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The importance of financial systems as a key factor in economic growth has become
even more pronounced in recent years, yet there is still surprisingly little agreement
about how to define and measure their development. To address this gap, the World
Economic Forum has undertaken an ongoing initiative that aims to provide business

The Financial Development Report 2009


leaders and policymakers with a common framework to identify and discuss the drivers
of the development of global financial systems and markets.

The Financial Development Report 2009, the second edition since its first publication in
2008, measures and analyzes the factors enabling the development of financial systems
in 55 economies. The Report aims to provide a comprehensive means for countries to
benchmark the various aspects of their financial systems and establish priorities for
improvement. It is published annually so that countries can continue to benchmark
themselves and track their progress over time.

The Report presents the rankings of the second Financial Development Index (FDI)
developed by the World Economic Forum in collaboration with the academic community,
multilateral organizations, and business leaders. The FDI assembles a vast amount of
data to create a holistic assessment of the different aspects of complex financial
systems, including the institutional environment, the business environment, financial
stability, banks, capital markets, and overall capital availability and access. Essay
contributions elaborate on specific effects of the current crisis on emerging markets
and on the achievement of the Millennium Development Goals. The Report contains
detailed profiles for the 55 economies covered by the FDI this year. Data used in the
calculation of the Index are fully annotated and clearly presented.

Written in a nontechnical language and style, the Report appeals to a large audience of
policymakers, business leaders, academics, and different organizations of civil society. It

2009
aims to provide policymakers with a balanced perspective as to which aspects of their
country’s financial system are most important and the ability to empirically calibrate this
view relative to other countries.
The Financial
Development Report

ISBN-13: 978-92-95044-27-2
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World Economic Forum World Economic Forum USA Inc.


Geneva, Switzerland New York, USA

The Financial Development


Report 2009
Part 1.r3 10/14/09 2:21 PM Page ii

The terms country and nation as used in World Economic Forum USA Inc.
this report do not in all cases refer to a
territorial entity that is a state as understood Copyright © 2009
by international law and practice. The terms by the World Economic Forum USA Inc.
cover well-defined, geographically self-
contained economic areas that may not be All rights reserved. No reproduction, copy or
states but for which statistical data are main- transmission of this publication may be made
tained on a separate and independent basis. without written permission.

No paragraph of this publication may be


reproduced, stored in a retrieval system, or
transmitted, in any form or by any means,
electronic, mechanical, photocopying, or oth-
erwise without the prior permission of the
World Economic Forum.

ISBN-10: 92-95044-27-4
ISBN-13: 978-92-95044-27-2

This book is printed on paper suitable for


recycling and made from fully managed and
sustained forest sources.

A catalogue record for this book is available


from the British Library.

A catalogue record for this book is available


from the Library of Congress.
Part 1.r3 10/14/09 2:21 PM Page iii

Contents

Contributors v Part 2: Country/Economy Profiles 47


How to Read the Country/Economy Profiles ..............................49
Academic Advisors vii List of Countries/Economies ........................................................51
Country/Economy Profiles............................................................52

Preface ix
by Klaus Schwab

Foreword xi
Part 3: Data Tables 273
by Kevin Steinberg
How to Read the Data Tables ...................................................275
Index of Data Tables...................................................................277
Executive Summary xiii Data Tables.................................................................................279
by Nouriel Roubini and James Bilodeau

Technical Notes and Sources 351

Part 1: Findings from the Financial 1 About the Authors 361


Development Index

Partner Institutes 363


1.1 The Financial Development Index: 3
Taking Stock of Financial System Strength
in a Time of Crisis
by Nouriel Roubini and James Bilodeau

1.2 This Time It’s Different: Transmission 29


of the Global Financial Crisis to Emerging
Market Economies and the Domestic and
International Policy Response
by Nouriel Roubini and Ayah El Said

1.3 Financial Development, Financial Crises, 37


and the Millennium Development Goals
by Erik Feyen
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Contributors
Contributors

LEAD ACADEMIC AND CO-AUTHOR STEERING COMMITTEE*


Nouriel Roubini Sir David Wright
Professor of Economics and International Business, Vice-Chairman, Barclays Capital
New York University and Chairman, RGE Monitor
Yasser El Mallawany
Chief Executive Officer, EFG-Hermes
EDITOR AND CO-AUTHOR
Andrew Crockett
James Bilodeau
President, JPMorgan Chase International
Associate Director and Head of Emerging Markets Finance
World Economic Forum USA Peter Sands
Group Chief Executive, Standard Chartered Bank
PROJECT TEAM Kevin Steinberg
Ibiye Harry Chief Operating Officer, World Economic Forum USA
Project Associate, World Economic Forum USA
Ayah El Said OPERATING COMMITTEE*
Economist, RGE Monitor Michael Drexler
Head of Strategy and Planning, Barclays Capital
Toopan Bagchi
Project Manager, World Economic Forum USA (on secondment Nick O’Donohoe
from McKinsey & Co.) Global Head of Research, JPMorgan Chase
Gerard Lyons
PROJECT ADVISORS Chief Economist and Group Head of Research, Standard Chartered
Margareta Drzeniek Hanouz Bank
v
Director, Senior Economist, World Economic Forum
Andrei Sharonov
Thierry Geiger Managing Director, Troika Dialog
Associate Director, Economist, Global Leadership Fellow,
Wael Ziada
World Economic Forum
Head of Research, EFG-Hermes

CONTRIBUTOR
Erik Feyen, The World Bank We would like to thank Dealogic and Thomson Reuters for their
generous contribution of data for this Report.

FROM THE WORLD ECONOMIC FORUM

Financial Institutions Team Global Competitiveness Network


Kevin Steinberg, Chief Operating Officer and Head of the Centre Jennifer Blanke, Director, Senior Economist, Head of Global
for Global Industries (New York), World Economic Forum USA† Competitiveness Network
Max von Bismarck, Director and Head of Investors Industry† Margareta Drzeniek Hanouz, Director, Senior Economist
Giancarlo Bruno, Director and Head of Financial Services Industry† Irene Mia, Director, Senior Economist
Anuradha Gurung, Associate Director† Thierry Geiger, Associate Director, Economist, Global Leadership
Trudy Di Pippo, Associate Director† Fellow
Kerry Wellman, Senior Community Manager† Ciara Browne, Associate Director
Abel Lee, Senior Community Manager† Pearl Samandari, Community Manager
Lisa Donegan, Community Manager† Eva Trujillo Herrera, Research Assistant
Tom Watson, Project Manager† Carissa Sahli, Coordinator
Isabella Reuttner, Project Manager†
Nadia Guillot, Senior Coordinator We thank Hope Steele for her superb editing work and
Michal Richardson, Coordinator† Neil Weinberg for his excellent graphic design and layout.
Takae Ishizuka, Coordinator†
Elisabeth Bremer, Coordinator†

* The Forum is grateful for the support of the Industry Partners who served on the Steering and Operating Committees. Any findings contained
in the Report are solely the view of the Report’s authors and do not reflect the opinions of the Steering or Operating Committee members.
† Employees of the World Economic Forum USA.
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Academic Advisors
Academic Advisors

Franklin Allen
The Wharton School

Martin Baily
Brookings Institution

Thorsten Beck
Tilburg University

Mario Blejer
Banco Hipotecario

Richard Cooper
Harvard University

Howard Davies
London School of Economics

Erik Feyen
The World Bank

Linda Goldberg
Federal Reserve Bank of New York

Subir Lall
International Monetary Fund
vii

Ross Levine
Brown University

Ashoka Mody
International Monetary Fund

Sergio Schmukler
The World Bank

Augusto de la Torre
The World Bank

The Forum is grateful for the support of the Academic Advisors who contributed to the Report. Any findings contained in the Report are
solely the views of the Report’s authors and do not reflect the opinions of the Academic Advisors.
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Preface
Preface
KLAUS SCHWAB
Executive Chairman, World Economic Forum

