The Securities Business and Monetary Markets Affiliation, sometimes known as SIFMA, is commerce affiliation: that’s, it’s a corporation made up of funding banks, asset managers, brokers, and others. Amongst different rule-setting, lobbying, and public training missions, it publishes an annual databook: this yr, the SIFMA Capital Markets Handbook 2025 (July 2025). Listed below are a couple of charts that assist to convey the scale and construction of US capital markets within the world financial system.
The 2 high panels of this determine present world fastened revenue markets–that’s, bonds–for 2024 (on the left) and 2014 (on the proper). The US has by far the largest bond markets on this planet, and had about 40% of the worldwide market each in 2014 and 2024. Nonetheless, it’s attention-grabbing to notice that the share of world fastened revenue markets primarily based in China has expanded dramatically within the final 10 years, from 7% to 17.3%. This explosion in debt in China is likely one of the issues plaguing China’s financial system: the borrowing was used to spice up measures of financial development during the last decade, however numerous these constructing and improvement initiatives didn’t work out all that nicely, and now the debt funds are coming due.
The underside two panels of the determine present the division of world fairness markets–that’s, inventory markets– in 2014 and 2024. The outstanding reality right here is that US inventory markets had 37.8% of world market capitalization in 2014, however by 2024, this had risen to primarily half of all world inventory market capitalization. American traders have turn into used to the concept of rising inventory markets: the remainder of the world, not a lot.
However these figures increase a query: if the US is dominating the worldwide bond and inventory markets, how do companies in the remainder of the world increase cash once they want it? The reply is “banks.” To place it one other means, US companies are more likely to be affected by the judgements of out of doors traders, as a result of they’ll see the worth that these outdoors traders place on the corporate in inventory market and when issuing new bonds. In the remainder of the world, it’s extra frequent to have “bank-centered” finance for corporations, by which an organization has a long-standing relationship with one or a couple of banks as its means of acquiring capital.
The highest panel exhibits financing for non-financial firms within the US and the remainder of the world. The US and the UK have a extra “equity-centered” monetary system, whereas the EU and Japan have a extra “bank-centered” system. In China, companies are clearly very depending on financial institution loans–principally from state-owned banks.
The underside panel makes the same level focuse simply on debt financing. You possibly can see that within the US, when firms borrow, they accomplish that primarily by issuing bonds. In the remainder of the world, when firms borrow, they accomplish that principally by taking out financial institution loans.
There’s a protracted and heated debate over whether or not it’s “better” for companies to obtain their debt financing from a financial institution that is aware of the agency nicely (and should even personal inventory within the agency) or to depend on issuing bonds to traders out there. As an American, I’m a fan of the bond markets, however clearly, both method could be purposeful, so long as the riskiness of loans is correctly evaluated and priced accordingly.
