The euro area economy is to a large degree financed through banks. Bank financing accounts for 145% of GDP in the euro area while only slightly above 60% in the US. In the US, market-based funding sources like shares and bonds amount to more than 300% of GDP, more than double the share in the Euro area (ECB 2009a).
The importance of banks is underscored by the key role played by small and medium-sized enterprises (SMEs) in the euro area. Typically these are too small to access financial markets. While in recent months some large companies have switched from bank to market based finance to circumvent bottlenecks in bank financing, SMEs are excluded from this alternative funding source.