Too Much Finance?

WPIEA2012161 Image
Price:  $18.00

Author/Editor: Jean-Louis Arcand, Enrico Berkes, Ugo Panizza
Release Date: © June, 2012
ISBN : 978-1-47550-466-8
Stock #: WPIEA2012161
Stock Status: On back-order

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This paper examines whether there is a threshold above which financial development no longer has a positive effect on economic growth. We use different empirical approaches to show that there can indeed be "too much" finance. In particular, our results suggest that finance starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP. We show that our results are consistent with the "vanishing effect" of financial development and that they are not driven by output volatility, banking crises, low institutional quality, or by differences in bank regulation and supervision.

More publications in this series: Working Papers

More publications by: Jean-Louis Arcand ; Enrico Berkes ; Ugo Panizza