Mature financial markets with ample liquid assets to lubricate the wheels of commerce are good for growth. This, incidentally, is most likely one of the reasons why high inflation hurts growth: inflation induces flight from money and thus deprives the economic system of necessary lubrication. See my paper "Does inflation matter for growth?" with Tryggvi Thor Herbertsson. However, unlike the correlations shown in this series of pictures of growth, the inverse relationship between inflation and growth across countries is not visible to the naked eye. For more on the relationship between financial depth and growth, see my recent paper "Natural resources and economic growth: The role of investment" with Gylfi Zoega and the associated slide show. That paper contains references to the recent literature on financial development and growth.
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