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Financialisation risks and economic performance

 

Notice

Type:   Working paper
 
Titre:   Financialisation risks and economic performance
 
Auteur(s):   Creel, Jérôme (1971-...) - Observatoire français des conjonctures économiques (Auteur)
Hubert, Paul (1983-...) - Observatoire français des conjonctures économiques (Auteur)
Labondance, Fabien - Observatoire français des conjonctures économiques (Auteur)
 
Date de publication:   2017-10
 
Éditeur:   Pairs
 
Collection:   OFCE Working paper  :  21
 
Mots-clés:   [en] Private credit, Banking sector fragility, Non performing loans, Bank crisis
 
Résumé:   [en] Drawing on European Union data, this paper assesses the long-standing mainstream view that financialisation improves growth. We measure financialisation with private credit to GDP and capture characteristics of banking sector fragility with the ratio of credit to deposits and the ratio of bank capital to assets. We test the impact of these variables on four measures of economic performance: the growth rates of GDP per capita, consumption per capita, investment and inequality. We observe that credit has no effect on economic performance. However, the potential riskiness of the banking sector measured by the ratio of credit to deposits decreases GDP per capita and contributes to increasing inequality whereas the ratio of capital to assets has a negative impact on GDP per capita growth through its negative effect on investment. This effect is driven by countries with low GDP per capita. We also find that the potential side effects of excessive financialisation have a negative effect on growth.
 
URL:   https://www.ofce.sciences-po.fr/pdf/dtravail/WP2017-22.pdf
 
 

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Version de l'auteur wp2017-21-financialisationrisks-jcreel.pdf 1,52 MB