Monitoring assessingfinancialmarketdevelopmentMotivation RolefinancialmarketforCB RECAP x0000x0000Sonja Juko Deutsche Bundesbank Monitoring and assessing financial market development A bi ID: 836919
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1 Monitoring & assessingfinancialmarketdev
Monitoring & assessingfinancialmarketdevelopmentA bird‘seyeviewSonja Juko, Senior AdvisorforMonetaryPolicyandFinancial Markets, Center forInternational Central Bank DialogueDisclaimer: Views expressedthosetheauthordo not necessarilyrepresenttheviewsDeutsche Bundesbank Monitoring & assessingfinancialmarketdevelopmentMotivation: RolefinancialmarketforCB (RECAP) ��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market dev
2 elopment: A bird's eye view Financial ma
elopment: A bird's eye view Financial markets CB functions(e.g. monetarypolicy, FX reservemanagement, financialstabilityetc.) Data collectionandanalysisfinancialmarketdevelopmentsprovidesbasisforpolicyformulationi.e. decisionsandimplementationi.e. operations Data source Financial marketdevelopmentsmayundermineachievingtheCB policyobjectivesmaycallforpolicymeasures Source risk AppliesfinancialmarketoperationswhichtheCB conductsin thecontextitsmandate Arena
3 foraction Appliesin particularmonetarypo
foraction Appliesin particularmonetarypolicywhichtransmittedthroughvariouschannelsinvolvingfinancialmarkets Venueforpolicytransmission Monitoring & assessingfinancialmarketdevelopmentMotivation: Benefitsfinancialmarkets(RECAP)Achievementgeneraleconomicobjectivesthatarerelevant forCBs) dependon financialmarketdevelopment��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Contribute to effi
4 cient allocation ofeconomicresources Su
cient allocation ofeconomicresources Supporteconomic growth Promotepoverty reduction presentationReflecton themotivationCBs monitorandassessfinancialmarketsandtheirdevelopmentReflecton conceptualapproacheshowfinancialmarketcharacteristicsanddevelopmentscanassessedReflecton stagefinancialmarketdevelopmentLAC countries andidentifybasicissuesin financialmarketdevelopmentindividual countries��Sonja Juko, Deutsche Bundesbank Monitoring and assess
5 ing financial market development: A bird
ing financial market development: A bird's eye view Monitoring & assessingfinancialmarketdevelopmentMotivationForwhatpurposesdo CBs monitorfinancialmarketdevelopmentsWhichfunctionsareasCBs requirea continuousmonitoringandassessmentfinancialmarketdevelopmentsconditionsandwhyWhichfinancialmarketsegmentsareyoumonitoringwithregardsyourtasksat theCB andwhy��Sonja Juko, Deutsche Bundesbank REFLECTION Monitoring and assessing financial market develo
6 pment: A bird's eye view Monetarypolicy
pment: A bird's eye view Monetarypolicy Financial stability/ Macroprudentialpolicy Fiscalagent Foreignreservemanagement Statistics … Monitoring & assessingfinancialmarketdevelopmentMotivation: Dependson CB functionMotivation byCBs monitorandassessfinancialmarketdevelopmentdiffersdependingon function��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Analyse policytransmissionAssessef
7 fectivenessandweaknessespolicyimplementa
fectivenessandweaknessespolicyimplementationIdentifypolicymeasureswhichstrengthenmarketrelatedchannels Monetarypolicy Analyse (systemticrisksfinancialstability(incl. marketfrictionsIdentifyandassessneedformacroprudentialmeasuresmitigaterisksfinancialstabilitycausedbyfinancialmarketdevelopments Financial stability Analyse andassessuniverseassetsforinvestmentsAnalyse risksFX portfolioPrepareassetallocationdecisions FX reservemanagement StatisticsCollectdatam
8 onitordevelopmentsin financialmarketsupd
onitordevelopmentsin financialmarketsupdate reportingrequirementsin orderincorporateimportantchangesin financialmarketsin officialstatistics Other accessthesurveypleaseopen theweblinkbelow https:// sonjajuko9053.survey.fm/assessingfinancialmarket development Link for moderator: https://crowdsignal.com How do you assess the stage of financial market development in your country? Rank your country on a scale from 0 to 1.Note: 0 is lowest possible value, is h
9 ighest possible value��Son
ighest possible value��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view SURVEY Conceptualapproachtofinancialmarketmonitoringcanfinancialmarketsandmarketdevelopmentsmonitored, assessedbenchmarked? Whichaspectsindicators) canshouldmonitoredin orderassessfinancialmarketdevelopments? … in broadterms… withviewdifferent financialmarketfunctions��Sonja Juko, Deutsche Bun
10 desbank REFLECTION Monitoring and assess
desbank REFLECTION Monitoring and assessing financial market development: A bird's eye view ConceptualapproachfinancialmarketmonitoringFinancial sectorassessment: Comprehensiveapproach(World Bank)��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Indicatorsfinancialstructure, developmentandsoundness(Chapter 2) Framework forfinancialstabilityanalysisandassessment(Chapter 3) Assessing fina
