金融部门评估规划（Financial Sector Assessment）手册：Chapter 2 Indicators of Financial Structure, Development, and Soundness.pdf

Financial Sector Assessment a Handbook bonds,equities,and derivative and structured finance products)should also be covered. uctural overview and types o lance she 2 aggregates financial markets,a description of the ize and growth trends in various al marke instruments (volume and value)would be appropriate.The overview should also reflect new linkages among financial markets and institutions that may be forged from a variety of sources,including innovations in financial instruments,new entrants into financial markets (e.g.,hedge funds),and changing practices among financial market participants (e.g.,energy trading and investments by financial institutions). The o erall size of the system could be ascertained by the value of financial assets both in absolute dollar t nd as a ratio of gross dome product(GDP).Altho identifying the absolut unt of fi ssets is informati king of the sta velopment and allows comparison across countries at different stages of development.Other indica tors of financial size and depth that could be usefully examined include ratios of broad money to GDP(M2 to GDP),private sector credit to GDP(DCP to GDP),'and ratio of bank deposits to GDP (deposits/GDP).However,one should be careful in interpret- ing observed ratios because they are substantially influenced by the state of financial and general economic development in individual countries.Cross-country comparisons of economies at similar stages of development are,therefore,useful in obtaining reliable henchmarks for "low"or" igh" atio The dese of the ypes of financial nte rmediaries and markets is also useful,and this information shou uld be supplemented by info ormation on the relativ composition of the financial system.Even though many countries do have a wide range of non-bank financial intermediaries (NBFIs),banking institutions still tend to dominat overwhelmingly.In advanced markets and in many emerging markets,NBFIs,particularly pension funds or insurance companies,often play a larger part than do banks in domestic and global asset allocation (and,sometimes,in the providing of credit).Similarly,market participants such as hedge funds play an increased role in financial markets and in the per nce of various asset classes.Her ce.for one to geta true view of financial structur seful to fo hanks ancial mark sby using a sof fina s in ent sub e of financial instruments in different ma as numer This type of focus on market shares enables the assessor to get a quick indication of the "effective"structur of the financial system.In addition,the presence of large financial conglomerates-alsc referred to as large and complex financial institutions(LCFIs)-in the domestic marke (either foreign-owned or domestic)would warrant special attention to the scope and scale of their activities,including exposures to other domestic institutions,as well as to intra- group and cross-border exposures,to ascertain their local systemic importance. Evaluating the overal rowth of the financial sysrem and of r major sub-sectors is and valuable info uld he obtair ed by ediarie well a each sector over time,in both nominal and real terms Alth ription trends is informative,it is a critical to ind licate the driving forces behind (a)observed chang es in institutions and their asset positions,and (b)the number of and growth rates of

16 Financial Sector Assessment: A Handbook 1 I H G F E D C B A 12 11 10 9 8 7 6 5 4 3 2 bonds, equities, and derivative and structured finance products) should also be covered. For financial institutions, the structural overview should focus on identifying the number and types of institutions, as well as growth trends of major balance sheet aggregates; for financial markets, a description of the size and growth trends in various financial market instruments (volume and value) would be appropriate. The overview should also reflect new linkages among financial markets and institutions that may be forged from a variety of sources, including innovations in financial instruments, new entrants into financial markets (e.g., hedge funds), and changing practices among financial market participants (e.g., energy trading and investments by financial institutions). The overall size of the system could be ascertained by the value of financial assets, both in absolute dollar terms and as a ratio of gross domestic product (GDP).1 Although identifying the absolute dollar amount of financial assets is informative, normalizing financial assets on GDP facilitates benchmarking of the state of financial development and allows comparison across countries at different stages of development. Other indicators of financial size and depth that could be usefully examined include ratios of broad money to GDP (M2 to GDP),2 private sector credit to GDP (DCP to GDP),3 and ratio of bank deposits to GDP (deposits/GDP). However, one should be careful in interpreting observed ratios because they are substantially influenced by the state of financial and general economic development in individual countries. Cross-country comparisons of economies at similar stages of development are, therefore, useful in obtaining reliable benchmarks for “low” or “high” ratios. The description of the number and types of financial intermediaries and markets is also useful, and this information should be supplemented by information on the relative composition of the financial system. Even though many countries do have a wide range of non-bank financial intermediaries (NBFIs), banking institutions still tend to dominate overwhelmingly. In advanced markets and in many emerging markets, NBFIs, particularly pension funds or insurance companies, often play a larger part than do banks in domestic and global asset allocation (and, sometimes, in the providing of credit). Similarly, market participants such as hedge funds play an increased role in financial markets and in the performance of various asset classes. Hence, for one to get a true view of financial structure, it is useful to focus on the share of various sub-sectors (banks, non-banks, financial markets, etc.) in total financial assets by using assets of financial institutions in different sub-sectors and value of financial instruments in different markets as numerators. This type of focus on market shares enables the assessor to get a quick indication of the “effective” structure of the financial system. In addition, the presence of large financial conglomerates—also referred to as large and complex financial institutions (LCFIs)—in the domestic market (either foreign-owned or domestic) would warrant special attention to the scope and scale of their activities, including exposures to other domestic institutions, as well as to intragroup and cross-border exposures, to ascertain their local systemic importance.4 Evaluating the overall growth of the financial system and of major sub-sectors is important, and valuable information could be obtained by examining changes in the number and types of financial intermediaries, as well as the growth of financial assets in each sector over time, in both nominal and real terms. Although a description of trends is informative, it is also critical to indicate the driving forces behind (a) observed changes in institutions and their asset positions, and (b) the number of and growth rates of

