Image Source: Pixabay

The Securities Industry and Financial Markets Association, typically referred to as SIFMA, is trade association: that is, it’s an organization made up of investment banks, asset managers, brokers, and others. Among other rule-setting, lobbying, and public education missions, it publishes an annual databook: this year, the SIFMA Capital Markets Handbook 2025 (July 2025). Here are a few charts that help to convey the size and structure of US capital markets in the global economy.

The two top panels of this figure show global fixed income markets–that is, bonds–for 2024 (on the left) and 2014 (on the right). The US has by far the biggest bond markets in the world, and had about 40% of the global market both in 2014 and 2024. However, it’s interesting to note that the share of global fixed income markets based in China has expanded dramatically in the last 10 years, from 7% to 17.3%. This explosion in debt in China is one of the problems plaguing China’s economy: the borrowing was used to boost measures of economic growth over the last decade, but a number of those building and development projects didn’t work out all that well, and now the debt payments are coming due.

The bottom two panels of the figure show the division of global equity markets–that is, stock markets– in 2014 and 2024. The remarkable fact here is that US stock markets had 37.8% of global market capitalization in 2014, but by 2024, this had risen to essentially half of all global stock market capitalization. American investors have become used to the idea of rising stock markets: the rest of the world, not so much.

But these figures raise a question: if the US is dominating the global bond and stock markets, how do firms in the rest of the world raise money when they need it? The answer is “banks”. To put it another way, US firms are much more likely to be affected by the judgements of outside investors, because they can see the value that these outside investors place on the company in stock market and when issuing new bonds. In the rest of the world, it is more common to have “bank-centered” finance for companies, in which a company has a long-standing relationship with one or a few banks as its way of obtaining capital.

The top panel shows financing for non-financial corporations in the US and the rest of the world. The US and the UK have a more “equity-centered” financial system, while the EU and Japan have a more “bank-centered” system. In China, firms are clearly very dependent on bank loans–mostly from state-owned banks.

The bottom panel makes a similar point focuse just on debt financing. You can see that in the US, when corporations borrow, they do so mainly by issuing bonds. In the rest of the world, when corporations borrow, they do so mostly by taking out bank loans.

There’s a long and heated debate over whether it is “better” for firms to receive their debt financing from a bank that knows the firm well (and may even own stock in the firm) or to rely on issuing bonds to investors in the market. As an American, I’m partial to the bond markets, but clearly, either approach can be functional, as long as the riskiness of loans is properly evaluated and priced accordingly.

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