Financial depth affects how stable a country's economy is. When financial systems are deep, they can reduce the ups and downs in economic growth. However, if the financial system is too deep, it can actually make consumption and investment more unstable. Deeper financial systems can also help cushion the impact of external shocks on the economy, especially in countries that are very open to trade and finance. Developing countries could benefit from further deepening their financial systems to make their economies more stable.