Banking sector negatively impacts economic growth in frontier markets.
The study looked at how the development of banking and stock markets affects economic growth in different types of markets. They found that in countries with developed stock markets, stock markets have a positive impact on growth. However, in countries with emerging or frontier markets, the impact of credit from banks depends on who is providing it. Overall, the banking sector has a negative impact on growth once the effect of stock markets is considered, but there is no evidence of "too much finance" causing problems.