Introducing a New Broad-based Index of Financial Development / Katsiaryna Svirydzenka.

Format:

Book

Government document

Author/Creator:

Svirydzenka, Katsiaryna.

Series:

IMF Working Papers; Working Paper ; No. 2016/005

IMF Working Papers

Language:

English

Physical Description:

1 online resource (44 pages)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2016.

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.

Contents:

Cover

Contents

Abstract

I. Introduction

II. Methodology

A. Data sources

B. Treatment of missing data

C. Normalization and treatment of outliers

D. Functional form of the aggregator

E. Weights

F. Putting it all together

III. Landscape of Financial Development

IV. Caveats and Limitations

References

Figures

1. Financial Development Index Pyramid

2. Treatment of Missing Data: Example 1

3. Treatment of Missing Data: Example 2

4. Databank Composition: Raw, Reconstructed, and Missing Data Shares

5. Linear Versus Geometric Aggregation: Hypothetical Example, Equal Weights

6. Linear Versus Geometric Aggregation: 2013 FD Index Ratings

7. Luxembourg Example: Index Ratings for 2013

8. Principal Component Analysis: Normalized Weights

9. World Map of Financial Development, 2013

10. Correlation of FD Index with Traditional Measures: Private Credit to GDP

11. Correlation of FD Index with Traditional Measures: Stock Market Capitalization/GDP

12. Financial Development through Time

13. Financial Development Index: Peer Group Averages

14. Financial Development Index: Selected Countries, 2013

Tables

1. Data Sources

2. Summary Statistics of the Underlying Data

3. Percent of Countries and Years with Data Availability

4. Share of Variance Explained by PCA Components

5. Summary Statistics of the Financial Development Index

Annexes

Annex 1. 2013 Country Rankings on Financial Development

Annex 2. 2013 Country Rankings on Financial Institutions Depth, Access, Efficiency

Annex 3. 2013 Country Rankings on Financial Markets Depth, Access, Efficiency.

Notes:

Description based on publisher supplied metadata and other sources.

ISBN:

9781513530734

1513530739

9781498339407

1498339409

9781498313346

1498313345

OCLC:

935061690