And what is perhaps even more significant: during the financial crisis, explicit and implicit guarantees for systemically important institutions meant that borrowing was, eventually, being subsidised. From the point of view of a big bank, loan capital becomes cheaper than equity capital. Is the practitioners’ view that equity capital leads to higher costs is therefore right in this context after all?
No, because the implicit guarantee on loan capital means that, in the event of a crisis, the costs are transferred to the general public or, in other words, the  BIS central bankers’ speeches  5  taxpayer. This results in a disconnect between microeconomic and macroeconomic costs and benefits, as was pointed out by the German Council of Economic Experts.