Whereas both a stable rate of return to capital investment and low yield in government securities may occur in tandem, banks’ reliance on government securities as Tier 1 capital buffer implies both missed profit opportunities and a bonus for firms.
Until the beginning of this century, the return on capital as measured in profits was substantially below the interest rate charged on prime loans. The significant increase in the return to capital stock after 2000 is perhaps a sign of firms’ intangibility and an unequivocal sign that the structure of the economy changed.
Whereas the productivity effect is notoriously absent in research, it is visible in the cost structure of firms. The significant investment in intangibles since the 1980s paid off after 2000 while a trend reversal towards physical capital deepening seems to be in place since 2009.
EUnomics 
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