ABSTRACT
An ecologically sustainable growth path has many prerequisites: amongst those would be the construction of a financial system which is itself sustainable and which is consistent with the funding of investment which supports a sustainable growth path. The financial system has often been viewed as something of a driver for economic growth, and as such lower and sustainable growth requires some taming of the financial system. The first part of the chapter discusses the relationships between financialization, growth of the financial sector and growth of economic activity. It is particularly concerned with whether indeed the financial system fosters growth, and whether more recently the relationship between financial growth and economic growth has changed. The second is based on the argument that there is not a general shortage of finance for investment particularly in a slower growth era, and that much more attention should be paid to ensuring that the direction of finance is towards environmentally friendly and ‘green’ investment. It cannot be expected that a financial system will ensure such a direction of finance, and that measures will be needed in terms of regulation and restructuring the financial system to aid the re-direction of finance.
