The linkage between the real sector and the financial sector is a certainty. The financial sector is a sector where households and firms save their excess money and where they get financing when needed. The financial sector facilitates economic activity in the real sector, and therefore, the existence of the financial sector cannot be separated from the real sector. Meanwhile, for the financial sector, the real sector is the source of its activity. The financial sector facilitates the real sector, and therefore, the development of the financial sector is much affected by the dynamics of the real sector.
There are several forms of linkages between the real sector and the financial sector that we can observe, among others, the presence of procyclicality and decoupling. Procyclicality is a form of linkage where the dynamics of the financial sector follow the dynamics of the real sector. This is certainly understandable considering that the existence of the financial sector is to facilitate the real sector. However, through the financial accelerator mechanism, the financial sector not only facilitates but also pushes further. This can certainly amplify the business cycle. Meanwhile, decoupling is a form of detachment of the financial sector from the real sector. The two sectors run independently; there is no connection between them. In addition to these two forms of linkage, it is also possible to have harmony between the real sector and the financial sector. In this regard, the financial sector moves in line with the real sector and can stabilise it when the real sector experiences an increase or decrease in activity.