This paper investigates the causes of the "vanishing effect of finance" detected in recent studies. The results highlight that the negative effect of the financial system on growth is mainly driven by advanced economies, whereas finance is still beneficial for income increases in developing...

Does the financial sector contribute to economic growth? While most of the studies carried out before the Financial crisis tend to answer the question with “yes”, recent empirical work provides evidence that the opposite is true. We study these new findings in detail, applying GMM and 3SLS...