Chapter 2:Indicators of Financial,Development,and Soundness available money and capital market instruments.One factor that has accounted for the observed growth of financial systems in many countries (number of institutions and size of assets)is financial liberalization,especially the softening of entry conditions for banks and other financial institutions and the liberalization of interest rates,which has stimu lated financial markets (especially money markets).In addition,changes in prudential regulation and accounting standards often have provided incentives for developing new ways to manage risks (e.g.asset and liability management for insurance company and sion funds)and hav e led to development of newr isk transfer instruments in capita 2.1.2 Breadth of the Financial System Data on the financial breadth enetration ofen serve as proxies for access of the popu lation to different segments of the financial sector.Well-functioning financial systems should offer a wide range of financial services and products from a diversified set of finan- cial intermediaries and markets.Ideally,there should be a variety of financial instruments that provide alternative rates of return.risk.and maturities to savers.as well as different sources of finance at varying interest rates and maturities.Evaluating the breadth or diver sity of the financial system should,therefore,involve identifying the existing financial institutions.the existi ng markets for financial instruments,and the range the fi pproach osition of sed abov I syste diversification. comparisons between bank and non-bank forms of financial i terme liation are usefu I to nstance,comparisons between banking credit and issues of bonds by the private sector Often,significant savings and financing through non-bank forms are indicators of finan. cial diversity because bank deposits and loans constitute the traditional forms of savings and credit in many countries.It is,therefore,useful to compare the extent of financial intermediation through banks with the amount of intermediation through insurance estment schemes.n oney markets, and capital markets.In particu arious ses of asset holde seholds,n vithin the to al market instruments or mutua assets can provide valu on financial diversi To supplement the overall indicators of diversity,assessors should also focus on sec toral indicators of financial development.For instance,the development of the insurance industry could be measured by examining trends in the ratio of gross insurance premiums to GDP,which could be broken down further into life and non-life premiums.Similarly leasing penetration could be measured by the value of leased assets as a percentage of total domestic investment.Table 2.1 shows a few sub-sectors of the financial system anc uggests relev ors of their size and development The breadth of the fina system also d be an yzed in terms of th existing A dic to this outreach is the anch n rk of th e banking system in particular,the total number of branches and the number of branches per thousand inhabitants.A comparison of the distribution of branches between rural and urban areas or among different provinces could also be useful as an indicator of the outreach of bank- ing outlets

