The Organisation for Economic Co-operation and Development has published a working paper concluding that deeper capital markets can promote growth by improving capital allocation, financing high risk, long term investment and potentially supporting resilience during downturns. The effect is not automatic and depends on whether the constraint is financial. Capital market reform is unlikely to address weak investment or productivity caused by low returns, institutional shortcomings, skills gaps or other nonfinancial barriers. The evidence is strongest for equity markets, which can fund innovation and productivity growth, while the relative benefits of market based debt over bank lending remain less conclusive. Banks and securities markets can be complementary, and excessive credit expansion or opaque nonbank debt can create risks. The paper also highlights the rapid expansion of private markets and growing concentration among issuers, investors and regions, which may weaken disclosure, price discovery, diversification and corporate monitoring. Core global equity and debt markets totaled USD 299 trillion at the end of 2025, comprising USD 164 trillion in equity and USD 135 trillion in debt.
2026-09-21OECD
Organisation for Economic Co-operation and Development finds capital markets support growth only when matched to specific financing constraints
The OECD finds that capital markets can support growth when they address specific financing constraints, with the clearest evidence relating to equity funding for innovation. Market based debt offers less certain advantages over bank lending and can create risks when credit expands excessively. The shift toward private markets and greater market concentration may also weaken disclosure, price discovery and diversification.