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Finance: Economic Lifeblood or Toxin?

In: The Social Value of the Financial Sector Too Big to Fail or Just Too Big?

Author

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  • Marco Pagano

    (University of Naples Federico II, Italy and EIEF,Italy and CSEF, Italy)

Abstract

The following sections are included:IntroductionA Mixed Record: The LiteratureThe Bright SideThe Dark SideShadow banks and securitizationLow Interest Rates and the Fall in Credit StandardsThe Nonlinear Effect of Financial Development: Some EvidenceNonlinear Effect on Long-Run GrowthNonlinear Effects on Bank Solvency and Systemic StabilityWhy Didn’t Regulation Prevent Financial Hypertrophy?“Sins of Omission:” Neglecting Financial Innovation and Changing Incentives“Sins of Commission:” The Role of PoliticsReferences

Suggested Citation

  • Marco Pagano, 2013. "Finance: Economic Lifeblood or Toxin?," World Scientific Book Chapters, in: Viral V Acharya & Thorsten Beck & Douglas D Evanoff & George G Kaufman & Richard Portes (ed.), The Social Value of the Financial Sector Too Big to Fail or Just Too Big?, chapter 8, pages 109-146, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814520294_0008
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    Cited by:

    1. Emmanuel Carré & Guillaume L’œillet, 2018. "The Literature on the Finance–Growth Nexus in the Aftermath of the Financial Crisis: A Review," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 161-180, March.
    2. Michael A Stemmer, 2017. "Revisiting Finance and Growth in Transition Economies - A Panel Causality Approach," Post-Print halshs-01524462, HAL.
    3. Kristle Romero Cortes, 2014. "Rebuilding after Disaster Strikes: How Local Lenders Aid in the Recovery," Working Papers (Old Series) 1428, Federal Reserve Bank of Cleveland.
    4. Ugo Panizza, 2018. "Nonlinearities in the Relationship Between Finance and Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 44-53, March.
    5. Amaia Altuzarra & Patricia Peinado & Carlos Rodriguez & Felipe Serrano, 2016. "Changes in the relationship between the financial and the real sector and the present financial crisis in the European Union," Working papers wpaper159, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    6. Claessens, Stijn, 2017. "Regulation and structural change in financial systems," CEPR Discussion Papers 11822, C.E.P.R. Discussion Papers.
    7. Maimbo, Samuel Munzele & Melecky, Martin, 2014. "Financial sector policy in practice : benchmarking financial sector strategies around the world," Policy Research Working Paper Series 6746, The World Bank.
    8. Georg Man, 2015. "Bank Competition, Economic Growth, and Nonlinearity: A Nonparametric Approach," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(3), pages 310-324, July.
    9. Emmanuel Carré & Guillaume L’Œillet, 2017. "Une revue de la littérature récente sur le nexus finance-croissance après la crise : apports, limites et pistes de recherche," Revue d'économie financière, Association d'économie financière, vol. 0(3), pages 271-290.
    10. Guangdong Xu & Binwei Gui, 2021. "The non‐linearity between finance and economic growth: a literature review and evidence from China," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(1), pages 3-18, May.
    11. Massimo Coletta & Riccardo De Bonis & Stefano Piermattei, 2019. "Household Debt in OECD Countries: The Role of Supply-Side and Demand-Side Factors," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(3), pages 1185-1217, June.
    12. Marco Pagano & ESRB Advisory Scientific Committee, 2014. "Is Europe Overbanked?," mBank - CASE Seminar Proceedings 132, CASE-Center for Social and Economic Research.
    13. Jean Arcand & Enrico Berkes & Ugo Panizza, 2015. "Too much finance?," Journal of Economic Growth, Springer, vol. 20(2), pages 105-148, June.
    14. Bahadir, Berrak & Valev, Neven, 2017. "Catching up or drifting apart: Convergence of household and business credit in Europe," International Review of Economics & Finance, Elsevier, vol. 47(C), pages 101-114.
    15. Enrico Berkes & Ugo Panizza & Jean Louis Arcand, 2015. "Too Much Finance or Statistical Illusion: A Comment," IHEID Working Papers 12-2015, Economics Section, The Graduate Institute of International Studies.
    16. Ugo Panizza, 2013. "Guest Workers: Financial Development and Economic Growth: Known Knowns, Known Unknowns, and Unknown Unknowns," IHEID Working Papers 13-2013, Economics Section, The Graduate Institute of International Studies.
    17. Samba Mbaye & Ms. Marialuz Moreno Badia & Kyungla Chae, 2018. "Bailing Out the People? When Private Debt Becomes Public," IMF Working Papers 2018/141, International Monetary Fund.
    18. Gould, David M. & Melecky, Martin & Panterov, Georgi, 2016. "Finance, growth and shared prosperity: Beyond credit deepening," Journal of Policy Modeling, Elsevier, vol. 38(4), pages 737-758.
    19. Richard E. Itaman, 2022. "The finance‐growth nexus enigma: Bringing in institutional context and the productiveness debate," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 504-527, April.

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    More about this item

    Keywords

    Depository Institutions; Banks; Too-Big-to-Fail; Financial Innovations;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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