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Get Too Much Finance? - The Graduate Institute, Geneva

Eshold above which nancial development no longer has a positive e ect on economic growth. We use di erent empirical approaches to show that there can indeed be too much nance. In particular, our results suggest that nance starts having a negative e ect on output growth when credit to the private sector reaches 100% of GDP. We show that our results are consistent with the "vanishing e ect" of nancial development and that they are not driven by output volatility, banking cris.

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