In the time since the first Financial Development Report which the Report is based. Other complementary
was published, global leaders have mounted an unprece- publications from the World Economic Forum include
dented response to a financial crisis, the effects of which The Global Competitiveness Report,The Global Enabling
have rippled across all regions and levels of society.The Trade Report,The Global Gender Gap Report,The Global
urgency of the threat to the global economy and our Information Technology Report, and The Travel & Tourism
collective prosperity has required pragmatic and at times Competitiveness Report.
inventive responses that transcended the conventions of We would like to express our gratitude to the lead
recent history. Now, with the publication of this, the academic on the project, Nouriel Roubini of New York
second Financial Development Report, as leaders take stock University, for his thought leadership in the design of
of the efficacy of their actions, thoughts turn to the the Financial Development Index and contributions to
implications of this crisis, to the assumptions on which this Report. We are grateful to our industry partners
our global financial system is based, and to the legacy of who served on the project Steering and Operating
this response. Committees, including Barclays Capital, EFG-Hermes,
As with past crises and episodes of dramatic change, JP Morgan Chase & Co., Standard Chartered Bank,
decisions made now have the potential to impact gener- and Troika Dialog Group.We are appreciative of our
ations to come. New models for global governance and academic advisors who generously contributed their
cooperation are needed that are commensurate with the time and ideas in helping shape this Report. We would ix
realities of increasing financial integration and economic also like to thank James Bilodeau at the World Economic
interdependence. As dialogue and consensus develop on Forum USA, editor and co-author of the Report, for his
new models for global financial governance, it is vital to energy and commitment to the project, as well as the
bring a balanced and rich perspective to bear on these other members of the project team, including Ibiye
decisions. It is in this spirit that the World Economic Harry, Ayah El Said, and Toopan Bagchi.We are grateful
Forum offers this year’s Financial Development Report as a to Margareta Drzeniek Hanouz and Thierry Geiger for
transparent, analytical tool to help promote richness of their guidance as Project Advisors. Appreciation also
dialogue and comprehensiveness of debate. goes to the Global Competitiveness Team, including
It is not only the more visible decisions at the global Jennifer Blanke, Irene Mia, Ciara Browne, Pearl
level that matter but also those taken at the regional and Samandari, Eva Trujillo Herrera, and Carissa Sahli.
local levels, which have the potential to build stronger Finally, we would like to thank our network of Partner
financial systems that help extend prosperity to all. The Institutes, without whose enthusiasm and hard work the
Financial Development Report, in providing a depth of annual administration of the Executive Opinion Survey
information across a number of economies, serves to and this Report would not be possible.
highlight some of the variation across individual financial
systems that must be considered in building on existing
strengths and looking for workable solutions to problems.
Once the priorities of stabilization have been achieved,
reform and development must be undertaken with a
sensitivity to the requirements, levels of development,
and specific circumstances of individual countries.
In the tradition of the Forum’s multi-stakeholder
approach to global issues, the creation of this Report
involved an extended program of outreach and dialogue
with members of the academic community, public fig-
ures, representatives of nongovernmental organizations,
and business leaders from across the world.This work
included numerous interviews and collaborative sessions
to discuss the approach to the design of the Index on
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Foreword
Foreword
KEVIN STEINBERG
Chief Operating Officer and Head of the Centre for Global Industries (New York), World Economic Forum USA

The World Economic Forum is pleased to release The decisions was highlighted in the current crisis. As
Financial Development Report 2009, the second edition financial services firms weigh where to base and then
since its inaugural publication last year.The Report rep- manage their operations in different regions, what are
resents a key initiative undertaken as part of the Forum’s the elements that should be considered? How should they
Industry Partnership Programme for Financial Services. think about the different risks and tradeoffs associated
The Programme provides a platform for CEOs and with different operating environments? The stability of
senior executives to engage with their peers and an financial systems must certainly be a central factor,
extended community of academics, leaders from gov- but effective corporate governance, robust legal regimes
ernment, and experts from civil society to tackle key promoting contract enforcement, availability of human
issues on the global agenda. Certainly, the ongoing capital, and other factors are also critical to nurturing
financial crisis ranks as one of the most pressing issues competitive and resilient financial systems.
to confront the global community in generations. For policymakers charged with the overall economic
welfare of the broader population, how do they ensure
that the financial system serves all constituencies,
Implications of the financial crisis including those that are less privileged? The measures
The current crisis has revealed the extent of global of financial access we capture in the Index illustrate
interconnectedness, exposing an underappreciated set that even while large corporations may have relatively xi
of linkages between players as diverse as homeowners easy availability of capital in particular markets, small
in the United States, asset-backed securities traders in enterprises and individuals in the same countries may
London, manufacturing firms in Asia, and agricultural not. Governments need to be quite nuanced in their
exporters in Latin America. Now a variety of stakeholders approaches to ensure that financial markets can support
across many national and international platforms are innovation and growth at all levels of society.
involved in crafting an effective and lasting response.
Financial stability must remain the near-term priority,
yet the potential reach and lasting impact of reform The Financial Development Report 2009
poses a breadth of questions that must be considered by In light of these far-reaching questions, this year’s
these different stakeholders as well. It is our hope that Report strives to move beyond an updated Index to a
the dimensions captured by the Financial Development broader examination of the global impact of the crisis
Index will inform this view and serve as a valuable tool on financial development. Part 1: Findings from the
for those most closely involved in the reform process to Financial Development Index, begins with Chapter 1.1
address both short- and long-term considerations. outlining the methodology for the Index, the academic
For regulators with macroprudential oversight, how theory and assumptions supporting it, and some of the
do they ensure that they have adequately addressed ele- key findings from the Index results. Chapters 1.2 and
ments of systemic risk without undermining the vital role 1.3, which complete Part 1, include some thoughtful
that financial development plays as a driver of economic contributions to provide context on how the current
growth? Will proposed solutions adversely impact the crisis has impacted both emerging economies and,
development of robust and sizeable financial intermedi- more specifically, the achievement of the Millennium
aries? A key challenge is to balance careful regulatory Development Goals.The effects of the crisis on several
oversight while promoting innovation and entrepreneur- emerging markets have been tempered by the sound
ship. As indicated by some results within the Index, macroeconomic policy and external conditions of
countries with a high degree of stability do not neces- recent years. However, the effects of financial crises do
sarily have deep and active financial intermediation that in general tend to fall disproportionately upon the
has been correlated with economic growth. Ongoing poor. It is therefore important for countries to craft
economic development may therefore depend on being policy responses with these effects in mind.
able to promote both simultaneously. We encourage readers to delve into the detail of
For financial intermediaries, the need to consider Part 2: Country/Economy Profiles and Part 3: Data
systemic issues in their investment and operational Tables of the Report. In light of the complexity of
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Foreword

financial systems and of the current problems we face,


the richness and breadth of the data paint a balanced
picture of the challenges and opportunities faced by
different countries.
By design, this Report necessarily relies on available
data to proxy for key elements of financial development.
It is with a degree of humility that we put forth this
Report given some of the inherent limitations of these
data, the rapidly changing environment, and the unique
circumstances of some the economies covered.Yet, in its
attempt to establish a comprehensive framework and a
means for benchmarking, we feel it provides a useful
starting point from which to ensure a rich and broad
perspective at this critical juncture.

