The markets – according to its proponents – work better if the conditions under which a state may fail are more explicit. This hypothesis – dear to many academics – does not however reflect reality. In the private sector bankruptcies are possible and are subject to regulation, but markets often incorrectly assess the risk of securities issued by the private sector.
The absence of such policy action implies that we cannot expect financing to deliver as much as we would like. Attracting financing on a large scale requires a strong enabling environment. Investors seek the highest risk-adjusted return.