Facts  After discussing the negative consequences on financial stability and economic growth that a “too large” financial sector can generate, in this section I will analyse available evidence to show that the financial industry as a whole has grown to a sub-optimal size.
While illustrating this point, it is important to keep in mind the difference between a beneficial long-term trend of gradual deepening of financial markets and the sizeable cyclical deviations towards “too large” that were at the root of the recent crisis. Let us look first at one development within the long-term trend.