11 ncial structure and financial developmen
ncial structure and financial development Evaluating securities markets supervision (Chapter 5) Assessingthelegal infrastructure(Chapter 9) Assessing information and governance infrastructure (Chapter 10) Assessing systemic liquidity infrastructure (Chapter 11) Sequencingfinancialsectorreform(Chapter 12) Data sources for financial sector assessment (Appendix C) ConceptualapproachfinancialmarketmonitoringAspectstomonitorrelatingtonotionmarketfunctionsfuncti
12 oninghighlightedin theliterature… w
oninghighlightedin theliterature… withviewfinancialmarketsin generalwholebroadmeasuresspecificmarketsegmentsnarrowmeasures��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Structure Depthsize Access (inclusion Efficiency Liquidity Soundness stability ConceptualapproachfinancialmarketmonitoringBroadindicatorsSvirydzenkaFinancial development is multidimensionalA wide range of financi
13 al institutions and markets facilitates
al institutions and markets facilitates the provision of financial services Financial markets allow individuals and firms to diversify their savings, and firms can now raise money through stocks, bonds, and wholesale money markets, bypassing traditional bank lendingAn important feature of financial systems (incl. financial markets) is access and efficiencyLarge financial systems incl. financial markets) are of limited use if they are not accessible to a su
14 fficiently large proportion of the popul
fficiently large proportion of the population and firms or inefficientOne needs to look at multiple indicators to measure financial developmentmorecomprehensivelycapturevariousfunctionsSingle indicatorsproxiesforfinancialmarketdevelopmenthaveclearshortcomings��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view ConceptualapproachfinancialmarketmonitoringBroadindicatorsbasedon Cihaket al 201
15 2MotivationProvide empirical shape and s
2MotivationProvide empirical shape and substance to the complex, multifaceted and amorphous concept of the ―functioning of financial systems (i.e. institutions and markets)Characterize and compare financial systems across countries and over timeAssess the relationship between measures of the financial system and key financial sector policiesGuiding questionsHow can one (empirically) characterize financial systems (i.e. institutions and markets)? How can
16 one compare financial systems across cou
one compare financial systems across countries and regions and through time Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view ConceptualapproachfinancialmarketmonitoringBroadindicatorsCihaket al 2012): Matrix indicatorsFour characteristics of financial marketsthe size depth) of financial markets, the degree to which individuals can and do use accessfinancial markets,the efficiencyof financial markets
17 in providing financial services, thestab
in providing financial services, thestabilityof financial markets��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view ConceptualapproachfinancialmarketmonitoringBroadindicatorsCihaket al 2012): Background��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view To approximate the size of stock markets, the most common choice is
18 stockmarket capitalization to GDP. For
stockmarket capitalization to GDP. For bond markets, the mostly commonly used proxy for size is the outstanding volume of debt securities (private and public) to GDPRatio of the size indicators for banks and financial markets can be used to gauge the degree to which a financial system is bankbased or marketbased. Depthsize A wellfunctioning financial system that overcomes market frictions will more effectively provide financial services to a wide range of
19 firms and householdsTo approximate acce
firms and householdsTo approximate access to stock and bond markets, measures of market concentration are used, the idea being that a higher degree of concentration reflects greater difficulties for access for newer or smaller issuers. Access inclusion For financial markets, efficiency measures focus onmeasuring transaction costs Efficiency For financial markets, the most commonly used proxy variable for stability is market volatility Soundness stability
20 Conceptualapproachfinancialmarketmonitor
ConceptualapproachfinancialmarketmonitoringIMF Financial developmentindexSvirydzenkaIndex approximatesfinancialdevelopmentin generalwitha viewbasicfunctionsthatfinancialinstitutionsandmarketsshould) provide��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view ConceptualapproachfinancialmarketmonitoringBroadindicators: Data sourcesfinancialdevelopmentindexSelection focuses on well establishe
21 dkey proxyvariables that cover a suffici
