How is investment financed? A study of Germany, Japan, the United Kingdom and the United States

The aims of this paper are, first, to construct a consistent comparative set of data on the sources of finance for investment over the period 1970-94 for the United Kingdom, the United States, Germany and Japan, and, second, to challenge conventional views of the international differences in financing patterns. We find that there is little evidence to support the view that Germany is a ''bank-financed'' system nor that the United Kingdom or the United States are ''market financed''. Whilst bank finance is more important in Japan, there has been a steady decline in the proportion of investment financed by banks over the last 25 years.