Publication: Financial Sector Assessment : A Handbook
Loading...
An error occurred retrieving the object's statistics
Published
2005
ISSN
Date
2012-06-06
Author(s)
World Bank
International Monetary Fund
Editor(s)
Abstract
The experience of many countries around the world clearly shows that while financial sector development can spur economic growth, financial fragility and instability can seriously harm growth. Following the financial crises of the late 1990s, there has been increasing interest in the systematic assessment of the strengths and weaknesses of financial systems, with the ultimate goal of formulating appropriate policies to foster financial stability, and stimulate financial sector development. Consequently, there has been an increased demand from financial sector authorities in many countries, as well as from the Bank and International Monetary Fund (IMF) staff for information on key issues, and sound practices in the assessment of financial systems, and in the design of policy responses. This Handbook of Financial Sector Assessment is a response to this demand. The Handbook presents an overall analytical framework for assessing financial system stability and developmental needs, providing broad guidance on approaches, methodologies, and techniques of assessing financial systems. Although the Handbook draws substantially on Bank and IMF experience with the financial sector assessment programs (FSAPs), and from the broader policy and operational work in both institutions, it is designed for generic use in financial sector assessments, whether conducted by country authorities themselves, or by Bank and IMF teams. It is, therefore, hoped the Handbook will serve as an authoritative source on the objectives, analytical framework, and methodologies of financial sector assessments, as well as a comprehensive reference book for training on the techniques of such assessments.
Link to Data Set
Citation
“World Bank; International Monetary Fund. 2005. Financial Sector Assessment : A Handbook. © World Bank. http://hdl.handle.net/10986/7259 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Lithuania : Financial Sector Assessment(Washington, DC, 2002-06)A joint International Monetary Fund (IMF)-World Bank Financial Sector Assessment Program (FSAP) mission visited Lithuania during November 4-15, 2001 to undertake an assessment of the financial sector. The principal objective of the mission was to assist the authorities in identifying potential vulnerabilities in the Lithuanian financial system and obstacles to its future development. Financial activity is likely to grow markedly in years to come, but a large share of the intermediation of saving and investment will not take place locally, but will instead involve a specific pattern of domestic and cross-border financial activity. Institutions in the Lithuanian financial system comprise banks, leasing companies, insurance companies, and securities firms. The insurance sector is small but likely to develop significantly in the years ahead. The payment system handles only a limited number of transactions and has shown itself to be robust in previous periods of stress. The Lithuanian financial system is likely to undergo significant further development and change, driven mainly by stepped-up domestic financial system reform and the increasing integration among financial markets in Lithuania and other countries in Europe. Lithuania appears committed to fighting money laundering and terrorist finance. Controls on money laundering in the insurance and securities sectors fall well short of those in the banking sector.Publication Financial Sector Assessment Update : Albania(World Bank, Washington, DC, 2014-02)Although the Albanian financial system withstood the shocks of 2008 global crisis relatively well, it continues to operate in highly uncertain macroeconomic environment, which triggers increased vulnerabilities in the system. The decline in profitability, growing non-performing loans (NPLs), substantial level of euroization, continued deleveraging of foreign bank subsidiaries and significant investments in government bonds in the absence of active secondary market are the main challenges that banking system faces. Given strong trade and financial links with euro area, the financial system and real sector in general are increasingly vulnerable to external shocks as well. Since 2007 the Bank of Albania (BoA) has introduced several macro-prudential measures to safeguard financial stability in the country. Higher risk weights and stricter loan-to-value and debt-to-income ratios were placed on banks surpassing twin limits on the rate of credit growth and NPL levels. A second set of macro-prudential policies was put in place in late 2011 to limit contagion risks and international spillovers: (i) foreign bank branches were converted into subsidiaries; (ii) liquidity regulations were tightened; and (iii) the regulation on related-party exposure was enhanced. In addition to that, the risk weights for unhedged borrowers were increased to 150 percent and a limit of such loans was set to 400 percent of capital. Overall, financial reporting legislation in Albania has improved recently and has a high degree of alignment with the acquis communautaire of the European Union (EU).Publication Sri Lanka - Financial Sector Assessment(Washington, DC, 2008-01)This Financial Sector Assessment (FSA) is based on the work of the joint World Bank and IMF Financial Sector Assessment Program (FSAP) update team that visited Sri Lanka between June 20 and July 3, 2007. The principal objectives of the FSAP Update were to: (i) assess developments in the financial sector and progress in strengthening financial sector regulation since 2002; and (ii) identify measures that would contribute to consolidation of financial stability and to further development of the financial sector over the next five years. This report describes the main findings of the 2007 FSAP update addressing bank and non bank financial institutions, state bank restructuring, pension funds, insurance, capital markets, supervisory framework, access to finance, and legal and judicial reforms. This report summarizes the recommendations for sustaining financial development.Publication Financial Sector Assessment : Sri Lanka(2008-01)This Financial Sector Assessment (FSA) is based on the work of the joint World Bank and IMF Financial Sector Assessment Program (FSAP) update team that visited Sri Lanka between June 20 and July 3, 2007. The principal objectives of the FSAP Update were to: (i) assess developments in the financial sector and progress in strengthening financial sector regulation since 2002; and (ii) identify measures that would contribute to consolidation of financial stability and to further development of the financial sector over the next five years. This report describes the main findings of the 2007 FSAP update addressing bank and non bank financial institutions, state bank restructuring, pension funds, insurance, capital markets, supervisory framework, access to finance, and legal and judicial reforms. This report summarizes the recommendations for sustaining financial development.Publication The Reform Agenda(World Bank, Washington, DC, 2009-06)The financial crisis has prompted a shift toward a tighter and more macro-prudential approach to financial regulation. But the reform agenda still needs to address the role of supervisory (rather than regulatory) failures, while the institutional arrangements needed to implement the new framework remain to be worked out. For most emerging economies, the existing reform agenda, developing institutional and legal underpinnings for the financial system and promoting financial access, remains valid. But for those characterized by weak financial oversight structures and more volatile economic cycles, adopting capital buffers as part of a macro-prudential regime may be a useful complement.