dkey proxyvariables that cover a sufficiently wide range of countries across a sufficiently long time periodFinancial market indicators mainly relate to equity (stock) market which are less relevant for central banks��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Methodologicaldetails Assessingcharacteristicsfinancialmarketdevelopment��Sonja Juko, Deutsche Bundesbank Mon
22 itoring and assessing financial market d
itoring and assessing financial market development: A bird's eye view AssessingcharacteristicsfinancialmarketdevelopmentCorrelationsCihaket al 2012): DepthaccessPositive relationshipbetweenmarketdepthandaccessDepthsizeliquidityfinancialmarketsincreaseswithrisein marketaccess��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view AssessingcharacteristicsfinancialmarketdevelopmentCorrelationsCi
23 haket al 2012): DepthefficiencyPositive
haket al 2012): DepthefficiencyPositive relationshipbetweenmarketdepthandefficiencyDepthsizeliquidityfinancialmarketsincreaseswithrisein marketefficiency��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view AssessingcharacteristicsfinancialmarketdevelopmentCorrelationsCihaket al 2012): Depthstabilityclearrelationshipbetweenmarketdepthandstability��Sonja Juko, Deutsche Bundesba
24 nk Monitoring and assessing financial ma
nk Monitoring and assessing financial market development: A bird's eye view AssessingcharacteristicsfinancialmarketdevelopmentCorrelationsCihaket al 2012): Access efficiencyPositive relationshipbetweenmarketaccessandefficiencyAccess financialmarketsincreaseswithhighermarketefficiency��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view AssessingcharacteristicsfinancialmarketdevelopmentCorre
25 lationsCihaket al 2012): Access stabilit
lationsCihaket al 2012): Access stabilitysignificantrelationshipbetweenmarketaccessandstability��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view AssessingcharacteristicsfinancialmarketdevelopmentCorrelationsCihaket al 2012): Efficiency stabilityWeakyetpositive relationshipbetweenmarketefficiencyandstability��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financia
26 l market development: A bird's eye view
l market development: A bird's eye view Benchmarking financialmarketdevelopmentin LAC countries��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentData sources: Global Financial Development Database (World Bank)Key facts about GFDDDataset of financial system characteristics capturing various aspects of financial markets 214 economies109 indicatorsAnn
27 ual dataTime series: from through for 10
ual dataTime series: from through for 109 indicatorsst update: July Weblink GFDD https ://www.worldbank.org/en/publication/gfdr/data/globalfinancialdevelopmentdatabase ��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentBenchmarking incomegroupCihaket al 2012High incomecountries score higherlevelsforfinancialmarketdepthandefficiencybut not in termsa
28 ccessandstabilityImpliesthatfinancialsta
ccessandstabilityImpliesthatfinancialstabilityandaccessnot guaranteedbyhigherlevelsdepthandefficiency��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view ��IBenchmarking financialmarketsbyincomegroup Benchmarking financialmarketdevelopmentBenchmarking regionCihaket al 2012Financial marketsin LAC score amongthelowestwitha viewaccessandefficiencybut high in termsstability�
29 0;�Sonja Juko, Deutsche Bundesban
0;�Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view��IBenchmarking financialmarketsbyregion Benchmarking financialmarketdevelopmentBenchmarking region(Deng et al 2016)Financial marketin LAC countries arelittledeveloped��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentBench
30 marking region(Deng et al 2016) cont�
marking region(Deng et al 2016) cont��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentGAPAnalysis (Deng et al 2016) Simple crosscountry comparison does not account for differences underlyingmacroeconomicconditionsDeviationsthefinancialdevelopmentindexfroma predictionbasedon economicfundamentalscanhelpidentifyunderoverdevelopmentcomparedcountries wi
31 thsimilarfundamentalsPredictednorms are
thsimilarfundamentalsPredictednorms are computed using the following equation: Gaps are the difference between the actual values of the index and the calculated norms��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentGAPAnalysis (Deng et al 2016): LAC countriesConsistent with previous studies, Deng et al find that shortfalls in market access and eff
32 iciency are commonin LAC��
iciency are commonin LAC��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentGAPAnalysis (Deng et al 2016): LAC countries (cont.) Countries in LAC should explore the causes behind financial development gaps Deeperanalysisallowsidentifygapsin greaterdetailPolicy implicationsGiven that macroeconomic fundamentals are often difficult to change in the shor
33 tterm, policies to alleviate gaps in fin
