The optimal size and role of the financial sector  The debate on the relationship between financial markets and the real economy habitually occupies the intellectual space that exists between Joseph Schumpeter’s insights into the ability of well-developed financial systems to stimulate economic growth, and Joan Robinson’s observation that “where enterprise leads, finance follows”.
1 The experience of recent decades from emerging as well as industrialised countries has mostly confirmed the first claim, namely, that deeper financial markets improve economic efficiency, lead to a better allocation of productive capital, and increase long-term economic growth.