This article explores the relationship between financial development and growth in manufacturing and service sectors in 77 developing economies over the period 1984–2013. Specifically, we examine whether the size of the financial sector matters and if it does, whether the size of the financial sector in these countries is of a sufficient scale for credit and liquidity expansion to benefit the economy. Using the two-step system generalized method of moments, we find a u-shaped relationship between either manufacturing or services growth and financial size, indicating that a critical level of financial scale has to be achieved for financial expansion to positively affect the growth. For some 50%–90 per cent of the economies in the sample, there is a robustly long-run adverse effect of financial expansion on both manufacturing and services growth, indicating a case of ‘too little’ finance, likely explained by a combination of weak institutions, market failures and the existence of large and lumpy investments that require sufficient financial scale.

中文翻译：

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发展中经济体的制造业和服务业增长：融资“太少”？

本文探讨了 77 个发展中经济体在 1984 年至 2013 年期间金融发展与制造业和服务业增长之间的关系。具体而言，我们研究金融部门的规模是否重要，如果重要，那么这些国家的金融部门规模是否足以使信贷和流动性扩张有利于经济。使用两步系统广义矩方法，我们发现制造业或服务业增长与金融规模之间存在 U 型关系，表明金融规模必须达到临界水平，金融扩张才能对增长产生积极影响。对于样本中约 50% 至 90% 的经济体，金融扩张对制造业和服务业增长都存在强劲的长期不利影响，