II.3. Impact of the financial crisis on corporate finance: how big is the shift from bank financing to bonds?

The global financial crisis had detrimental consequences for banks’ balance sheets, as well as for their funding costs and profitability, thus weighing negatively on their ability to supply new loans. As a result, banks tightened credit standards for all borrowers, including non-financial corporations. The restricted access to bank funding for the corporate sector induced the latter to seek other sources of external financing. The high level of euro-area corporate bond issuance in 2009 suggests that European corporations were able to partly replace bank financing with corporate bond market financing and, in addition, to do so at a relatively low average cost.