17 Chapter 2: Indicators of Financial Structure, Development, and Soundness 1 I H G F E D C B A 12 11 10 9 8 7 6 5 4 3 2 available money and capital market instruments. One factor that has accounted for the observed growth of financial systems in many countries (number of institutions and size of assets) is financial liberalization, especially the softening of entry conditions for banks and other financial institutions and the liberalization of interest rates, which has stimulated financial markets (especially money markets). In addition, changes in prudential regulation and accounting standards often have provided incentives for developing new ways to manage risks (e.g., asset and liability management for insurance company and pension funds) and have led to development of new risk-transfer instruments in capital markets. 2.1.2 Breadth of the Financial System Data on the financial breadth or penetration often serve as proxies for access of the population to different segments of the financial sector. Well-functioning financial systems should offer a wide range of financial services and products from a diversified set of financial intermediaries and markets. Ideally, there should be a variety of financial instruments that provide alternative rates of return, risk, and maturities to savers, as well as different sources of finance at varying interest rates and maturities. Evaluating the breadth or diversity of the financial system should, therefore, involve identifying the existing financial institutions, the existing markets for financial instruments, and the range of available products and services. The relative composition of the financial system discussed above is a first-cut approach to determining the extent of system diversification. In addition, comparisons between bank and non-bank forms of financial intermediation are useful, for instance, comparisons between banking credit and issues of bonds by the private sector. Often, significant savings and financing through non-bank forms are indicators of financial diversity because bank deposits and loans constitute the traditional forms of savings and credit in many countries. It is, therefore, useful to compare the extent of financial intermediation through banks with the amount of intermediation through insurance, pensions, collective investment schemes, money markets, and capital markets. In particular, the share of various classes of asset holders—specifically, households, non-financial corporations, banks, and NBFIs—within the total capital market instruments or mutual fund assets can provide valuable information on financial diversification. To supplement the overall indicators of diversity, assessors should also focus on sectoral indicators of financial development. For instance, the development of the insurance industry could be measured by examining trends in the ratio of gross insurance premiums to GDP, which could be broken down further into life and non-life premiums. Similarly, leasing penetration could be measured by the value of leased assets as a percentage of total domestic investment. Table 2.1 shows a few sub-sectors of the financial system and suggests relevant indicators of their size and development. The breadth of the financial system also could be analyzed in terms of the outreach of existing financial institutions. A common indicator related to this outreach is the branch network of the banking system, in particular, the total number of branches and the number of branches per thousand inhabitants. A comparison of the distribution of branches between rural and urban areas or among different provinces could also be useful as an indicator of the outreach of banking outlets

18 Financial Sector Assessment: A Handbook 1 I H G F E D C B A 12 11 10 9 8 7 6 5 4 3 2 2.1.3 Competition, Concentration, and Efficiency Competition in the financial system can be defined as the extent to which financial markets are contestable and the extent to which consumers can choose a wide range of financial services from a variety of providers. Competition is often a desirable feature because it normally leads to increased institutional efficiency, lower costs for clients, and improvements in the quality and range of financial services provided. There are numerous measures of competition, including the total number of financial institutions, changes in market share, ease of entry, price of services, and so forth. In addition, the degree of diversity of the financial system could be an indicator of competition or the lack thereof because the emergence of vibrant non-bank intermediaries and capital markets often have been a source of effective competition for banking systems in many countries. All things remaining equal, an increase in the number of financial institutions or an expansion in available financial market instruments will increase competition by expanding the available sources of financial services that consumers can access. Ease of entry into the system could be judged by looking at the regulatory and policy requirements for licensing, for example, the required minimum paid-up capital. Table 2.1. Sectoral Indicators of Financial Development Sub-sector Indicator Banking • Total number of banks • Number of branches and outlets • Number of branches/thousand population • Bank deposits/GDP (%) • Bank assets/total financial assets (%) • Bank assets/GDP (%) Insurance • Number of insurance companies • Gross premiums/GDP (%) • Gross life premiums/GDP (%) • Gross non-life premiums/GDP (%) Pensions • Types of pension plans • Percentage of labor force covered by pensions • Pension fund assets/GDP (%) • Pension fund assets/total financial assets (%) Mortgage • Mortgage assets/total financial assets • Mortgage debt stock/GDP Leasing • Leased assets/total domestic investment Money markets • Types and value of money market instruments • New issues and growth in outstanding value • Number and value of daily (weekly) transactions in the instruments Foreign exchange markets • Volume and value of daily foreign exchange transactions • Adequacy of foreign exchange (reserves in months of imports, as ratio to short-term external debt or to broad money) Capital markets • Number of listed securities (bonds and equities) • Share of households, corporations, banks, and NBFIs in the holdings of securities • Number and value of new issues (bonds and equities) • Market capitalization/GDP (%) • Value traded/market capitalization (%) • Size of derivative markets Colllective investment funds • Types and number of schemes (unique and mixed funds) • Total assets and growth rates (nominal and as percentage of GDP) • Total number of investors and average balance per investor • Share of households, corporations, banks, and NBFIs, in total mutual funds assets

