Holding Companies and Security Substitution: Evidence

Abstract

It is a typical, but controversial, characteristic of the Belgian economy that large holding companies control a substantial part of the crucial savings/investment process. Indeed, the holding companies issue shares in the securities market in order to finance their controlling interests in large industrial and financial corporations, some of which have their shares publicly traded in the stock market. It is consequently a real challenge for the economist to explain why such a security substitution and financial intermediation is taking place in the Belgian capital market.