tterm, policies to alleviate gaps in financial development should be tailored to address countryspecific distortions��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentData sources: Financial developmentindex(IMF)Key factsIndex summarizeshowdevelopedfinancialinstitutionsandfinancialmarketsarein termsdepthsizeliquidityaccessandefficiencyIndex database
34 providesindicesforover180 countries with
providesindicesforover180 countries withannualfrequencyfromonwardsWeblink database http ://data.imf.org/?sk=F8032E80B36C43B1AC26493C5B1CD33B&sId=1481127141475 ��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindexIMF): Financial marketsin Top 20 countries��Sonja Juko, Deutsche Bundesbank Monitoring and assessing
35 financial market development: A bird's e
financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): US & GER US (1982 2017): Veryandhighlyefficientmarkets, after problemswithmarketaccessin earlierstageofmarketdevelopmentGermany (19822017): Market depthandefficiencysignificantlyimprovedmostnotablyfollowingtheintrodcutionoftheeuro��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird'
36 s eye view Benchmarking financialmarketd
s eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): PT & ES Portugal (19822017): Financial marketdevelopmentimprovedsiginificantlySpain (1982 ): Financial marketdevelopmentimprovedsiginificantly��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view accessthesurveypleaseopen theweblinkbelow https:// sonjajuko9053.survey.fm/assessingfinancialmarket development Li
37 nk for moderator: https://crowdsignal.c
nk for moderator: https://crowdsignal.com How do you assess the depth, access and efficiency of financial markets in your country? Rank each characteristic on a scale from 0 to 1. Note: 0 is lowest possible value, is highest possible value��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view SURVEY Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): MapFinancial marketd
38 evelopmentappearsquiteheterogeneousin LA
evelopmentappearsquiteheterogeneousin LAC countries��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): LAC countries��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): LAC countr
39 ies Market depth��Sonja Ju
ies Market depth��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): LAC countries Market access��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): LAC countries Market efficiency
40 ��Sonja Juko, Deutsche Bun
��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): Institutionsmarketsin LAC Bahamas (1982 2017):evels ofmarketdepthandefficiencyremainextremelylowaccessdeclinedBarbados (1982 2017): Small improvementdue increasedmarketdepth��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market deve
41 lopment: A bird's eye view Benchmarking
lopment: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): Institutionsmarketsin LAC Brazil(19822017): Significantincreaseacrossall dimensions. Market efficiencyhasreachedhigh levelChile (19822017): Market depthandaccessincreasedsubstantially��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developm
42 entindex(IMF): Institutionsmarketsin LAC
entindex(IMF): Institutionsmarketsin LAC Colombia(19822017): Market depthandaccessincreasedvisiblyefficiencystaysweakDominianRepublic(19822017): Market depthaccessandefficiencyremainalmostunchangedat extremelylowlevels��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): Institutionsmarketsin LAC cont Guatemala (1982201
43 7): Market depthaccessandefficiencyremai
7): Market depthaccessandefficiencyremainalmostunchangedat lowlevelsHonduras (19822017): Market depthincreasedsomewhataccessandefficiencyremainunchangedat extremelylowlevels��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): Institutionsmarketsin LAC cont Jamaica (19822017): Market depthincreasedvisiblyaccessandeffici
44 encyremainunchangedat lowlevelsMexico: (
encyremainunchangedat lowlevelsMexico: (19822017): Market depthandaccessincreasedsubstantially��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): Institutionsmarketsin LAC cont Nicaragua (19822017): Market depthaccessandefficiencyremainalmostunchangedat extremelylowlevelsTrinidad (19822017): Market depthhasimprovedbut
45 accessandefficiencystayveryweak�
accessandefficiencystayveryweak��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): Institutionsmarketsin LAC Argentina(1982 2017): HighlyunstabledevelopmentaccessoverallimprovedwhileefficiencydeclinedPeru (1982 ):clearimprovementdepthandaccessimprovedwhileefficiencydeclined��Sonja Juko, Deutsche Bundesb
46 ank Monitoring and assessing financial m
ank Monitoring and assessing financial market development: A bird's eye view WherelookformorecountryspecificinsightsFinancial sectorassessmentprogram(FSAP)The Financial Sector Assessment Program (FSAP) provides a comprehensive and indepth analysis of a country’s financial sectorFSAP assessments are joint responsibilityof IMF and World Bank in developing economies and emerging markets and of the IMF alone in advanced economiesFinancial stability assess
