The non‐linearity between finance and economic growth: a literature review and evidence from China

Guangdong Xu and Binwei Gui

Asian-Pacific Economic Literature, 2021, vol. 35, issue 1, 3-18

Abstract: The influence of finance on the economy has been shown to be non‐linear. When financial development exceeds the needs of the real sector, an economy will face the challenge of ‘too much finance’, which may generate problems such as rent‐seeking, asset price bubbles, or even financial crises. China seems to have followed the ‘too much finance’ pattern in the most recent decade, during which a fast‐expanding financial sector and a slowly growing economy coexisted. The empirical part of this study supports a non‐linear (S‐shaped) relationship between financial development and GDP per capita; in addition, the two financial development indicators used (total loans and private credit) appear to have opposite effects on economic growth.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/apel.12316

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:apacel:v:35:y:2021:i:1:p:3-18

Ordering information: This journal article can be ordered from
https://ordering.onl ... 7-8411&ref=1467-8411

Access Statistics for this article

Asian-Pacific Economic Literature is currently edited by Yixiao Zhou

More articles in Asian-Pacific Economic Literature from The Crawford School, The Australian National University
Bibliographic data for series maintained by Wiley Content Delivery ().