If financial institutions do not have sufficient  11  information about their client firms, extended funds may be used for inefficient investment activities. Financial institutions may also become cautious about extending loans at their own risk to firms that face stresses.
The debt-to-GDP ratio has moved up at a steady pace, in line with previous expansions and neither fueled by nor fueling an asset bubble. Moreover, banks and other financial institutions have sizable loss-absorbing buffers. The growth in business debt does not rely on short-term funding, and overall funding risk in the financial system is moderate.