Too much finance?

This paper examines whether there is a threshold above which financial depth no longer has a positive effect on economic growth. We use different empirical approaches to show that financial depth starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP. Our results are consistent with the “vanishing effect” of financial depth and that they are not driven by endogeneity, output volatility, banking crises, low institutional quality, or by differences in bank regulation and supervision.


Publication year:
2015
In:
In: Journal of Economic Growth 20, no 2(2015), p. 105-148

Note: The status of this file is: restricted


 Record created 2015-10-05, last modified 2018-01-28

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