Countries with larger banking sectors experience greater inequality and slower economic growth, according to a report published by the Organisation for Economic Co-operation and Development (OECD).
A report by the OECD has said that countries that have larger banking sectors have higher levels of inequality and slower rates of growth, with some calling the actions of the financial sector “socially useless”.
Analysis from 50 years in its 34 member countries showed that large financial sectors have the potential to slow down the rate of growth of the economy, while the higher paid workers within the financial sector exacerbate income inequality.
The report said that there can be too much finance that pushes credit to the wrong places, meaning that finance is not used for the most efficient social purposes.
“There can be too much finance. When the financial sector is well developed, as has been the case in OECD economies for some time, further increases in its size usually slow long-term growth”, the report said.
Economists at the Paris-based think-tank launched the report at an event in London on Wednesday, saying that the high financial rewards of the within the sector mean that too many talented people are “sucked in”, instead of doing something else.
Christine Mann, chief economist at the OECD said that larger banks tended to lend too much money because there was the expectation that when things went wrong, governments would bail them out.
The report also said that banks had a habit of pumping excessive credit into households which creates unsustainable bubbles, rather than investing in developing companies that had the potential to stimulate growth.
Mann also called for reforms of pay in the banking and financial sectors, including extending the period by which bonuses could be clawed back from top banking figures.
Image: emdoubleyou0 via Flickr
Trickle-down economics dismissed by IMF economists
Global turmoil or a crude stimulus for the economy?
Merge income tax and NI, says Amol Rajan in the Standard. Why not scrap income taxes altogether?
Richest 1% on track to own more than all the rest by 2016
Like our Facebook Page
How Cities In Canada Are Addressing Climate Change
10 Tax Incentives for Businesses That are Lowering their Carbon Footprint
How to Manage Anxieties About Climate Change
Green Brands Must Understand Their Customers to Market Wisely
Key Necessities for Starting an Eco-Friendly Freelance Business
6 Ways To Overcome Cash Flow Challenges as a Green Business
Going Cashless Lowers Our Carbon Footprint and Has Other Pros and Cons
How to Be as Eco-Friendly as Possible on a Trip to New York
Why Brazed Plate Heat Exchangers Are Eco-Friendly
6 Steps For Making Crypto & Blockchain Eco-Friendly
How To Use Solar Power Sustainably At Home
Building a Career in Green Construction: Tips and Insights
Solar-Powered Security Systems: Protecting Your Home and the Environment
Top 5 Benefits of Workplace Sustainability
The Role of Smart Technology in Managing EV Charging Stations
4 USA Vacation Destinations for an Eco-Friendly Trip
Why Internet Faxing Is A Sustainable Business Move
5 Ways Eco-Friendly Employers Can Boost Efficiency
6 Wastewater Management Tips to Reduce Water Pollution
What to Look for When Choosing an Eco-Friendly Locksmith
- Environment3 months ago
6 Home Improvements You Can Make to Help the Environment
- Environment10 months ago
4 Countries That Have Banned Single-Use Plastic
- Features9 months ago
5 Huge Support Tips for Eco-friendly eCommerce Brands
- Environment7 months ago
How to Ensure Your Home’s Eco-Friendly During Construction?