Industrial heart keeps beating calmly as financial world changes

Germany’s small and medium sized companies — the Mittelstand — are the envy of the industrial world. Yet their financing arrangements are often derided as old-fashioned. That is a mistake, argues Jon Hay. The strength of private, family ownership and the depth of Germany’s relationship-driven banking system are central reasons for the Mittelstand’s success. Now they are exploring a wider range of financial techniques — but at their own pace.