Summary of Are Euro-Area Corporate Bond Markets Irrelevant?

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Are Euro-Area Corporate Bond Markets Irrelevant? summary

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Economists Bastian von Beschwitz and Conor T. Howells explore the relationship between capital market access and overall investment for firms in the United States and the European Union. While US firms regularly issue bonds, EU companies rely more on bank credit. But does the lack of a large corporate bond market put EU firms at a disadvantage in terms of their potential growth? getAbstract recommends this timely though esoteric report to those looking to understand the dynamics of the US and EU capital markets.

About the Authors

Bastian von Beschwitz is an economist at the Board of Governors of the Federal Reserve System, where Conor T. Howells was a senior research assistant.


In the United States, companies turn largely to the capital markets – specifically, bond issuance – for investment capital, raising more than twice as much via bonds than through equities in 2015. In contrast, companies in the European Union are much less reliant on bonds for financing. As a percentage of GDP in 2005, US bond issuance was 1.7%, while in the EU it was 0.9%. Small and medium-sized US companies secure five times as much financing in the capital markets than their EU counterparts do.

In the United States, a company with a credit rating “is 3.5 percentage points more likely...

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