hss-seminar-65

Department of Humanities and Social Sciences

Indian Institute of Technology Ropar

HSS Seminar

‘Finance & Growth: Is There Limit to Finance?"

by

Prof. Kul Luintel

April 26, 2019, Friday, at 11:00 AM

Venue:  Lecture Hall 2.

Abstract

There has been renewed interest in the finance-growth relationship following the Global Financial Crisis of 2008 (GFC). The three decades leading to the GFC has seen the financial sector in the industrialized economies grow at an extraordinarily rapid rate. A growing body of literature reports that the enlarged financial sector has produced several undesirable growth, productivity and distributional effects. One such effect is the ‘growth cost’ of excessive finance (credit), dubbed ‘too much finance’. This strand of literature reports that the relationship between finance and growth is non-monotonic implying a threshold beyond which finance is detrimental to economic growth. Typically, the estimated threshold is a ratio of total credit to the private sector of around 100% of GDP. Given the policy implication of a threshold in finance-growth nexus and the fact that the magnitude of total credit to private sector is much higher than 100% of GDP in most industrialized countries, we rigorously scrutinize this issue by way of replication and extensions. Our scrutiny does not reveal any robust support for the nonmonotonicity or ‘too much finance’ thesis.

About the speaker:

Kul Luintel is Professor of Economics at Cardiff Business School (CARBS). He received his MPhil (1990) and PhD (1993) from Glasgow University. His general research interests are macroeconomics, money and finance. He has published widely in the areas of Financial Development, Financial Structure and Economic Growth; Financial Controls, Economic Growth and the Productivity of Capital; the Dynamics of Innovation and Endogenous Growth; R&D and International Knowledge Diffusion;  Fiscal Solvency; Fiscal Integration in the EU; Real Exchange Rate Behaviour; Exogeneity of Money; Spot and Forward Market Efficiency; Fisher Relationship, and Executive Stock Options. From 2012 to 2015, he was the Head of the Economics Section (Department) and a Member of the Management Board of CARBS.