[17] This constrains competition for good credit and amplifies the doom loop between sovereign and bank creditworthiness, which we have failed to eradicate. And, second, banks often hesitate to finance investments in intangible assets for which collateral values are hard to quantify, or in new sustainable technologies with highly uncertain future payment streams.
New ECB research shows that stock markets are better than banks at reallocating investment toward “greener” sectors, and that innovative sectors with fewer tangible assets grow faster in countries with deeper stock markets.