Description
The funding structure of the corporate sector varies significantly across jurisdictions. This chart suggests China and Europe are more mutually comparable in terms of financial system structure than with the United States. Indeed, both China and Europe aim to reduce the dominant role of banks in their respective systems – an effort labelled “capital markets union” in the EU and “capital markets reform” in China – even though there is scope for skepticism in their ability to force rapid structural change, because financial ecosystems tend to evolve slowly. The financial reform debate in both Europe and China tends to be dominated by concepts and arguments imported from the US, but our paper argues that the two jurisdictions have a lot to learn from each other.
This chart was taken from our latest PIIE Briefing, China’s Economic Transformation: Lessons, Impact, and the Path Forward, in the essay by Silvia Merler and Nicolas Véron titled “Moving Away from Banks: Comparing Challenges in China and the European Union.”
