Financial systems can be compared according to the degree volatile assets are transformed into more stable assets for households and private investors. A discrete-time macroeconomic portfolio model distinguishes between financial systems via a parameter for this transformation by financial intermediaries, which build up and draw on reserves. A comparative-static analysis shows that aggregate income in market based financial systems is less sensitive to profit expectations unless the capital gain effect and its impact on consumption becomes dominant. Depending on the transformation by financial intermediaries, both credit and equity finance can in principle be analysed in the same way but especially venture capital companies in market based systems refrain from offering any degree of transformation. A UK-German survey indicates considerable funding gaps. German respondents perceive a higher degree of normative equity gaps and risk mitigation as the most effective policy instrument. Guarantees reinforced the differences between the financial system and motivated companies to invest in higher risk areas for which they have riot developed adequate instruments of relationship funding. In a downturn public guarantee pay outs reduce losses for private investors and exert a stabilising effect on the industry but hamper a restructuring.