The completion of Europe's capital markets union is desirable for several reasons, including its ability to finance high growth sectors and provide incentives for carbon-intensive sectors to develop greener technologies. However, the underdevelopment of capital markets in Europe is evident when comparing company financing structures to other advanced economies. European companies are more bank-financed than in the US, and venture capital investments are lower in Europe. Additionally, EU institutional investors are underinvested in equity products and have a large share of their existing equity investments in extra-euro-area stocks.