Going forward
We recognize the challenging economic and political
environment into which this Financial Development
Report is being launched. Fortunately, as this is the
second edition, it provides us a first-time opportunity to
compare how financial systems are evolving year over
year at a time when understanding these changes could
not be more important.We therefore welcome ongoing
discussions and public debate, and anticipate that further
work will be both productive and necessary.
xii On behalf of the World Economic Forum as well
as the project team, I extend thanks to all involved in
creating this Index for their tremendous contributions
to this work. Our Industry Partners have relayed their
enthusiasm not only for using this work as a basis for
discussions with policymakers, but also for engaging in
a broader dialogue about how all stakeholders can ensure
the stability and effectiveness of both national and global
capital markets.We therefore welcome feedback and
reactions from all interested in this work, and invite
your involvement in our future efforts.
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Executive Summary
Executive Summary
NOURIEL ROUBINI, New York University and RGE Monitor
JAMES BILODEAU, World Economic Forum USA

The Financial Development Report and the Financial • At second place, Australia showed considerable
Development Index (FDI) on which it is based provide strength in the rankings. Canada, the smallest of the
a score and rank for 55 countries according to the level G-8 countries (by GDP), and countries that are
of their financial development. It analyzes the drivers of smaller than it fared better in this year’s Index,
financial system development that support economic comprising 7 out of the top 10 in overall rank.
growth in developed and developing countries to serve These include Australia (2nd), Singapore (4th),
as a tool for countries to benchmark themselves and Hong Kong SAR (5th), Canada (6th), Switzerland
prioritize areas for reform. (7th), the Netherlands (8th), and Denmark (10th).
The Report defines financial development as the factors,
policies, and institutions that lead to effective financial interme-
diation and markets, as well as deep and broad access to capital
and financial services. In accordance with this definition, Table 1: Top 10 in overall Index ranking
measures of financial development are captured across
2009 2008 2009 Change
seven pillars: rank rank score in score
Economy (1 to 55) (1 to 55) (1 to 7) (2009 vs. 2008)

United Kingdom 1 2 5.28 –0.55


1. Institutional environment Australia 2 11 5.13 0.15
2. Business environment United States 3 1 5.12 –0.73 xiii
Singapore 4 10 5.03 –0.12
3. Financial stability
Hong Kong SAR 5 8 4.97 –0.26
4. Banking financial services Canada 6 5 4.96 –0.3
5. Non-banking financial services Switzerland 7 7 4.91 –0.32
Netherlands 8 9 4.85 –0.37
6. Financial markets Japan 9 4 4.64 –0.64
7. Financial access Denmark 10 n/a 4.64 n/a

Note: Some refinements have been made to this year's Index that may affect
Financial stability is thus an important component comparability with the previous year's results.

of the FDI, but a breadth of additional factors is also


considered in this assessment of the long-term develop-
ment of financial systems.
This year’s FDI also illustrates some interesting find-
Although some refinements were made to this
ings with respect to developing countries:
year’s FDI, a high-level comparison with last year’s
Index seems to indicate some general trends:
• Within the FDI’s financial stability pillar, a number
of developing countries—such as Brazil, Chile, and
• The world’s largest economies exhibited the largest
Malaysia—achieve strong scores.
drop in absolute scores as compared with last year.
The size and global nature of these economies may
have led to greater exposure to the current financial • A comparison of commercial financial access and
turmoil, as captured in some of the more recent retail financial access measures illustrate that larger
data in this year’s FDI. enterprises in developing countries appear to enjoy
access to financial services (such as equity offerings
and private credit) that rivals access seen in devel-
• While the United Kingdom came in 1st and the
oped countries.
United States came in 3rd, both experienced a
sharp drop in their overall scores that significantly
decreased the margin with which they lead other • However, developing countries did not score nearly
countries in the Index. Financial instability weighed as well in terms of retail financial services provided
heavily on both, a factor that was offset by strength to individuals (such as savings and demand accounts,
in some measures of financial intermediation. micro credit, and point-of-sale financial services)
despite the importance of these agents to the
economies of many developing countries.
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Executive Summary

Table 2: Top 20 in the financial stability pillar


2009
rank Economy Score

1 Norway 5.73
2 Switzerland 5.66
3 Hong Kong SAR 5.63
4 Chile 5.62
5 Singapore 5.61
6 Saudi Arabia 5.60
7 Canada 5.57
8 Kuwait 5.49
9 Australia 5.48
10 Germany 5.34
11 Finland 5.27
12 France 5.27
13 Malaysia 5.14
14 Mexico 5.13
15 Brazil 5.13
16 Czech Republic 5.08
17 United Arab Emirates 5.07
18 Sweden 5.07
19 Denmark 4.99
20 Slovak Republic 4.92

There is necessarily a lag in some of the data used


to calculate the FDI, so it is important not to view it as
having captured the full effects of the current financial
crisis. As successive iterations of the Report are published,
the long-term effects of the crisis on financial system
xiv development will become increasingly clear. The find-
ings with respect to specific countries and variables cov-
ered in this Report can be found in the country profiles
and data tables contained in Parts 2 and 3.
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Part 1
Findings from the Financial
Development Index
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1.1: The Financial Development Index


CHAPTER 1.1 The global financial crisis that has unfolded over the
past 18 months has underlined the central role that
financial systems play in the economic development
The Financial Development of countries. In particular, the importance of financial
stability as a key aspect of financial systems that has
Index: Taking Stock of implications extending well beyond a country’s border
and deep into the real economy has been made painfully
Financial System Strength in a clear.The sheer scale of the response required by policy-
Time of Crisis makers to avert a deepening of the crisis has led countries
to rethink the mechanisms for governance and oversight
of financial systems at the global and local levels.
NOURIEL ROUBINI, New York University and RGE Monitor
As countries continue to examine their response
JAMES BILODEAU, World Economic Forum USA
to the current crisis to minimize the possibility of simi-
lar occurrences in the future, as well as to ensure the
efficacy of their actions, it is crucial to take a longer-term
perspective on the role and nature of financial systems.
Specifically, it is imperative to consider all the different
factors that are important in facilitating the central role
of financial systems in furthering economic prosperity
for all participants in the global economy. Empirical
studies concerning financial development and growth
have generally found that cross-country differences in the
levels of financial development explain a considerable
portion of the cross-country differences in growth rates
of economies.1
It is against this backdrop that the second annual
Financial Development Report aims to provide policymakers 3
with a common framework to identify and discuss this
range of factors that are central to the development of
global financial systems and markets. It provides the
Financial Development Index (FDI), which ranks 55 of
the world’s leading financial systems against which coun-
tries can benchmark themselves and with which they
can establish priorities for financial system improvement.
The Financial Development Report is published annually so
that countries can continue to benchmark themselves
against their peers and track their progress over time.
In recognition of the diversity of countries covered
in the FDI and the variety of financial activities that are
vital to economic growth, the FDI provides a holistic
view of financial systems. For the purposes of this Report
and the FDI we have defined financial development as the
factors, policies, and institutions that lead to effective financial
intermediation and markets, as well as deep and broad access to
capital and financial services. This definition thus spans the
foundational supports of a financial system, including
the institutional and business environments; the financial
intermediaries and markets through which efficient risk
diversification and capital allocation occur; and the results
of this financial intermediation process, which include
the availability of, and access to, capital.
The FDI relies upon current academic research in
both selecting the factors that are included and in deter-
mining its overall structure.This encompasses a variety

