Mechanism of the Effect of Financialization on Economic Growth from the Perspective of Talent Flow

Since the 1980s, financial sectors began to expand rapidly and have a growing proportion in GDP which is referred as “financialization”. Thus a lot of scholars had studied the relationship between financial development and economic growth. The study first discusses the effect of financial development and financialization on economic growth. And then, the paper discusses the effect of talent inflow in financial industry on economic growth. Finance industry attracts a lot of talents when financial has developed to a certain degree. Meanwhile, financial sectors will occupy relatively excessive talent so that the lack of talent in production industry will hinder the economic growth. The third section first showed the relationship between the talent inflow and financialization. They positively correlated at the beginning and then level off gradually with the increasing of talent inflow. This section also provides an inverted “U” relationship between the increment of talent in financial sectors and economic growth. The last section provides a summary and the shortcoming of the inverted “U” relationship. Moreover, this paper suggests that the government should strengthen financial regulation and limit financial innovation to prevent financial industry from occupying excessive talent.