, the less the banking sector spurs growth and the more capital market financing comes into play. also, market - based financial systems help to take the sting out of recessions that follow in the wake of financial crises. bank - based financial systems, meanwhile, are more adept at evening out “ normal ” cyclical fluctuations. however, the latest financial crisis has opened up another vista. a system in which the real economy is wholly reliant on a single source of financing – be it the banking sector or the capital market – will run into difficulties when that well runs dry. so, at the end of the day, it ’ s not a question of choosing either one or the other. the idea behind the european capital markets union is not to give up on bank - based financing, but to harness capital market financing as an add - on. and europe still offers plenty of potential in this respect. measured in terms of economic output, the us equity market is more than oneand - a - half times the size of its european counterpart, while the us venture capital market is five times the size of that in europe, and the us securitisation market is larger still than the european market. it ultimately all comes down to the old economic adage that you shouldn ’ t put all your eggs in one basket. or, to couch it in rather more technical terms, it ’ s all about diversifying the sources of corporate financing. if we give the capital markets a more prominent role in funding the real economy, that will give businesses broader and better access to funding – to the notable benefit of small and medium - sized enterprises. what it will also do is create a more efficient financial system that can better support sustained economic growth. 4. integration – establishing a single capital market the second objective of the european capital markets union is to deepen the integration of the capital markets. what benefits do integrated capital markets have to offer? one of the biggest advantages, undoubtedly, is that they can help to improve risk sharing. the underlying technical question is this : to what degree does an economic shock impair private consumption? and this is where the capital markets perform a key buffer function. in the usa, for example, the integrated markets for capital cushion around 40 % of total cyclical fluctuations between the us federal states. if a negative shock hits an industry or a specific region, then this loss is spread widely beyond that region. but in return, shareholders throughout the country also receive a share of the profits

community bank assets maturing beyond five years had grown steadily from 16. 9 percent to 18. 4 percent, respectively. since then, the share of these assets has been pared back to 16. 3 percent, as short - term interest rates have increased. bankers continue to rely significantly on the interest rate protection provided by their stable and reliable core deposit base. if recent deposit growth has been fueled by low interest rates and weakness in the equity markets, unexpected liquidity and interest rate pressures may develop if deposit customers shift funds to other investment vehicles. we need to remember that depositor behavior can change, as it did in the high - interest - rate environment of the late 1970s and early 1980s. conclusions the u. s. banking industry is healthy, strong, profitable, and well positioned to support economic growth and prosperity. banks have been able to adapt to changing circumstances and still generate record profits. the outlook for performance in the coming year is good. community banks continue to demonstrate their value to the marketplace and to occupy a prominent position in the economy. new challenges, and perhaps some new opportunities, will arise as we move ahead. adapting to change is an important aspect of the banking business and an important strength of bank charters, and the ability to respond well to changing circumstances has been a key to sustained profitability. the continued vibrancy of the bank charter depends on prudent management and a recognition of both the risks and rewards of aggressive growth.