In the medium term we could also expect insurance companies and pension funds to play a growing role in the financing of the corporate investment. Due to their long-term liability, they may have a larger role in the development of bond markets. They would possibly be a more stable source of funding when compared to the highly cyclical patterns seen in bank lending.
Furthermore over recent years insurance companies and pension funds, as net sellers of credit risk protection instruments, have increased the capacity of the banking system to absorb adverse shocks.