One explanation is that economies can rebound without bank credit because capacity utilization is low during a recession allowing GDP to recover mainly through the absorption of unused capacity rather than through investment. A second explanation is that, in the absence of bank credit, firms increasingly use internal finance and trade credit.
In these last days, I am not going to look back on the past 14 years. Neither will I focus on what is going on in the financial system today. Instead, I will share some thoughts with you about the future of the financial system. That future is being shaped by a broad set of new regulations addressing weaknesses exposed by the financial crisis.