13 Ensuring that failed firms are able to smoothly exit the market is also key to enabling capital and labour to be allocated to where it can be more productively used. Business churn – the combined rate of business formation and closure – has been declining in Europe and the United States since just before the crisis (Chart 4).
In lock step with the decline in churn, evidence suggests that capital misallocation has been rising in both regions.14  6/9  BIS central bankers' speeches  As an example of barriers to business creation, it takes on average about 10 days to start a new business in the euro area.