Public Information Notice (PIN) No. 03/71
IMF Executive Board Discusses Financial Soundness Indicators

June 13, 2003

Financial Soundness Indicators
May 14, 2003

Financial Soundness Indicators (FSIs) and the IMF

Compilation Guide on Financial Soundness Indicators
July 30, 2004

Financial Soundness Indicators—Background Paper

Prepared by the Staff of the Monetary and Financial Systems and Statistics Departments

May 14, 2003

Use the free Adobe Acrobat Reader to view the full text of 646kb pdf file.


  1. Using FSIs in Country Surveillance
    1. Overview of the role of FSIs in Country Surveillance
    2. The Choice of FSIs and Coverage of the Financial Sector
    3. Using FSIs to Monitor Risks to Financial Stability
    4. Role of FSIs in Country Surveillance of Macroeconomic Conditions
    5. Conclusion

  2. Availability of Data on Core and Encouraged FSIs
    1. Introduction
    2. Background
    3. Core Indicators
    4. Encouraged Indicators
    5. Conclusions

  3. Insurance FSIs
    1. Introduction
    2. Overview of Insurance
    3. Risks Faced by Insurers and Financial Stability
    4. FSIs for Life Insurers

  4. Financial Soundness Indicators of Sensitivity to Market Risk
    1. Experience with Collecting Market Risk FSIs on FSAP Missions
    2. Net Open Position in Foreign Exchange vs. the Exchange Rate Stress Test
    3. The Duration Gap vs. the Interest Rate Stress Test
    4. Other Market Risk FSIs
    5. Conclusions and Issues Going Forward

  5. Estimating the Linkage Between Corporate Leverage and Asset Quality
    1. Introduction
    2. Model Specification
    3. Relationship Between Corporate and Banking Sector FSIs in the Panel Data Set
    4. Estimation Methodology and Results
    5. Implications for Surveillance

  6. Using Supervisory Information to Interpret FSIs
    1. Motivation
    2. Framework For Using Supervisory Information in the Analysis of FSIs
    3. Concluding Remarks 70
Text Tables
  1. Financial Soundness Indicators: Core and Encouraged Sets
  2. Role of the Core and Corporate Sector FSIs
  3. Survey Response Rates
  4. Overview and Interpretation of FSIs for Life Insurers
  5. Reporting of FSIs on FSAPs, 1999-2003
  6. Reporting of Market Risk FSIs in FSAPs Missions
  7. Dependent Variable: NPLs
  8. BCPs Containing Information Relevant to the Interpretation of FSIs


  1. Framework for Financial Stability Analysis
  2. Availability of Core Financial Soundness Indicators
  3. Distribution of the Number of Core FSIs On Which Data Collected
  4. Availability of Encouraged Financial Soundness Indicators
  5. Distribution of the Number of Encouraged FSIs On Which Data Collected
  6. Correlation Between NPLs/Loans and the Corporate Leverage Ratio
  7. Correlation Between NPLs Less Provision Over Capital and the Corporate Leverage Ratio
  8. Correlation Between Bank Capital/Asset Ratio and Corporate Leverage Ratio
  9. Correlation Between NPLs/Loans and Corporate Earnings (EBITA)/Capital
  10. Correlation Between NPL/Loans and Corporate Earnings (EBIT)/Interest Payments
  11. Correlation Between NPLs Less Provision Over Capital and Corporate Earning/Capital
  12. Correlation Between Capital to Assets and Corporate Earning/Capital
  13. Correlation Between NPLs Less Provision Over Capital and Corporate Earning over Interest Expenses
  1. The Role of Financial Stability Reports in Financial Sector Surveillance
  2. Impact of Differences in Loan Classification System on FSIs
  3. Using BCPs Assessments to Evaluate Bank Equity Figures
  4. Deficiencies Leading to Uncertainties About Bank Capital Ratio Figures
  5. Framework For Using Supervisory Information to Analyze FSIs in the Appendix
  1. Using BCPs Assessments to Interpret FSIs