The authors would especially like to thank Ibiye Harry for her extensive
contributions to this chapter and Report.
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1.1: The Financial Development Index

of measures intended to capture different dimensions Financial intermediation and financial markets
of financial stability that have been highlighted in the contribute directly to increased economic growth and
current crisis. However, consistent with its purpose of aggregate economic welfare through their effect on capital
supporting the long-term development of financial accumulation (the rate of investment) and on techno-
systems and their central role in economic growth, it logical innovation. First, greater financial development
also encourages a broad analysis over a theoretical focus leads to greater mobilization of savings and its allocation
on a few specific areas.With this holistic view, decision to the highest-return investment projects.This increased
makers can develop a balanced perspective accumulation of capital enhances economic growth.
as to which aspects of their country’s financial system Second, by appropriately allocating capital to the right
are most important and empirically calibrate this view investment projects and promoting sound corporate
relative to other countries. governance, financial development increases the rate
of technological innovation and productivity growth,
further enhancing economic growth and welfare.
Financial development and economic growth Financial markets and intermediation benefit
A large body of economic literature supports the premise consumers and firms in many other ways that are not
that, in addition to many other important factors, the directly related to economic growth. Access to financial
performance and long-run economic growth and welfare markets for consumers and producers can reduce poverty,
of a country are related to its degree of financial devel- such as when the poor have access to banking services
opment. Financial development is measured by factors and credit.The importance of microfinance can be seen
such as size, depth, access, and the efficiency and stability in this context.This access allows consumers to smooth
of a financial system, which includes its markets, inter- consumption over time by borrowing and/or lending and
mediaries, range of assets, institutions, and regulations. stabilizes consumer welfare in the presence of temporary
The higher the degree of financial development, the shocks to wages and income. By contributing to the
wider the availability of financial services that allow diversification of savings and of portfolio choices, it can
the diversification of risks.This increases the long-run also increase the return on savings and ensure higher
growth trajectory of a country and ultimately improves income and consumption opportunities. Insurance serv-
4 the welfare and prosperity of producers and consumers ices can help mitigate a variety of risks that individuals
that have access to financial services.The link between and firms face, thus allowing better risk sharing of indi-
financial development and economic growth can be vidual or even macroeconomic risks.
traced back to the work of Joseph Schumpeter in the
early 20th century,2 and more recently to Ronald
McKinnon and Edward Shaw.This link is now well The seven pillars of financial development
established in terms of empirical evidence.3 To understand and measure the degree of financial
The current environment has highlighted the development, one must consider all of the different
potentially severe impact that financial crises can have factors that together contribute to the degree of depth
on economies, and in particular on those with fewer and efficiency of the provision of financial services.
resources with which to deal with financial adversity Conceptually, in thinking about an index that measures
(see Box 1).4 Yet research supports the idea that coun- the degree of financial development, the various aspects
tries that have experienced occasional financial crises of development can be seen as seven “pillars” grouped
have, on average, demonstrated higher economic growth into three broad categories, as indicated in Figure 1:
than countries that have exhibited more stable financial
conditions.5 Thus, although it is important to mitigate 1. Factors, policies, and institutions: the foundational
the short-term impact of crises, it is also important to characteristics that allow the development of financial
view financial development in terms inclusive of, but intermediaries, markets, instruments, and services.
broader than, financial stability.
Economic theory suggests that financial markets 2. Financial intermediation: the variety, size, depth,
and intermediaries exist mainly because of two types of and efficiency of the financial intermediaries and
market frictions: information costs and transaction costs. markets that provide financial services.
These frictions lead to the development of financial
intermediaries and financial markets, which perform 3. Financial access: access by individuals and businesses
multiple functions, such as facilitating the trading, hedging, to different forms of capital and financial services.
diversification, and pooling of risk; providing insurance
services; allocating savings and resources to the appro- The seven pillars are organized and described below
priate investment projects; monitoring managers and according to these three categories. (See Appendix A
promoting corporate control and governance; mobilizing for the detailed structure of the FDI and a list of all
savings efficiently; and facilitating the exchange of goods indicators).
and services.
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1.1: The Financial Development Index


Figure 1: Composition of the Financial Development Index

Financial Development Index

Factors, policies, Financial Financial access


and institutions intermediation

1. Institutional environment 4. Banking financial services 7. Financial access

2. Business environment 5. Non-banking financial services

3. Financial stability 6. Financial markets

Policymakers Financial End users


intermediaries of capital

Source: World Economic Forum

5
Factors, policies, and institutions effects on the real economy. Official supervisory power
This first category covers those foundational features can be an important component of this oversight, and
that support financial intermediation and the optimal can include the ability to declare the insolvency of
provision of financial services and includes the first three financial institutions, restructure them, and undertake
of the seven pillars: the institutional environment, the prompt corrective and enforcement actions.9 The
business environment, and the degree of financial stability. robustness of private monitoring of financial institu-
tions—incorporating such elements as the requirements
First pillar: Institutional environment for certified auditing, the percentage of banks rated by
The institutional environment encompasses the laws international rating agencies, and the quality of bank
and regulations that allow the development of deep and accounting—is also an essential aspect of regulation.10
efficient financial intermediaries, markets, and services A measure of the effectiveness of regulation of securities
as well as the macroprudential oversight of financial exchanges is also included.
systems.This includes the overall laws, regulations, and Better corporate governance is believed to encour-
supervision of the financial sector, as well as the quality age financial development, which in turn has a positive
of contract enforcement and corporate governance. impact on growth.11 Contract enforcement is also
Economic theory proposes that a strong institutional important because it limits the scope for default among
environment exists to alleviate information and transaction debtors, which in turn promotes compliance.Variables
costs.6 Much empirical work has tackled issues related capturing these measures as they relate to the formal
to the importance of institutions and their impact on transfer of funds from savers to investors are included
economic activity in general.The presence of legal insti- in the pillar.12 Inadequate investor protection leads to a
tutions that safeguard the interests of investors is an inte- number of adverse effects, which can be detrimental to
gral part of financial development.7 Reforms that bolster external financing and ultimately to the development of
a country’s legal environment and investor protection are well-functioning capital markets.13 In general, inadequate
likely to contribute to a more efficient financial sector.8 enforcement of financial contracts has been found to
Accordingly, we have included variables related to the augment the process of credit rationing, thus hindering
degree of judicial independence and judicial the overall process of growth.14
efficiency. Other important aspects of the institutional envi-
Additionally, the current crisis has clearly empha- ronment are a country’s capital account openness and
sized the importance of regulation at the institutional domestic financial sector liberalization. Financial
level as it relates to financial stability and corresponding liberalization generally permits a greater degree of
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1.1: The Financial Development Index

