Financial Soundness Indicators: Analytical Aspects and Country Practices

Occasional Papers, April 8, 2002

Source details

Canonical URL: Financial Soundness Indicators: Analytical Aspects and Country Practices

Publication date: April 8, 2002
Paper examines the development of measures of financial sector soundness and methods to analyze them in light of financial turmoil of the late 1990s and more recent episodes of instability.
Authors propose two sets of financial soundness indicators considered useful for:
- periodic monitoring; and
- compilation and dissemination efforts by national authorities.
Highlights substantial advances in measuring and analyzing financial soundness indicators and specifies areas where more work is needed.

The late 1990s financial turmoil and subsequent instability episodes underline the importance of continuous monitoring of financial systems as a tool for preventing crises.
Two sets of financial soundness indicators are proposed as useful frameworks for monitoring and for national compilation and dissemination.
Substantial progress has been made in recent years in the measurement and analysis of financial soundness indicators.
Remaining gaps and areas requiring further methodological and data work are identified (areas not enumerated in the source summary).