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Non-linearities in the Relationship between Finance and Growth

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Abstract

This paper reviews the empirical literature on the links between ?finance and growth with a special focus on the empirical literature that has shown that the marginal contribution of fi?nancial depth to economic growth becomes negative in countries with large fi?nancial sectors (the too much fi?nance? result). It then assesses the empirical and theoretical validity of recent criticisms to this literature and concludes by discussing avenues for future research aimed at identifying the channels through which a very large ?financial sector can slow down economic growth.

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  • Ugo Panizza, 2017. "Non-linearities in the Relationship between Finance and Growth," IHEID Working Papers 12-2017, Economics Section, The Graduate Institute of International Studies.
    • Handle: RePEc:gii:giihei:heidwp12-2017
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    Cited by:

    1. Arnold, Lutz G. & Zelzner, Sebastian, 2022. "Financial trading versus entrepreneurship: Competition for talent and negative feedback effects," The Quarterly Review of Economics and Finance, Elsevier, vol. 86(C), pages 186-199.
    2. Valérie Revest & Alessandro Sapio, 2019. "Alternative equity markets and firm creation," Post-Print halshs-02169726, HAL.
    3. Katuala, Hénock M., 2021. "Frictions financières et Dynamique macroéconomique : Examen des régularités cycliques," Dynare Working Papers 66, CEPREMAP.
    4. Ketteni, Elena & Kottaridi, Constantina, 2019. "Credit market deregulation and economic growth: Further insights using a marginal integration approach," Journal of Macroeconomics, Elsevier, vol. 62(C).
    5. Valérie Revest & Alessandro Sapio, 2019. "Alternative equity markets and firm creation," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 1083-1118, July.
    6. Mais Sha'ban & Claudia Girardone & Anna Sarkisyan & Thankom Arun, 2023. "On the relationship between financial inclusion and bank performance," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 52(3), November.

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    More about this item

    Keywords

    Financial development; Finance-growth Nexus; Too much finance;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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