This paper presents a simple endogenous growth model in which the financial sector improves the efficiency of the savings transformation into investment. The model suggests that multiple endogenous growth paths can exist and the possibility of non-linear relationship between financial...

This paper analyzes the role of financial intermediation in a simple endogenous growth model. The results suggest that multiple endogenous growth paths can exist in connection with various levels of financial development, due to the reciprocal externality between financial and real sectors....