47 ment, which is the responsibility of the
ment, which is the responsibility of the IMFFinancial development assessment, the responsibility of the World BankGoalof FSAP assessmentsis twofold: to gauge the stability and soundness of the financial sector and to assess its potential contribution to growth and developmentAssess development aspects: FSAPs examine institutions, markets, infrastructure, and inclusiveness; the quality of the legal framework and of payments and settlements systems; obstacle
48 s to competitiveness and efficiency; pro
s to competitiveness and efficiency; progress in financial inclusion; and access to retail payment digital technologyExamine the financial sector’s contribution to economic growth and developmentIssues related to the deepening of domestic capital markets are particularly important in developing and lowincome countries��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Benchmarking fi
49 nancialmarketdevelopmentSummary evidence
nancialmarketdevelopmentSummary evidence from LACIn LAC countries, average financial market development measured with a view to depth, access and efficiency is well below levels reached in advanced economies and has little improved over timeBehind regional averages are differences among individual countries and with respect to the different dimensions of market developmentAs regards financial market development over time: Improvements most notable in BRA,
50 , MEXAs regards specific characteristics
, MEXAs regards specific characteristics of financial market development: Access and efficiency score generally lower than depthFinancial market development improved in some countries during specific periods (in particular 1980s1990s)��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Key takeawaysIn light theirmandateobjectives) andrelatedfunctions, CBs havea particularinterestin monitor
51 ingandassessingfinancialmarketdevelopmen
ingandassessingfinancialmarketdevelopmentsBroadanalyticalapproachesmonitorandassessfinancialmarketdevelopmentcapturedifferent aspectsfunctioningmarketsDepthaccessandefficiencyBasedon broadmeasures, financialmarketdevelopmentin mostLAC countries standsat lowlevelsleavingamplescopeforimprovementin particularwitha viewmarketaccessandefficiencyQuestionWhatcancountries do encouragefinancialmarketdevelopment��Sonja Juko, Deutsche Bundesbank Monito
52 ring and assessing financial market deve
ring and assessing financial market development: A bird's eye view ReferencesCihaket al (2012): Benchmarking financialsystemsaroundWorld, The World Bank Policy Research Working Paper 6175. http:// documents.worldbank.org/curated/en/868131468326381955/Benchmarkingfinancialsystemsaroundworld Heng, Dynaet . (2016): AdvancingFinancial Development in LatinAmericaandCaribbean, IMF Working Paper WP/16/81, https:// www.imf.org/en/Publications/WP/Issues/2016/12/3
53 1/AdvancingFinancialDevelopmentLatin Ame
1/AdvancingFinancialDevelopmentLatin AmericaandtheCaribbean Sahay, Ratnaet. al. (2015): RethinkingfinancialdeepeningStabilityandGrowth in Emerging Markets, IMF StaffDiscussionNote, SDN/15/08 https://www.imf.org/en/Publications/StaffDiscussion Notes/Issues/2016/12/31/RethinkingFinancialDeepeningStabilityandGrowthEmergingMarkets Svirydzenka, Katsiaryna(2016): Introducing a New Broadbased Index of Financial Development, IMF Working Paper 16/5 https ://www.i
54 mf.org/en/Publications/WP/Issues/2016/12
mf.org/en/Publications/WP/Issues/2016/12/31/IntroducingNewBroadbasedIndexFinancial Development The World Bank (2005): Financial SectorAssessment A Handbook http ://documents.worldbank.org/curated/en/306701468337879923/Financialsectorassessmenthandbook ��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Contact: sonja.juko@bundesbank.de ��Sonja Juko, Deutsche Bundesbank Mon
55 itoring and assessing financial market d
itoring and assessing financial market development: A bird's eye view ConceptualapproachfinancialmarketmonitoringFinancial developmentindex: MethodologicaldetailsThe financial development index is constructed using a standard threestep approach found in the literature on reducing multidimensional data into one summary indexnormalization of variablesaggregation of normalized variables into the subindices representing a particular functional dimensioniii) ag
56 gregation of the subindices into the fin
gregation of the subindices into the final indexThe procedure follows the OECD Handbook on Constructing Composite Indicators (OECD, ��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market development: A bird's eye view Back Benchmarking financialmarketdevelopmentFinancial developmentindex(IMF): LAC countries Index components��Sonja Juko, Deutsche Bundesbank Monitoring and assessing financial market developmen