Finance can be beneficial for growth, but it can also contribute to financial crises, which are often very damaging for growth. An extensive review of the literature suggests that financial development has a positive impact on economic growth at adequate levels of financial depth but that the effect vanishes, or even becomes negative, when finance becomes excessive. Excessive finance can incubate economic booms and asset price bubbles that end in financial crises, followed by low rates of economic growth for sustained periods. Too little finance is not desirable—but too much is not desirable either.

Does finance accelerate or retard growth? Theory and evidence

CARLETTI, ELENA;
2014

Abstract

Finance can be beneficial for growth, but it can also contribute to financial crises, which are often very damaging for growth. An extensive review of the literature suggests that financial development has a positive impact on economic growth at adequate levels of financial depth but that the effect vanishes, or even becomes negative, when finance becomes excessive. Excessive finance can incubate economic booms and asset price bubbles that end in financial crises, followed by low rates of economic growth for sustained periods. Too little finance is not desirable—but too much is not desirable either.
2014
9780198723455
Allen, Franklin; Behrman, Jere R.; Birdsall, Nancy; Fardoust, Shahrokh; Rodrik, Dani; Steer, Andrew; Subramanian, Arvind
Towards a better global economy : policy implications for citizens worldwide in the twenty-first century
Allen, Franklin; Carletti, Elena; Qian, Jun QJ; Valenzuela, Patricio
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3986758
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