Subject. This article explores the relationship between financial development and economic growth. Objectives. The article aims to summarize the results of studies that reveal the statistical properties of the relationship between financial development and economic growth, and test the hypothesis regarding the nonlinear nature of this relationship through empirical research. Methods. For the study, I used analysis, systematization, and the fixed effects model. Results. The article describes the six main mechanisms that cause the effect of nonlinearity of the relationship between finance and growth, and reveals the properties of the nonlinearity of the analyzed relationship in the course of empirical analysis for 43 OECD countries for the period from 1990 to 2019. Conclusions and Relevance. The article concludes that the regulator needs closer control over the loan state and dynamics, and readiness to apply, in appropriate cases, the tactics of slowing down credit expansion. Measures to restore the functionality of financial systems in terms of their role as allocative mechanisms are also important, which follows from the analysis of the sources of nonlinearity of the relationship under consideration. The results of the study can be used by financial regulators when setting targets for the indicators of financial development and formulating policies based on the principle of harmonizing the goals of financial development and economic growth.
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