Financial sector bargaining power, aggregate growth and systemic risk

  • Emanuele CiolaEmail author
Regular Article


Recent decades have seen a substantial increase in the size and influence of the financial industry in advanced economies. Mainstream theory states that the financial sector can increase the efficiency and stability of the real economy by reducing informational asymmetries and transaction costs. Nevertheless, the rise of the financial industry has been accompanied by lower aggregate growth, increased inequality and declining financial stability. With this in mind, the main aim of the present article is to provide a different perspective on the rise of finance in developed countries, by focusing on the impact of financial markets on aggregate growth and economic (in)stability. Specifically, we analyse the role of the bargaining power of financial intermediaries in promoting (or reducing) the entrance of new enterprises in the market and find that the financial sector is essential for the good functioning of the real economy, but that an overdeveloped financial industry can reduce the incentive for new firms to start production, resulting in a negative impact on aggregate growth and economic stability.


Financial development Entrepreneurship Firm financing Growth Systemic risk 

JEL Classification

E44 G32 O43 



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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Economics and Social SciencesUniversità Politecnica delle MarcheAnconaItaly
  2. 2.Economics DepartmentUniversitat Jaume ICastellón de la PlanaSpain

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