Feyen, ErikBeck, Thorsten2013-11-262013-11-262013-09https://hdl.handle.net/10986/16319Across the world, supply for financial services rarely matches the demand, given multiple market frictions. This paper discusses the concept of the financial possibilities frontier as a constrained optimum to categorize different problems of shallow financial markets or unsustainable expansion. The paper offers three examples of how to use different data sources to apply the frontier concept to assess the state of financial systems.en-USCC BY 3.0 IGOaccountingagency problemagency problemsarbitrageasset positionsbailoutbank creditbank lendingbanking crisesbanking systembanking systemsbankruptcyboom-bust cycleborrowerbranch networkcapital flowscapital inflowscapital marketcapital market developmentcapital marketschecking accountscollateralcollateral requirementsconsumer protectioncontract enforcementcontractual savingscontractual savings institutionscoordination failurescorporate bondcorporate bond marketscorporate bondscredit assessmentcredit expansioncredit guaranteecredit increasecredit informationcredit institutionscredit linecredit marketcredit ratingscredit Sourcecreditorcreditor rightscreditorscurrency crisesdebtdebt securitiesdefault riskdemand for creditdepositdeposit mobilizationdeposit servicesDepositsdeveloping countriesdummy variableseconomic developmentenforceabilityenforceability of contractsenterprise financingequity marketsexchange rateexporterexportersexternal financeexternal fundingfinancial crisesfinancial crisisFinancial developmentfinancial fragilityfinancial informationfinancial instabilityfinancial institutionfinancial institutionsfinancial instrumentsfinancial liberalizationfinancial marketsfinancial sector developmentfinancial sector indicatorsfinancial stabilityfinancial statementsfinancial structurefinancial systemFinancial Systemsfinancing obstaclesfiscal policyfixed assetsforeign bankforeign bank entryforeign currencyforeign currency debtformal loanglobalizationgovernment bondgovernment bond marketgovernment interventionsgovernment ownershipgovernment policiesgovernment securitiesgross domestic productincome flowsincome from bondsincome levelincome levelsincome volatilityindebtednessinflationinformation asymmetriesinstitutional developmentinsuranceInsurance companiesinsurance policiesinterest rateinterest ratesInternational Bankinternational capitalinternational capital marketsinternational financial integrationinvestment opportunitiesinvestment projectsinvestor protectionlack of competitionlack of creditlegal rightslending interest rateliabilityliability sidelife insurancelife insurance premiumsliquidityloanloan applicationsloan defaultlocal currencieslocal currencylong-term financelong-term investmentlong-term investorsmacroeconomic conditionsmacroeconomic instabilitymacroeconomic stabilitymacroeconomic uncertaintymarket disciplinemarket failuresmarket infrastructuremarket participantsmarket playersmarket sizemarket structureMarket Turnovermaturitiesmaturitymicro datamicro-datamicro-enterprisesmonetary policymonetary stabilityMortgageMortgage financemortgagesmutual fundmutual fund assetsmutual fundsnon-performing loansoffshore centeroffshore centersopportunity costspartial creditpayment servicespayment systempayment systemspensionpension fundpension fund assetspension fundspolitical stabilityPrivate CreditPrivate Debtprivate equityprivate lendersPublic DebtPublic Debt Securitiesregulatory barriersregulatory constraintsregulatory frameworkregulatory frameworksremittancereturnrights of creditorsrisk diversificationrisk managementrisk management servicessavings servicessecuritiessettlementsettlement infrastructureshare of investmentStock Markettaxtax policiestax ratetotal debttransactiontransaction coststransactions coststransition countriestransition countrytransition economiestransition economytransparencyTurnoverwithholding taxWorld Bank10.1596/1813-9450-6615