As regards the futility of excessive risk taking, as Andrew Haldane puts it, “If risk-making were a valueadding activity, Russian roulette players would contribute disproportionately to global welfare.” 7. Even post crisis, it is agreed by all that a well developed financial sector plays a critical role in economic development.
An efficient financial sector enables the individuals to smoothen their consumption through the life cycle and deal with uncertainties. It also pools resources and directs them to socially productive projects. A poorly developed financial sector on the other hand would greatly reduce welfare. But it certainly does not mean that social and economic welfare is a monotonically increasing function of the financial sector growth.