financial depth, which translates into greater financial • other aspects of the business environment, including
intermediation among savers and investors.This in turn taxation policy and the costs of doing business for
increases the monetization of an economy, resulting in a financial intermediaries.
more efficient flow of resources.15 Empirically, however,
the impact of capital account liberalization delivers Measures taken to facilitate the creation and improvement
mixed evidence. Several studies have asserted that capital of human capital have been found to assist the process
account liberalization has no impact on growth while of economic growth.19 Empirical evidence supports this
others have found a positive, and statistically significant, relationship and shows positive correlations between
impact.16 At the same time, other work asserts that the human capital and the degree of financial development.20
relationship is undetermined. Our proxies for the amount of human capital are related
Given such ambiguity over the impact of capital to the enrollment levels of tertiary education.We also
account openness, it is best examined within the context include measures that reflect the quality of human capital,
of the legal environment.The better a country’s legal and such as the degree of staff training, the quality of man-
regulatory environment, the greater the benefits from agement schools and math and science education, and
capital account openness—and vice versa. Accordingly, the availability of research and training services.
within the FDI we try to capture the relationship Another key area is infrastructure.We capture a basic
between capital account openness and the level of legal measure of the quality of physical infrastructure, which
and regulatory development and have interacted the is important given its role in enhancing the process of
variables used to measure each (see Appendix A).The private capital accumulation and financial depth in
presence of both a robust legal and regulatory system countries by increasing the profitability of investment.21
and capital account openness provides a positive indica- Our analysis of infrastructure emphasizes measures of
tion of the financial development of a country.We have information and communication technologies, which
also interacted the capital account openness variable are particularly important to those firms operating
with the level of bond market development because of within a financial context because of their data-intensive
research that asserts the importance of developing nature.
domestic bond markets in advance of full liberalization Another integral aspect of the business environment
6 of the capital accounts.17 Assessments of commitment to is the cost of doing business in a country. Specifically,
WTO trade agreements as they relate to financial serv- research has shown that the cost of doing business is a
ices have also been included and interacted in a vital feature of the efficiency of financial institutions.
similar manner. The different costs of doing business are integral to
A similar analysis can be extended to the degree of assessing a country’s business environment as well as the
liberalization of the domestic financial sector.This degree type of constraints that businesses may be facing.22 As
of liberalization is based on whether a country exerts such, the better the business environment, the better the
interest rate controls (either ceilings or floors), whether performance of financial institutions and the higher the
credit ceilings exist, and whether foreign currency degree of financial development.Variables that capture
deposits are allowed. In general, the better a country’s such costs include the World Bank’s measures of the cost
legal and regulatory environment, the greater the impact of starting a business, the cost of registering property,
of domestic financial sector liberalization on a country’s and the cost of closing a business. Indirect or transaction
economic growth.Variables representing each of these costs are captured in variables such as time to start a
characteristics have been interacted to represent this business, time to register property, and time to close a
result. Recent research supports the importance of business.
advanced legal systems and institutions in this respect, Our analysis also considers taxes as another key
holding that the presence of such institutions is as vital constraint that businesses in the financial sector can face.
as having both a developed banking sector and equity The variables in this subpillar focus on issues related to
markets.18 distortionary and burdensome tax policies, reflecting
clearer consensus around the importance of these issues.
Second pillar: Business environment Because of less clarity in the academic literature around
The second pillar focuses on the business environment the effects of absolute rates of taxation and issues of data
and considers: comparability, we have not included measures related to
overall tax rates.
• the availability of human capital—that is, skilled
workers who can be employed by the financial Third pillar: Financial stability
sector and thus provide efficient financial services; The third pillar addresses the stability of the financial
system.The severe negative impacts of financial instability
• the state of physical capital—that is, the physical on economic growth can be profoundly seen in the
and technological infrastructure; and current financial crisis as well as pervasive past financial
crises.This instability can lead to significant losses to
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1.1: The Financial Development Index


investors, resulting in systemic banking crises, systemic
corporate crises, currency crises, and sovereign debt crises. Box 1: Financial crises and the Millennium
This pillar tries to capture the risk of three types Development Goals
of crises: currency crises, systemic banking crises, and
sovereign debt crises. For the risk of currency crises, we (Please see Chapter 1.3 by Erik Feyen for a full discussion of
include the change in real effective exchange rate, the this topic.)
current account balance, a dollarization vulnerability There is no doubt that financial sector development
indicator, an external vulnerability indicator, external contributes to economic growth and poverty alleviation. And
debt to GDP, and net international investment position. even though financial systems can be prone to instability,
studies show that countries that have experienced occasion-
The external debt to GDP and net international invest-
al financial crises have, on average, grown faster than coun-
ment position variables are specifically applied to devel-
tries with stable financial conditions because they stimulated
oping and developed countries, respectively. healthy risk taking by, for example, financing a small compa-
The systemic banking crises subpillar combines meas- ny, a farmer, or R&D activities. However, financial crises can
ures of historic banking system instability, an assessment have devastating effects on the world’s most vulnerable peo-
of aggregate balance sheet strength, and measures of the ple. The weakest members of society are often at the highest
presence of “bubbles.” Historic instability is captured in risk of falling into a poverty trap, which can lead to long-term
a measure of the frequency of banking crises since the developmental and economic losses. The current crisis has
1970s; more recent banking crises are given greater once again demonstrated that developing countries must
weight. Empirical research has shown that countries that strengthen their safety nets and plan their crisis intervention
have gone through systemic banking crises or endured a scenarios to protect the weakest in a timely, targeted, and
high degree of financial volatility are more susceptible to cost-effective manner.
During normal times, both developed and developing
profound short-term negative impacts on the degree of
countries with sound banking and capital markets enjoy
financial intermediation.23 A financial strength indicator
stronger per capita income growth than countries without
provides a measure that balances quantitative measures such markets. Research suggests that financial development
of balance sheet strength with qualitative assessments of results in fewer people living in poverty, since the poor indi-
banks’ abilities to meet their obligations to depositors and rectly benefit from economic growth through increases in
creditors. Capital adequacy measures, such as capital-to- employment opportunities and real wages, as well as from 7
asset ratios, have not been included because of research investment in core infrastructure.
that indicates the shortcoming of such measures with However, although the poor benefit disproportionately
respect to emerging markets.24 from financial development, they also tend to suffer dispro-
The last type of crisis captured within the financial portionately from financial crises. This occurs because they
stability pillar is sovereign debt crisis. An important are less able than wealthier people to insulate themselves
proxy for the risk of this crisis is sovereign credit ratings; against shocks. Even a small shock can force households to
sell off productive assets such as land and livestock, econo-
these data were calculated as an average of both local
mize on food and healthcare, and pull their children out of
currency sovereign credit ratings and foreign currency
school to make ends meet. Thus, financial crises can endan-
sovereign credit ratings. Sovereign ratings measure the ger progress toward attaining the Millennium Development
degree to which a country is willing and able to pay its Goals.
debt in a timely manner and in full.Thus, a high sover- Countries should continue to pursue policies that
eign credit rating signifies less likelihood of default encourage financial development and avoid those that lead
occasioned by a sovereign debt crisis. Credit default to excessive long-term intervention in systems or those that
swaps provide a quantitative, market-based indicator of increase protectionism in the wake of a financial crisis. Well-
the ability of a country to repay its debt. Macroprudential thought-out safety nets and crisis policies would do much to
measures such as inflation and GDP growth are also mitigate the worst effects of a crisis on the poor.
included, as these also influence the ability of countries
to service their debt.
The greater the risk of these crises, the greater the
likelihood that the different processes of financial inter-
mediation will be hampered, precipitating lower economic
growth rates. However, these effects of financial stability
on economic growth can be considered in terms of a system that is very free and innovative and is very
tradeoff between risk and innovation/return. For example, lightly regulated and supervised may eventually become
a financial system that is very heavily supervised and unstable and trigger credit booms and asset bubbles
regulated may be very stable and never spark a financial that can severely affect growth, returns, and welfare.
crisis. However, such a controlled system would hamper Although there is some tradeoff between the stability
the financial development and innovation that increases of the financial system and its degree of innovation and
returns, diversifies risks, and better allocates resources to sophistication, financial stability remains an important
the highest-return investments. Conversely, a financial input in the process of financial development.
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1.1: The Financial Development Index

