Financial and Monetary Systems

Financial development can actually hinder growth at a certain point

The September 17 and 18 curves are seen on the board at the Australian Securities Exchange (ASX) in Sydney September 18, 2008. Australian shares extended their losses to 4 percent in afternoon trade on Thursday, as investors continued to dump financial stocks on concerns about who could be the next victim of the global credit crisis. REUTERS/Daniel Munoz (AUSTRALIA) - RTR220CR

Recent research suggests a point beyond which the benefits of financial development diminish, and further development can even hurt growth. Image: REUTERS/Daniel Munoz

Eilyn Lee Yin Chong
Graduate student, Woodrow Wilson School of Public and International Affairs, Princeton University
Ashoka Mody
Visiting Professor in International Economic Policy, Woodrow Wilson School, Princeton University.
Francisco Varela Sandoval
Graduate student, Woodrow Wilson School of Public and International Affairs, Princeton University
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Non-linear relationship
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Financial and Monetary SystemsEconomic Progress
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