The
European Commission aims at enhancing the depth of capital markets as
well as fostering capital market integration by building a so-called
Capital Markets Union (CMU). A collaborative study of the Cologne
Institute for Economic Research (IW Köln) and the College of Europe
(CoE) finds that the CMU can enhance SME financing but also produces
winners and losers.
The European Commission aims at fostering the financing options
for companies, especially for small and medium-sized companies (SMEs)
which make up the bulk of all European companies. A crisis experience
was that even sound companies whose banks got into distress had to face
restrictive access to finance. Fostering capital market access for SMEs
should provide them with additional financing options and lessen the
dependency of SMEs to bank financing. And indeed, the capital markets
depth of the EU differs from the US. While approximately 80 percent of
corporate debt financing depends on capital markets in the US, 90
percent of debt financing depends on banks in the EU...''
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