Recent evidence reveals that there is indeed such a thing as too much finance. 7 Financial depth starts having a negative effect on output growth once credit to the private sector reaches 100 per cent of GDP. Most advanced countries exceeded this level prior to the financial crisis – and continue to do so.
This has a consequence which is not at all new but can blow up into something dramatic: business models not only have to be revised and updated, but sometimes have to be taken back to the drawing board. And they have to be capable of being constantly retooled. Transformation impacts on us as well, in our function as supervisors.