For example, the share of total financial sector assets held by banks in the Euro Area has fallen by around a third since the period before the financial crisis.3 The share of new borrowing by companies in the EU through market-based financing has almost doubled over the same period.4 And the share of commercial real estate assets held by investment funds has also doubled across the Euro Area over the past decade.5 So market-based finance has been growing in Europe, a trend that is also mirrored internationally, with potential benefits for the economy as a whole.
The need for resilience in markets For those benefits to be realised fully, however, a critical precondition is that markets are resilient in the face of adverse shocks. If market financing is there in good times only, and disappears or gets disrupted when shocks hit, that can adversely affect the rest of the financial system or, increasingly, the broader economy.