by banks. the weight of construction - related investment has diminished, partly as a result of the credit - allocation changes i have just referred to. since 2013, in fact, investment in equipment and in intangible assets has gained weight relative to total investment ( more than 4 pp ) to the detriment of investment in real estate assets. beyond the changes in the supply of credit, this pattern will also have been influenced by certain far - reaching changes in the demand for real estate assets in recent years. in particular, there have been some housing - related fiscal and regulatory measures that have sought to reduce the traditional bias towards home ownership, such as the elimination of the house - purchase allowance under personal income tax. it should also be borne in mind that spain has been no exception regarding the overall tendency to increase the weight of investment in intangible assets derived largely from the expansion of digitalisation and technological development. this change causes difficulties when it comes to using the asset to be financed as collateral, which may lead to the disintermediation of business financing, in particular of large corporations. while this is a global phenomenon, its intensity has been somewhat more marked here, with spain having traditionally been more highly banked than other developed economies. small and medium - sized enterprises cannot avoid this change, and they must be prepared to undertake the search for alternative means of financing. that will require headway in making their management more professional and in enhancing their transparency with a view to resorting to the financing offered on the capital markets. see chapter 2 “ financing and investment decisions of spanish non - financial corporations ”, annual report 2016, banco de espana. 16 / 18 regulatory framework i would now like to focus on three regulatory challenges with the potential to distort our country ’ s current regulatory framework : the enormous disparity of regulations at the municipal and regional levels ; regulations that depend on firm - size ; and regulations that artificially distort the costs of different - sized firms. firstly, the disparity of regulations at the municipal and regional levels. the oecd published a report in 2015 showing the enormous dispersion of procedures needed in 19 spanish cities in order, for example, to start a company, to apply for a building permit or to initiate a legal claim. in such a setting, the formalities needed to undertake investment projects proliferate, which hampers building up the business in alternative locations. this may be particularly relevant for certain sectors, such as professional

least skilled – is essential to reduce this scourge and thus help correct the strong rise in wage inequality that stemmed from the crisis. in this respect, it would be desirable to improve the human capital of the least skilled unemployed and to align job training measures to employers ’ demands. these measures should be structured to fit others aimed at reducing the high temporary employment ratio, in light of its negative influence on human capital accumulation – to which i shall refer later – and, once again, on inequality. indeed, despite trending more favourably over the past year, the temporary employment ratio stood in 2019 q1 at almost 26 %, far above that in other european countries. reducing it will necessarily involve raising the attractiveness of permanent hiring for firms. finally, let us turn to the banking sector. major challenges, in many cases shared with other european banking systems, remain outstanding, despite the progress made in recent years. for one thing, the spanish banking sector should speed up the reduction of its non - earning assets, since these not only bear down on its profitability but also on its capacity to allocate 9 / 18 resources efficiently. this aspect is particularly relevant in spain ’ s case, where the recourse by smaller - sized firms to external funding is mainly through bank loans. next, in addition to enhancing the quality of their assets, spanish institutions should strengthen their capital and the liabilities susceptible to be used in the event of bail - ins in order to face on the best footing the regulatory challenges still pending. as in other countries, the new technological environment poses a challenge. but it is also an opportunity for the financial system, which the spanish banking sector should harness. finally, financial institutions should seek to enhance their reputation. this challenge should not be neglected if they are to successfully tackle an environment like the current one, which is becoming more competitive as new agents emerge ( e. g. the so - called fintech ). in an economy like spain ’ s, where the banking sector continues to mediate most financial flows, overcoming these challenges is crucial if deposit institutions are to continue contributing to economic growth. the productivity challenge in recent decades the increase in total factor productivity ( tfp ), which measures the efficiency with which productive factors are used, has been notably meagre in spain. indeed, tfp posted negative growth rates for much of the 2000s. in spain, it has averaged growth over the past 20 years of approximately 0. 2 %, 0. 2 pp less