This paper argues that the investment–savings imbalances of households and companies play an important role in determining the probability that an economy experiences a credit-less recovery, following a recession. From a flow of funds perspective, imbalances between investment and savings of the private non-financial sector reflect its need for net financing, i.e. financing from sources other than private savings, such as bank credit, equity issuance and bond market financing. Thus, the lower the investment-savings gap, the lower the net financing needs of the private sector, and hence the more likely an economic recovery without bank credit should be. Indeed, drawing on a broad dataset, covering 96 countries and 272 recovery episodes, a substantial share of credit-less recoveries seem to be associated with a low or declining investment-savings gap of the private sector. We use existing theoretical concepts to formalize the hypothesis that such a decline is associated with an increased probability of the subsequent recovery being credit-less. We formally test this hypothesis in a number of alternative specifications and sample sizes and present empirical evidence that credit-less recoveries are indeed associated with both low and declining financing needs of the private sector, as proxied by the investment-savings gap at the trough of the recession and its adjustment during the downturn. We show that this reflects a rebalancing of wealth towards financial assets during the downturn, or, equivalently, a decrease in private sector leverage, which can subsequently be used to finance real investment during the recovery stage, even in the absence of positive bank credit flows. Lastly, we provide empirical evidence that, controlling for the change in investment-savings imbalances, economies whose economic downturn was preceded by a credit boom are more likely to experience a credit-less recovery.