In the USA, the integrated markets for capital cushion around 40% of total cyclical fluctuations between the US federal states. If a regional economic downturn were to occur, the enterprises’ loss in earnings in one state would then be distributed between shareholders in other states, just as these would also benefit from increased profits in a boom.
Only 25% of cyclical fluctuations are smoothed via the credit markets, where losses are shared only in the event of an insolvency. Fiscal mechanisms cushion just 20% of economic shocks. 4 Studies for the German federal states come to similar conclusions.