International evidence on the financial kuznets curve

The results presented in this study provide cross-sectional evidence on the “financial Kuznets curve”, which is the financial counterpart of the environmental Kuznets curve. It is a representation of the “finance curse”, providing a warning signal against over-dependence on the financial sector. By measuring the degree of financialisation in terms of the ratio of publicly-traded shares to GDP, the results show an inverted U-shaped curve between the GDP growth rate and financialisation. The negative effect of financialisation on growth materialises much more quickly in high growth countries.