat, A. (ed.), From Government Intervention to Market Economies: The Israeli Market 1985–1998. Cambridge, MA: MIT Press,257–290.Google Scholar
The Capital Market Reform (Bachar Committee). (2004). Final Report. [In Hebrew]Google Scholar
The Committee for Examining the Aspects of Banks’ Holdings in Real Corporations (the Brodet Committee). (1995). Final Report. [In Hebrew]Google Scholar
The Committee for Examining the Measures Required to Increase the Involvement of Institutional Bodies in the Israeli Capital Market (the Hamdani Committee). (2018). Final Report. [In Hebrew]Google Scholar
The Committee for the Examination of the Corporate Governance Code in Israel (the Goshen Committee). (2006). Final Report. [In Hebrew]Google Scholar
The Committee for the Examination of the Debt Arrangements in Israel. (2014). Final Report. [In Hebrew]Google Scholar
The Committee for Increasing Competition in Common Banking and Financial Services (the Strum Committee). (2016). Final Report. [In Hebrew]Google Scholar
The Competitiveness Committee. (2012). Final Report. [In Hebrew]Google Scholar
The Israeli Securities Authority. Annual Report. Various years. [In Hebrew]Google Scholar
Villalonga, B., and Amit, R. (2009). How Are U.S. Family Firms Controlled? The Review of Financial Studies, 22(8), 3047–3091.CrossRefGoogle Scholar
Yosef, R., and Spivak, A. (2008). The New Pension World: After the Big Bang of 2003. Publications of the Economics and Society Program 5. Jerusalem: The Van Leer Jerusalem Institute. (Hebrew)Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×