Italy must improve its capital markets to help underperforming companies access funding for investment and growth, while giving investors means for more diversified savings portfolios, the OECD said on Friday.

In a review of the capital markets of the eurozone's third-largest economy, the Organisation for Economic Co-operation and Development said Italian companies were deprived of needed funding for long-term projects and planning, and would not be able to grow to fend off global competition without stronger capital markets. Italy's citizens would benefit from more options in the market for their savings, the Paris-based group made up of the world's wealthiest countries said in its new report, "Creating Growth Opportunities for Italian Companies and Savers."

The peninsula's capital market is less developed than many of its European peers, and the country's sluggish economy is held back by a disproportionately low number of large productive companies and a large number of small companies with low productivity, the group said.

But with more developed capital markets, companies would be able to access financing to invest and reach critical scale, the OECD said. During a presentation of the report, Economy Minister Roberto Gualtieri said Italy needed to be more "ambitious" in its ongoing reforms. The country is trying to speed up its slow judicial system and make state bureaucracy more efficient. "Italians are very good savers but not such good investors," with low participation rates, Gualtieri said. "The overall wealth left in savings accounts could be potentially invested more in capital markets."

European Commission Executive Vice President Valdis Dombrovskis said Italian companies' overreliance on bank credit for funding was risky, and more diversification in funding sources "could protect from shocks in Italy's banking sector."

The OECD recommended that Italy encourage and promote new listings on the regulated market, enhance the role of regulators, and strengthen the institutional framework, while putting into place mechanisms to encourage the participation of individual and institutional investors, such as pension funds.