Users also downloaded
Showing related downloaded files
Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Indonesia Economic Prospects, December 2024(Washington, DC: World Bank, 2024-12-19)Indonesia’s economy remains resilient, buoyed by strong domestic demand and a recovering service sector. The current account deficit widened, driven by moderating terms of trade and cyclical factors that intensified services and income outflows. After two years of consolidation, the fiscal policy stance loosened slightly. Meanwhile, Bank Indonesia (BI) has been incrementally easing its policy stance while managing currency stability. Indonesia needs to significantly increase tax revenues to investment in human and physical capital to achieve its high-income status ambitions. The country’s public capital stock lag regional and structural peers, falling far short of advanced economies. Closing these gaps could enhance productivity growth and support the sustained 6 percent growth required to reach high-income status by 2045. However, the investment needed is substantial. A significant portion of this must be financed through increased tax revenues, as a substantial rise in debt would be risky and would violate statutory caps on deficit and debt levels. Overall, increasing tax revenues will require reforms that widen the tax base, improve tax administration, and address structural constraints to compliance. Reforms to widen the tax base could lower the registration threshold for VAT to align with middle-income country norms, which also applies to the temporary final tax for MSMEs. Meanwhile, a permanent final tax regime could be introduced for MSMEs below the threshold. Special CIT treatments, such as for construction services, publicly listed firms, and non-standard VAT exemptions, may be phased out gradually. Tax incentives need to become more strategic, time-bound, and systematically reviewed. Improving compliance requires better risk management, using high-quality third-party data and integrating fragmented government systems. Simplifying and clarifying VAT regulations can reduce disputes and administrative burdens. Lastly, addressing structural constraints involves deepening financial sector depth, which is expected to have the secondary effect of facilitating compliance through improved information and formalization.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication World Bank East Asia and Pacific Economic Update, October 2025: Jobs(Washington, DC: World Bank, 2025-10-07)GDP growth in the East Asia and Pacific (EAP) region remains above the global average but is projected to slow down in 2025 and even further in 2026. The sluggishness is due to a less favorable external environment—rising trade restrictions, easing but still elevated global uncertainty, and slowing global growth—as well as persistent domestic difficulties. Today, many people are in low-productivity or informal jobs, and many of the young cannot find any jobs. The class of people vulnerable to falling into poverty is now larger than the middle class in most countries. In a region that thrived because export-oriented, labor-intensive growth created more productive jobs, firms must deal with higher tariffs and workers must contend with the growing use of robots, AI and digital platforms. More productive jobs would be created by reforms to enhance economic opportunity, human capacity and their virtuous interplay.Publication Indonesia Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-23)Indonesia’s economy remains resilient amid worsening global conditions. GDP grew at 4.9 percent year-on-year (yoy) in Q1-2025, slightly lower than previous post-pandemic quarters. Domestic demand was impacted by reduced government consumption and lower investment. Budget efficiency measures led to a contraction in public consumption, while investment in the construction and manufacturing sectors dipped due to investors’ concerns over domestic and global policy uncertainty. Meanwhile, declining commodity prices worsened Indonesia’s terms of trade. The supply side showed notable contributions from the agriculture and services sectors. Businesses and households are adjusting to economic uncertainty, but weak consumption of middle-class households has been persistent since the pandemic. The GOI structural reform agenda could accelerate growth further. In response to rising global policy uncertainty, the GOI devised a program of deregulation including reforms to the business environment and licensing, investment liberalization, trade and logistics reforms, and digital services. These reforms complement other reforms currently in play, like those related to financial sector deepening, and accompany the demand stimulus that the GOI is targeting through its priority programs. If implemented, these reforms could gradually expand the economy’s capacity, unlock further FDI, boost investment returns, and ensure productivity gains. The report suggests that this will translate into better job creation and raise GDP growth to 5.3-5.5 percent in 2026-2027. This report identifies the necessary steps to reach the target of providing 3 million housing units each year. In short, to meet the housing target and supercharge current efforts, the government needs to act as both a housing provider and a housing facilitator: instituting housing regulation reforms, accelerating public-funded housing programs, and creating an enabling environment that attracts private investment in Indonesia. Directly, 3.8 billion dollars in annual public investments can create an estimated 2.3 million jobs and mobilize 2.8 billion dollars in private capital. Reforms can create an enabling environment for housing investments and indirectly help multiply this impact.