As a result, bank credit in the region declined from average growth rates above 30% in the period 2003–2008 to close to zero or even negative rates of growth in the recent years. Bank credit is particularly important for economic growth in the EU. This situation is attributable to the fact that European economies are heavily dependent on bank financing.
This dependence on banks is in contrast to the US, where capital markets play a bigger role in financing the economy. Central, Eastern and Southern European economies are also bank-based financial systems in which capital markets remain relatively underdeveloped. Consequently, bank deleveraging, combined with increased risk aversion on the part of investors, has affected the ability to finance sustainable growth throughout the region.