The size (total financial assets within a country) of the


Box 2: The effect of the global financial crisis on financial system also matters because the larger it is, the
emerging markets greater its ability to benefit from economies of scale
given the significant fixed costs prevailing in financial
(Please see Chapter 1.2 by Nouriel Roubini and Ayah El Said intermediaries’ activities. A larger financial system tends
for a full discussion of this topic.) to relieve existing credit constraints.This facilitates bor-
At the onset of the financial crisis, economic and finan- rowing by firms and further improves the process of
cial fundamentals of emerging market economies were in savings mobilization and the channeling of savings to
much better shape than they had been in previous episodes investors. Given that a large financial system should
of global turmoil. The relative resilience of emerging markets
allocate capital efficiently and better monitor the use
to external shocks was not only a result of the good policies
of funds, improved accessibility to financing will tend
implemented, but also the result of good luck: 2004–07 was a
most favorable period of external conditions for emerging
to amplify the resilience of an economy to shocks.
markets in a booming global economy. Thus, a deeper (total financial assets as a percentage
With the collapse of Lehman Brothers on September 15, of GDP) financial system is an important component
2008, the global financial crisis spread swiftly, and the of financial development as it contributes to economic
spillover effects were felt in the emerging markets very rap- growth rates across countries.27 Measures of size and
idly. The crisis was seen to affect emerging markets through depth have been included in each of the three financial
trade, financial, and commodity channels via the sharp drop intermediation pillars to capture this factor.
in commodity prices. The countries with the least sound
macro and financial fundamentals were affected most Fourth pillar: Banking financial services
severely during the crisis. Although the previous pillar captures some of the negative
Policy response to the recession by international organ-
impacts that an unstable banking system can have on
izations occurred on a much larger scale than it had in previ-
an economy, banks also play a vital role in supporting
ous crises originating in emerging markets. Better fundamen-
tals allowed emerging markets to respond countercyclically
economic growth.This role is captured in the fourth
to the crisis through domestic policy. pillar. Bank-based financial systems emerge to improve
Economic recovery in these markets is expected to be acquisition of financial information and to lower trans-
8 more robust than in that of advanced economies; however, action costs, as well as to allocate credit more efficiently.
the issue of financial stability will continue to be a priority for This role is especially important in developing economies.
emerging markets as they become more cautious about the The efficient allocation of capital in a financial system
sequencing of financial sector liberalization, financial deep- generally occurs through bank-based systems or market-
ening, and financial development in general. based financial systems.28 Some research asserts that banks
finance growth more effectively and efficiently than
market-based systems, particularly in underdeveloped
economies where non-bank financial intermediaries are
generally less sophisticated.29 Research also shows that,
compared with other forms of financial intermediation,
Excessively unstable financial systems—systems that are well-established banks form strong ties with the private
prone to repeated and virulent financial crises—are less sector, a relationship that enables them to acquire infor-
likely to grow and develop. For a full discussion of the mation about firms more efficiently and to persuade firms
impact of the crisis on emerging market economies, see to pay their debts in a timely manner.30 Advocates of
Box 2 and the following chapter by Nouriel Roubini bank-based systems argue that banks that are unimpeded by
and Ayah El Said. regulatory restrictions tend to benefit from economies
of scale in the process of collecting information and can
thus enhance industrial growth. Banks are also seen as
Financial intermediaries and markets key players in eradicating liquidity risk, which causes
The second category of pillars measures the degree of them to increase investments in high-return, illiquid assets
development of the financial sector as seen in the different and speed up the process of economic growth.31
types of intermediaries.These three pillars are banking One of the key measures of the efficacy of the
financial services, non-banking financial services (e.g., banking system captured in this pillar is size.The larger
investment banks and insurance firms), and financial the banking system, the more capital can be channeled
markets. from savers to investors.This enhances the process of
Consensus exists on the relationship between the financial development, which in turn leads to greater
size and depth of the financial system and the supply economic growth.These measures of size span deposit
and robustness of financial services that are important money bank assets to GDP, M2 to GDP, and private
contributors to economic growth.25 This relationship credit to GDP.
occurs because the size of financial markets is viewed Another key aspect of the banking system is its
as an important determinant of savings and investment.26 efficiency. Direct measures of efficiency captured in the
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1.1: The Financial Development Index


Index are aggregate operating ratios such as bank oper- Sixth pillar: Financial markets
ating cost to assets and the ratio of non-performing The four major types of financial markets include bond
loans to total loans. An indirect measure of efficiency is markets (both for government and corporate bonds),
public ownership. Publicly owned banks tend to be less stock markets where equities are traded, foreign exchange
efficient, impeding the processes of credit allocation and markets, and derivatives markets.
channeling capital, which in turn slows the process of Stock market liquidity is statistically significant in
financial intermediation. terms of its positive impact on capital accumulation,
Measures of operating efficiency may provide an productivity growth, and current and future rates of
incomplete picture of the efficacy of the banking system economic growth.38 More generally, economic theory
if it is not profitable.We have thus also included an suggests that stock markets encourage long-run growth
aggregate measure of bank profitability. Conversely, if by promoting specialization, acquiring and disseminating
banks are highly profitable while performing poorly in information, and mobilizing savings in a more efficient
the operating measures, then this may indicate a lack of way to promote investment.39 Research also shows that
competition along with undue and high inefficiency. as countries become richer, stock markets become more
A third key aspect of the efficacy of the banking active and efficient relative to banks.40 Bond markets have
system captured by this pillar is the role of financial received little empirical attention, but recent research
information disclosure within the operation of banks. has shown that bond markets play an important role in
Policies that induce correct information disclosure and financial development and the effective allocation of
that authorize private-sector corporate control of banks, capital.41
as well as motivate private agents to exercise corporate Derivatives markets are an important aspect of
control, tend to encourage bank development, opera- this pillar because they can significantly improve risk
tion, and stability.32 This has a positive effect on the management and risk diversification.The development
overall economy. of derivatives markets can enhance the confidence of
international investors and financial institutions and
Fifth pillar: Non-banking financial services encourage these agents to participate in them. Derivatives
Because of inadequate regulation and oversight, certain markets generally are small in emerging markets.The
non-banking financial services, such as securitization, strengthening of the legal and regulatory environment 9
played a detrimental role in the current financial crisis. can enhance the development of such markets.42
However, non-bank financial intermediaries—such as
broker dealers, traditional asset managers, alternative
asset managers, and insurance companies—are still con- Financial access
sidered both an important complement to banks and a This third and final category is comprised of one pillar
potential substitute for them.Their complementary role that represents the measures of access to capital and
lies in their efforts to fill any vacuum created by com- financial services.
mercial banks.Their competition with banks allows both
parties to operate more efficiently in meeting market Seventh pillar: Financial access
needs. Activities of non-bank financial intermediaries The measures represented in this last pillar span measures
include their participation in securities markets as well of access to capital through both commercial and retail
as the mobilization and allocation of financial resources channels. Empirically, greater access to financial services
of a longer-term nature—for example, in insurance has been associated with the usual proxies for financial
activities. development and resulting economic growth.43 The
Empirical research has found that banks as well as presence of financial services per se as reflected by size and
non-bank financial intermediaries are larger, more depth does not imply their accessibility by the different
active, and more efficient in advanced economies.33 types of users within an economy.Thus, the presence of
Advocates of the market-based system (i.e., non-banks) access becomes integral to our analysis.
point to the fact that the market-based system is able to Measures of commercial access captured include
finance innovative and high-risk projects.34 As for the venture capital availability, access to local equity markets,
insurance sector, it can be seen as a tool that eases trade access to credit, access to loans, and an overall level of
and commerce by providing ample liability coverage. financial market sophistication. Performance in the other
Insurance also creates liquidity and facilitates the process pillars contributes to performance in this subpillar and
of building economies of scale in investment, thereby to the extent of access to financial services by end users.
improving overall financial efficiency.35 And insurance We have also introduced measures related to
has been found to mobilize illiquid savings to positively retail access to financial services that are provided by
affect growth.36 the Consultative Group to Assist the Poor and the
The degree of development of non-bank financial Microfinance Information Exchange, Inc.These include
intermediaries in general has been found to be a good proxy measures such as the penetration of bank accounts, the
of a country’s overall level of financial development.37 number of automated teller machines (ATMs) and
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1.1: The Financial Development Index

