Substudy 5: The Influence of Financial and Capital Market Systems

Globalisation, new technologies and enhanced competition have increased the risks in the financial system and made players more cautious in their behaviour. Banks are intent on better security for their financing, and companies demand higher profitability for their investment. This is one of the causes of the weak growth currently experienced. In order to overcome this, many economists recommend expanding the financial markets and accelerating the transition to a market-based financial system. In such a course, theorists perceive all the advantages of an automated market, while practicians chiefly see a means to spread the risks, especially market and credit risks. The contribution failed to find any evidence for the superiority of market-based systems over bank-dominated systems. The scope and quality of the provision of financial services are more important than the institutional differences between financial systems. Nevertheless, the extension of tools for active risk control and risk diversification could contribute to accelerating growth. Specifically it is proposed to facilitate access to modern securitisation methods for SMEs.