Capital markets are significant drivers of economic growth and increasing their size could compensate for the post-financial crisis decline in bank lending, finds a new research by AIMA.
Growing capital markets by one-third could fuel a long-term real growth rate in per-capita GDP of around 20%, the study, by Christoph Kaserer, of TUM School of Management, and Marc Steffen Rapp at Philipps-Universität Marburg.
Capital markets provide new funding for long-term investment and facilitate improvements in corporate governance. Economies traditionally regarded as bank-based have embraced capital markets in recent years and old distinctions between the bank-based economic structure of parts of Europe and the more market-based structure of the U.K. and U.S. are rapidly disappearing.
“Bank lending clearly is not keeping pace with demand and the global economic recovery could be jeopardized unless new sources of financing can be found, particularly from the investment management community,” adds Jack Inglis, AIMA CEO.