points of sale (POS), and microfinance penetration. Table 1: The Financial Development Index 2009
These measures capture access to capital by individuals rankings
and small enterprises that can be important contributors
2009
to growth in developing countries. 2009 2008 score Change
Country/Economy Rank Rank (1–7) in score
Accessibility, along with the size and depth of the
United Kingdom 1 2 5.28 –0.55
financial system as a whole captured in the previous
Australia 2 11 5.13 +0.15
pillars, has a significant effect on a country’s real activity,
United States 3 1 5.12 –0.73
economic growth, and overall welfare. Singapore 4 10 5.03 –0.12
Hong Kong SAR 5 8 4.97 –0.26
Canada 6 5 4.96 –0.30
Adjustments to the Financial Development Index Switzerland 7 7 4.91 –0.32
this year Netherlands 8 9 4.85 –0.37
The structure of the Financial Development Index Japan 9 4 4.64 –0.64
remains largely similar to that used in last year’s inaugural Denmark 10 n/a 4.64 n/a

report.While there are still seven pillars in the Index, France 11 6 4.57 –0.68
Germany 12 3 4.54 –0.74
we have improved several of them slightly.The 7th pillar
Belgium 13 17 4.50 –0.06
now focuses specifically on measures of access to finan-
Sweden 14 13 4.48 –0.27
cial services and capital, whereas last year it also included Spain 15 12 4.40 –0.50
measures of size and depth of the overall financial system. Ireland 16 14 4.39 –0.33
We have redistributed these size measures into the Norway 17 15 4.38 –0.28
appropriate financial intermediation pillars (the 4th, 5th, Austria 18 18 4.28 –0.27
and 6th pillars, specifically). Finland 19 21 4.24 –0.21

As noted previously, we have also expanded our United Arab Emirates 20 16 4.21 –0.40
Italy 21 22 3.98 –0.40
definition of financial access to include a new subpillar of
Malaysia 22 20 3.97 –0.51
retail measures that are applicable to individuals and small
Korea, Rep. 23 19 3.91 –0.64
enterprises.We considered that this was an important Saudi Arabia 24 27 3.89 –0.01
10 dimension to add to the Index in consideration of the Jordan 25 n/a 3.89 n/a
important role that this segment of the economy can China 26 24 3.87 –0.22
play in developing countries. Bahrain 27 28 3.85 –0.04
We have also made some refinements to the meas- Israel 28 23 3.69 –0.45
Panama 29 32 3.63 +0.03
ures within each of the seven pillars to better proxy
Kuwait 30 26 3.62 –0.31
for the components of financial development we are
Chile 31 30 3.60 –0.19
trying to capture.Within the 1st pillar (institutional South Africa 32 25 3.48 –0.51
environment), we have combined capital account and Czech Republic 33 35 3.48 +0.05
domestic financial sector liberalization measures with a Brazil 34 40 3.46 +0.18
new measure on commitment to the WTO agreement Thailand 35 29 3.35 –0.48
on trade in services to create a single subpillar called Egypt 36 37 3.33 +0.01

financial sector liberalization. We now interact this variable Slovak Republic 37 42 3.30 +0.05
India 38 31 3.30 –0.34
with bond market development in addition to the legal
Poland 39 41 3.27 0.00
and regulatory issues score, as noted previously.We have
Russian Federation 40 36 3.16 –0.24
also added measures related to corruption perceptions Hungary 41 33 3.08 –0.45
and legal rights. A couple of changes were made to the Peru 42 46 3.07 +0.01
2nd pillar (business environment) to better align cost of Mexico 43 43 3.06 –0.15
doing business measures with financial services compa- Turkey 44 39 3.03 –0.27
nies and to add indirect cost measures related to time Vietnam 45 49 3.00 –0.03

required to undertake some business-related activities. Colombia 46 44 2.94 –0.27


Kazakhstan 47 45 2.93 –0.20
A measure of absolute tax rates was replaced with a
Indonesia 48 38 2.90 –0.41
variable to increase the emphasis on distortionary or
Pakistan 49 34 2.85 –0.61
inefficient tax policies. Philippines 50 48 2.84 –0.19
Several changes were made to the financial stability Argentina 51 47 2.77 –0.26
pillar, in particular the banking stability subpillar.We Nigeria 52 50 2.72 –0.04
now use a new financial strengths indicator instead of Ukraine 53 51 2.71 –0.02
a stability index, have moved some regulatory measures Bangladesh 54 n/a 2.57 n/a
Venezuela 55 52 2.52 –0.18
into the institutional environment pillar, and added a
variable pertaining to the manageability of private debt Note: Some refinements have been made to this year's Index that may affect
as an additional indicator of “bubbles.” Similarly, a man- comparability with the previous year's results.

ageability of public debt measure has been added to the


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1.1: The Financial Development Index


risk of sovereign debt crisis subpillar as well as an aggregate Figure 2: Change in overall Index scores by GDP tier
macroprudential indicator and measure of credit default
swap spreads.The weighting of the banking stability
subpillar has also been increased slightly, to 40 percent.
Other changes to variables include the inclusion of
7,000
operational efficiency measures and an aggregate prof-
itability indicator to replace an efficiency index in the Top 5 by GDP

2008 average GDP (nominal US$ billions)


6,000
banking financial services pillar.We now use a three-year
running average for some measures in the non-banking 5,000
financial services pillar to provide a steadier indication
of trends in non-banking activities (e.g., IPOs and secu- 4,000
ritizations). Several additional measures have been added
to the financial markets pillar, including the number of 3,000
listed companies per 10,000 people.
6th–10th by GDP
2,000

11th–20th by GDP
The Financial Development Index 2009 rankings 1,000
21st–30th by GDP
The overall ranking for this year’s Financial Development 31st–40th by GDP 41st–55th by GDP

Report can be seen in Table 1, along with the 2008 rank- 0.0
-0.7 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1
ing, the Index score, and the change in score from last
Change in FDI score from 2008 to 2009
year. As noted above, there were some changes made to
the Index structure and variables this year; yet looking
across the overall rankings and scores, some general Note: The graph shows the change in overall Index score grouped by GDP
(US$ billions); GDP values shown are average for each tier. Some refine-
trends seem apparent. ments have been made to this year's Index that may affect comparability
with the previous year's results.

Comparison of 2009 and 2008 scores and rankings


The vast majority of scores have dropped significantly 11
compared with a year ago. In general, those that dropped rankings despite a significant drop in score.The United
the furthest were in the largest industrialized economies. States’ drop in score pulled it down to 3rd from 1st.
France (–0.68), Germany (–0.74), Japan (–0.64), the Two small developed Asian economies, Hong Kong
United Kingdom (–0.55), and the United States (–0.73) and Singapore, both climbed the rankings to 4th and
experienced the largest declines in absolute score.The 5th place, respectively, while Japan dropped to 9th place
size and global nature of these financial systems may from 4th last year.Three smaller European economies—
have led to greater exposure to the current financial Switzerland (7th), the Netherlands (8th), and Denmark
crisis, which was manifested across the different pillars (10th)—along with Canada (6th), round out the top 10.
of the Index. France and Germany both dropped out of the top 10
This trend would appear to be consistent across into 11th and 12th place, respectively.
the broader sample of countries covered in the Index. Many countries banded in the middle of the Index
In Figure 2, countries are grouped by the size of their did not experience significant changes in their relative
GDP, and the average GDP for each group is plotted rank despite the financial turmoil of the past year;
against the average change in score from last year. One however, there were some notable exceptions. Brazil’s
sees a general trend that larger economies experienced increase in overall score moved it up to 34th in the
a sharper drop in overall score than smaller economies. ranking from 40th, while Pakistan experienced one
Of the relatively few countries that experienced of the most severe drops; it fell 15 places down to 49th
an increase, Brazil experienced the largest (+0.18) and from 34th, which probably reflects the political and
Australia the second largest (+0.15), which would seem economic instability confronted by the country and the
consistent with the relatively robust performance of their resulting impact on its financial system. Indonesia and
financial systems in the face of the extreme instability South Africa also experienced significant declines.There
of the past year. Countries at the bottom of the Index, was no improvement in score for countries at the
such as Nigeria and Venezuela, have remained there with bottom of the Index such as Nigeria, Ukraine, and
little improvement. Venezuela.
Thus, for most countries, it was the relative nature
of their declines that determined their ranking in the Financial stability and the Financial Development Index
Index.44 This can be seen in the countries ranked within In Table 2, the rankings and scores are provided for each
the top 10 of the Index—all of them except Australia of the FDI pillars that have been described previously in
experienced a decline in their overall score.The United this chapter. A look across country rankings and scores
Kingdom managed to move into the top spot in the in each of these pillars reveals a degree of heterogeneity
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1.1: The Financial Development Index