Chapter 2:Indicators of Financial,Development,and Soundness In many cases,the ownership structure of the financial system can be indicative of competition or lack thereof.For instance,banks of different ownership often have dif ferent mandates and clientele,leading to substantial market segmentation.Also,systems dominated by state-owned financial institutions tend to be less competitive than those in 3 which privately owned institutions are very active because state ownership often dampens commercial orientation.In some cases,the shares of domestic-and foreign-owned finan- cial institutions in various financial sub-sectors could be relevant in assessing competition and incentives for financial innovations. Me have been the de gree inancial s biggest institutions in the market (as defined by market shares).For example,the three bank concentration ratio measures the market share of the top three banks in the system defined in terms of assets,deposits,or branches.Deciding what is concentrated and what is not depends a lot on judgment,and benchmarking becomes critical.3 A more sophisti- cated measure of concentration is the Herfindahl Index(HI),which is the sum of squares of the market shares of all firms in a sector.Higher values of the index indicate greater market concentration.When applied to the financial sector,this index uses information about the market share of each bank to obtain a single summary measure.The concept ation also ould be applied tofin al ma k ially by ent marke struments i the t outsta ding value of financial instruments.For exampl the relative shares of oney and market instruments i total financial assets could give an indication of the extent to which financial markets are positioned between short-term and long-term intermediation.Information on holdings of the instruments by types of investors and by number of issuers of different instruments also helps assess market competition. The sustainable development of a financial system and the degree to which it provides support to real sector activities depend to a large extent on the efficiency with which rmediation occurs.Efficienc efers to the ability of the financial sector to provide t at the ompetition and efficie are relat o a la ge exten e more c etitive systems invari bly turn ou to be m efficient (all other gs D ing equal sure of efficiency that could be evaluated include (a)total costs of financial intermediatior as percentage of total assets and (b)interest rate spreads (lending minus deposit rates). Components of intermediation costs include operating costs(staff expenses and other overhead),taxes,loan-loss provisions,net profits,and so forth.Those costs can be derived from the aggregated balance sheet and income statements for financial institu- tions.However,interest rate spreads sometimes remain high despite efficiency gains because of the need to build loan-loss provisions or charge a risk premium on lending to high-risk b capital marke efficiency implies that curren security prices fully ble information.Hence,in an efficient financial market,day- ts of market prices tend to be random,and information on past prices would no help predict future prices.The bid-ask spread (ie.,the difference between prices at which participants are willing to buy and sell financial instruments)is often used as a proxy for measuring the efficiency of markets,with more efficient markets exhibiting narrower 9

19 Chapter 2: Indicators of Financial Structure, Development, and Soundness 1 I H G F E D C B A 12 11 10 9 8 7 6 5 4 3 2 In many cases, the ownership structure of the financial system can be indicative of competition or lack thereof. For instance, banks of different ownership often have different mandates and clientele, leading to substantial market segmentation. Also, systems dominated by state-owned financial institutions tend to be less competitive than those in which privately owned institutions are very active because state ownership often dampens commercial orientation. In some cases, the shares of domestic- and foreign-owned financial institutions in various financial sub-sectors could be relevant in assessing competition and incentives for financial innovations. Measures of concentration often have been used as indicators of competition. Concentration is defined as the degree to which the financial sector is controlled by the biggest institutions in the market (as defined by market shares). For example, the threebank concentration ratio measures the market share of the top three banks in the system, defined in terms of assets, deposits, or branches. Deciding what is concentrated and what is not depends a lot on judgment, and benchmarking becomes critical.5 A more sophisticated measure of concentration is the Herfindahl Index (HI), which is the sum of squares of the market shares of all firms in a sector. Higher values of the index indicate greater market concentration. When applied to the financial sector, this index uses information about the market share of each bank to obtain a single summary measure.6 The concept of concentration also could be applied to financial markets, especially by examining the share of different market instruments in the total outstanding value of financial market instruments. For example, the relative shares of money and capital market instruments in total financial assets could give an indication of the extent to which financial markets are positioned between short-term and long-term intermediation. Information on holdings of the instruments by types of investors and by number of issuers of different instruments also helps assess market competition. The sustainable development of a financial system and the degree to which it provides support to real sector activities depend to a large extent on the efficiency with which intermediation occurs. Efficiency refers to the ability of the financial sector to provide high-quality products and services at the lowest cost. Competition and efficiency of the financial system are related to a large extent because more competitive systems invariably turn out to be more efficient (all other things being equal). Quantitative measures of efficiency that could be evaluated include (a) total costs of financial intermediation as percentage of total assets and (b) interest rate spreads (lending minus deposit rates). Components of intermediation costs include operating costs (staff expenses and other overhead), taxes, loan–loss provisions, net profits, and so forth. Those costs can be derived from the aggregated balance sheet and income statements for financial institutions. However, interest rate spreads sometimes remain high despite efficiency gains because of the need to build loan–loss provisions or charge a risk premium on lending to high-risk borrowers. For money and capital markets, efficiency implies that current security prices fully reflect all available information. Hence, in an efficient financial market, day-to-day movements of market prices tend to be random, and information on past prices would not help predict future prices. The bid–ask spread (i.e., the difference between prices at which participants are willing to buy and sell financial instruments) is often used as a proxy for measuring the efficiency of markets, with more efficient markets exhibiting narrower