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Reassessing the impact of finance on growth
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Reassessing the impact of finance on growth

Stephen G Cecchetti and Enisse Kharroubi
Policy File
Bank for International Settlements
07/01/2012

Abstract

Bank for International Settlements Banking/Finance International/Economic development
This paper investigates how financial development affects aggregate productivity growth. Based on a sample of developed and emerging economies, we first show that the level of financial development is good only up to a point, after which it becomes a drag on growth. Second, focusing on advanced economies, we show that a fast-growing financial sector is detrimental to aggregate productivity growth.

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