An increasing number of nonfinancial firms have discovered that raising funds in the commercial paper market is cheaper than borrowing funds from a bank. Indeed, between 1975 and 1986, banking's share of short-term borrowings by large manufacturing firms fell from 48 percent to 27 percent. Most of this loss in market share can be attributed to the growing importance of commercial paper. Since 1981, banking's share of total borrowings by these corporations has also been under pressure.
In the second quarter of 1987, Eastman Kodak had $529 million of commercial paper outstanding to fund its day-to-day operations. Five or ten years ago, Kodak would have turned to one of the dozen or so money center banks for this sort of funding. Such a change in Kodak's financing patterns is part of a broader trend in the nation's financial markets.