Currently, tax treatment still favours debt financing over equity financing. Removing this bias in taxation would encourage companies to strengthen their equity base and thus turn more towards equity capital markets in their search for sources of funds. 2  Bank of England (2015), A European Capital Markets Union: Implications for Growth and Stability. Financial Stability Paper No 33, February 2015.
3  Asdrubali P; Sørensen, B E; Yosha, O (1996), “Channels of Interstate Risk Sharing: US 1963–1990”, Quarterly Journal of Economics, 111(4), 1081–1110. 4  Balli, F S; Kalemli-Ozcan, S; Sorensen, B E (2012), Risk Sharing Through Capital Gains. In: Canadian Journal of Economics, Vol 45(2), pp 472–492. 5  Afonso, A; Furceri, D (2007), Business Cycle Synchronization and Insurance Mechanisms in the EU.