The evidence points to the fact that there is a threshold beyond which the positive effect of finance on growth starts petering out.3 A BIS paper puts that threshold at 100% to 150% of GDP.4 There are different reasons for this concept of a threshold.
Yet the present value of the total losses of the banks that failed or were taken over made good by other banks or by the State during this decade-and-a-half did not even amount to 1.5 per cent of a single year’s GDP.