Introducing a New Broad-based Index of Financial Development
January 12, 2016
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Summary
There is a vast body of literature estimating the impact of financial development on economic growth, inequality, and economic stability. A typical empirical study approximates financial development with either one of two measures of financial depth – the ratio of private credit to GDP or stock market capitalization to GDP. However, these indicators do not take into account the complex multidimensional nature of financial development. The contribution of this paper is to create nine indices that summarize how developed financial institutions and financial markets are in terms of their depth, access, and efficiency. These indices are then aggregated into an overall index of financial development. With the coverage of 183 countries on annual frequency between 1980 and 2013, the database should offer a useful analytical tool for researchers and policy makers.
Subject: Financial institutions, Financial markets, Financial sector development, Market capitalization, Securities, Securities markets, Stock markets
Keywords: a number of indices, efficiency measure, FD Index, FD index vis-à-vis, Financial Development, financial institution access, Financial Institutions and Markets, financial institutions efficiency, financial market access, financial market development, financial market indicator, Financial sector development, GDP, Global, index, market, Market capitalization, return on equity, Securities, Securities markets, Stock markets, WP
Pages:
43
Volume:
2016
DOI:
Issue:
005
Series:
Working Paper No. 2016/005
Stock No:
WPIEA2016005
ISBN:
9781513583709
ISSN:
1018-5941
Notes
The file accompanying this working paper is an updated version of the Financial Development Index that came out with the earlier Staff Discussion Note 15/07, which can be found here. Link to data appendix for this paper.
