Vernimmen produce sharp financial snippets in their newsletters. Regularly, however, they publish something that produces more questions than answers.

Take this chart/text of the financing choices made by firms with turnover greater than EUR 500m in various countries:

Messieurs, just what, in this financially globalized world, are the "spécificités nationales" behind these contrasting capital structures?

A piece of research from 2005 which looked at this from the US vs Euro Area (EA) perspective suggested it was nearly all about agency costs. Which might be also a comment by region about the reputations of independent 3rd party assessors like S&P, Moodys etc.

Nonetheless, financing has become a shade more complicated since 2005; and the differences between EA companies in that graph should also reflect (for example) relative risk/access to debt markets, perception of bond market vs bank stability and the demand for easy rollover. All in the context of investors searching for yield as central banks continue to provide generous liquidity to banking systems.

To some degree they do (Spain vs the rest) but others are less convincing (Italy vs UK, France vs Germany). The UK is especially interesting and some insight into the choice (and not obligation) of financing comes from this Reuters piece last May.

But banks, especially many Euro banks, now face rising funding costs of their own - unlike last year. Can hardly wait for next year's snapshot.

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