Enhancing Financial Sector Surveillance in Low-Income Countries - Case Studies

Policy Papers, April 16, 2012

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This supplement presents ten case studies that highlight the roles of targeted policies to facilitate sustainable financial deepening in a variety of country circumstances, reflecting historical experiences that parallel a range of markets in LICs.
The case studies were selected to broadly capture efforts by countries to increase reach (e.g., financial inclusion), depth (e.g., financial intermediation), and breadth of financial systems (e.g., capital market, cross-border development).
The analysis in the case studies highlights the importance of a balanced approach to financial deepening.
A stable macroeconomic environment is described as vital to instill consumer, institutional, and investor confidence necessary to encourage financial market activity.
Targeted public policy initiatives (e.g., collateral, payment systems development) can remove impediments and create infrastructure for improved market operations, while ensuring appropriate oversight and regulation of financial markets to address potential sources of instability and market failures.
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Ten case studies illustrate how targeted policies can facilitate sustainable financial deepening across diverse LIC market circumstances.
Financial deepening requires attention to three dimensions: reach (financial inclusion), depth (financial intermediation), and breadth (capital markets and cross-border development).
Macroeconomic stability is essential to build confidence among consumers, institutions, and investors and to support market activity.
Infrastructure measures such as collateral frameworks and payment systems development are important enablers of improved market operations.
Oversight and regulation are necessary complements to policy and infrastructure measures to mitigate instability and market failures.

Maintain a stable macroeconomic environment to support confidence and market participation.
Implement targeted public policy initiatives to remove impediments and build infrastructure for market operations; examples cited include:
- Collateral frameworks.
- Payment systems development.
Ensure appropriate oversight and regulation of financial markets to address potential sources of instability and market failures.

Case studies were chosen to reflect a range of historical experiences and market conditions relevant to low-income countries (LICs).
Emphasis placed on capturing efforts to expand:
- Reach: financial inclusion.
- Depth: financial intermediation.
- Breadth: capital market and cross-border development.

Publication title: Enhancing Financial Sector Surveillance in Low-Income Countries - Case Studies
Publication date: April 16, 2012
Subjects listed: Cross country analysis, Financial sector, Financial systems, Kenya, Low-income developing countries, Mexico, Nepal, Philippines, Surveillance, Turkey, Uganda, Uruguay

International Monetary Fund — Enhancing Financial Sector Surveillance in Low-Income Countries - Case Studies (April 16, 2012)