One reason is that the new regulatory environment gives banks incentives to hold marketable, liquid securities, such as corporate bonds or asset backed securities, as opposed to corporate loans. This will, in my view, increase the complementarities between marketable assets and corporate loans within banks’ balance-sheets, where in the past they were considered as substitutes.
What I am suggesting is not that Europe will – or should – abandon its intermediated model of financing but that it will complement it, more than in the past, with alternative sources of finance.