As a result, debt-to-GDP ratios for nonfinancial corporations in the euro area and the US increased in the past ten years from roughly 65% to 75–80%. 3 And of course, leverage also increased in the financial sector.
This development was particularly evident here in the US, where it was compounded with structural transformation, including the rise of the shadow banking sector, the spread of the “originate to distribute” model and the greater interconnectedness between institutions.