{
  "title": "Too Much Finance?",
  "publication": "IMF Working Papers, June 1, 2012",
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  "summary": "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.",
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    {
      "heading": "Summary",
      "content": "- This paper examines whether there is a threshold above which financial development no longer has a positive effect on economic growth.\n- Different empirical approaches are used to show that there can indeed be \"too much\" finance.\n- Key quantitative finding: finance starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP.\n- The results are consistent with the \"vanishing effect\" of financial development and are shown not to be driven by:\n  - output volatility,\n  - banking crises,\n  - low institutional quality,\n  - differences in bank regulation and supervision."
    },
    {
      "heading": "Main findings",
      "content": "- Finance has diminishing returns to economic growth and can become harmful beyond a threshold.\n- Identified threshold: credit to the private sector = 100% of GDP.\n- The negative effect on output growth begins at that threshold."
    },
    {
      "heading": "Methodology and robustness",
      "content": "- Multiple empirical approaches are applied to test for a threshold effect.\n- Robustness checks indicate results are not driven by:\n  - output volatility,\n  - banking crises,\n  - low institutional quality,\n  - differences in bank regulation and supervision."
    },
    {
      "heading": "Thematic coverage and keywords",
      "content": "- Subjects: Bank supervision; Banking crises; Credit; Economic sectors; Financial crises; Financial markets; Financial regulation and supervision; Financial sector; Financial sector development; Money.\n- Keywords: Bank supervision; Banking crises; Banks; Credit; credit to the private sector; decreasing returns; dummy variable; economic development; Economic Growth; Finance-growth nexus; Financial development; Financial sector; Financial sector development; mis-specification error; point estimate; positive correlation; Stock Markets; System GMM; WP.\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/too-much-finance-26011\n\n---\n\n Content in this bundle\n\n- Wp12161\n  - Wp12161 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp12161 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/too-much-finance-26011"
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    "Authors: Enrico G Berkes, Ugo Panizza, Jean-Louis Arcand",
    "Published: June 1, 2012",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475504668.001",
    "This paper examines whether there is a threshold above which financial development no longer has a positive effect on economic growth.",
    "Different empirical approaches are used to show that there can indeed be \"too much\" finance.",
    "Key quantitative finding: finance starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP.",
    "The results are consistent with the \"vanishing effect\" of financial development and are shown not to be driven by:",
    "Finance has diminishing returns to economic growth and can become harmful beyond a threshold.",
    "Identified threshold: credit to the private sector = 100% of GDP.",
    "The negative effect on output growth begins at that threshold.",
    "Multiple empirical approaches are applied to test for a threshold effect.",
    "Robustness checks indicate results are not driven by:",
    "Subjects: Bank supervision; Banking crises; Credit; Economic sectors; Financial crises; Financial markets; Financial regulation and supervision; Financial sector; Financial sector development; Money.",
    "Keywords: Bank supervision; Banking crises; Banks; Credit; credit to the private sector; decreasing returns; dummy variable; economic development; Economic Growth; Finance-growth nexus; Financial development; Financial sector; Financial sector development; mis-specification error; point estimate; positive correlation; Stock Markets; System GMM; WP.",
    "**Wp12161**"
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