Hsu, Sara and Li, Jianjun (2012): “Ideal” financial development and financial overaccumulation.
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In this paper, we examine whether there is an “ideal” level of financial development, somewhere between financial capital overaccumulation and financial capital underaccumulation. We construct indexes of non-bank or speculative financial development, financial (bank) deepening, and production. We find that financial deepening does support what we dub the “speculative spread,” that is, the difference between non-bank or speculative finance and real production. As financial deepening grows, the speculative spread may grow in step. Where the speculative spread exceeds deepening, financial instability may occur. Hence financial deepening may promote or constrain economic development.
|Item Type:||MPRA Paper|
|Original Title:||“Ideal” financial development and financial overaccumulation|
|Keywords:||financial deepening, economic growth, profit rate, overaccumulation|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
G - Financial Economics > G0 - General > G01 - Financial Crises
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C60 - General
|Depositing User:||Sara Hsu|
|Date Deposited:||11. Apr 2012 14:54|
|Last Modified:||18. Feb 2013 19:40|
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