Table 2: Financial Development Index 2009

OVERALL INDEX FACTORS, POLICIES, AND INSTITUTIONS

1st pillar: Institutional environment 2nd pillar: Business environment 3rd pillar: Financial stability
Country/Economy Rank Score Country/Economy Rank Score Country/Economy Rank Score Country/Economy Rank Score

United Kingdom 1 5.28 Singapore 1 6.17 Denmark 1 6.15 Norway 1 5.73


Australia 2 5.13 Denmark 2 5.97 Singapore 2 6.05 Switzerland 2 5.66
United States 3 5.12 Norway 3 5.89 Norway 3 5.98 Hong Kong SAR 3 5.63
Singapore 4 5.03 Sweden 4 5.87 Canada 4 5.94 Chile 4 5.62
Hong Kong SAR 5 4.97 Netherlands 5 5.82 Sweden 5 5.93 Singapore 5 5.61
Canada 6 4.96 Austria 6 5.71 Finland 6 5.88 Saudi Arabia 6 5.60
Switzerland 7 4.91 Switzerland 7 5.70 Switzerland 7 5.84 Canada 7 5.57
Netherlands 8 4.85 Finland 8 5.67 Netherlands 8 5.84 Kuwait 8 5.49
Japan 9 4.64 Germany 9 5.66 Hong Kong SAR 9 5.82 Australia 9 5.48
Denmark 10 4.64 Hong Kong SAR 10 5.65 United States 10 5.70 Germany 10 5.34
France 11 4.57 United States 11 5.63 Australia 11 5.68 Finland 11 5.27
Germany 12 4.54 Canada 12 5.62 United Kingdom 12 5.63 France 12 5.27
Belgium 13 4.50 Ireland 13 5.61 Germany 13 5.60 Malaysia 13 5.14
Sweden 14 4.48 Australia 14 5.56 Ireland 14 5.48 Mexico 14 5.13
Spain 15 4.40 United Kingdom 15 5.54 Japan 15 5.45 Brazil 15 5.13
Ireland 16 4.39 Belgium 16 5.54 Korea, Rep. 16 5.35 Czech Republic 16 5.08
Norway 17 4.38 Japan 17 5.43 Austria 17 5.29 United Arab Emirates 17 5.07
Austria 18 4.28 France 18 5.35 Bahrain 18 5.24 Sweden 18 5.07
Finland 19 4.24 Spain 19 5.12 United Arab Emirates 19 5.19 Denmark 19 4.99
United Arab Emirates 20 4.21 Bahrain 20 5.05 France 20 5.09 Slovak Republic 20 4.92
Italy 21 3.98 United Arab Emirates 21 5.05 Belgium 21 5.08 Netherlands 21 4.91
Malaysia 22 3.97 Malaysia 22 4.86 Italy 22 4.94 Peru 22 4.90
Korea, Rep. 23 3.91 Jordan 23 4.73 Spain 23 4.92 China 23 4.83
Saudi Arabia 24 3.89 Israel 24 4.68 Saudi Arabia 24 4.88 Austria 24 4.81
12 Jordan 25 3.89 Saudi Arabia 25 4.60 Chile 25 4.84 Colombia 25 4.80
China 26 3.87 Panama 26 4.51 Hungary 26 4.68 Poland 26 4.78
Bahrain 27 3.85 South Africa 27 4.41 Israel 27 4.60 Israel 27 4.76
Israel 28 3.69 Hungary 28 4.41 Slovak Republic 28 4.56 Korea, Rep. 28 4.73
Panama 29 3.63 Czech Republic 29 4.31 Kuwait 29 4.51 Nigeria 29 4.71
Kuwait 30 3.62 Chile 30 4.29 Malaysia 30 4.49 Bangladesh 30 4.69
Chile 31 3.60 Korea, Rep. 31 4.26 Thailand 31 4.43 South Africa 31 4.67
South Africa 32 3.48 Italy 32 4.22 Turkey 32 4.37 Spain 32 4.66
Czech Republic 33 3.48 Thailand 33 4.08 Poland 33 4.34 Belgium 33 4.66
Brazil 34 3.46 Slovak Republic 34 4.08 Russian Federation 34 4.21 Japan 34 4.57
Thailand 35 3.35 China 35 4.07 Czech Republic 35 4.19 Panama 35 4.57
Egypt 36 3.33 Kuwait 36 3.94 South Africa 36 4.15 Thailand 36 4.57
Slovak Republic 37 3.30 Poland 37 3.90 Jordan 37 4.12 United Kingdom 37 4.57
India 38 3.30 Egypt 38 3.87 Colombia 38 4.11 United States 38 4.56
Poland 39 3.27 Nigeria 39 3.83 Panama 39 4.09 Russian Federation 39 4.50
Russian Federation 40 3.16 Peru 40 3.70 China 40 4.09 Bahrain 40 4.49
Hungary 41 3.08 Vietnam 41 3.70 Kazakhstan 41 4.05 Ireland 41 4.48
Peru 42 3.07 Brazil 42 3.64 Peru 42 3.95 Venezuela 42 4.44
Mexico 43 3.06 Philippines 43 3.62 Mexico 43 3.90 Indonesia 43 4.44
Turkey 44 3.03 Mexico 44 3.59 Argentina 44 3.81 Italy 44 4.44
Vietnam 45 3.00 Indonesia 45 3.54 Ukraine 45 3.73 Egypt 45 4.27
Colombia 46 2.94 Turkey 46 3.50 Egypt 46 3.70 India 46 4.23
Kazakhstan 47 2.93 Kazakhstan 47 3.39 Brazil 47 3.63 Philippines 47 4.12
Indonesia 48 2.90 India 48 3.38 India 48 3.51 Pakistan 48 4.10
Pakistan 49 2.85 Colombia 49 3.30 Vietnam 49 3.44 Vietnam 49 3.82
Philippines 50 2.84 Argentina 50 3.23 Pakistan 50 3.42 Jordan 50 3.79
Argentina 51 2.77 Ukraine 51 3.08 Philippines 51 3.36 Turkey 51 3.79
Nigeria 52 2.72 Pakistan 52 3.03 Indonesia 52 3.26 Hungary 52 3.70
Ukraine 53 2.71 Russian Federation 53 3.01 Nigeria 53 2.95 Argentina 53 3.68
Bangladesh 54 2.57 Venezuela 54 2.50 Venezuela 54 2.92 Kazakhstan 54 3.50
Venezuela 55 2.52 Bangladesh 55 2.47 Bangladesh 55 2.71 Ukraine 55 3.19
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Table 2: Financial Development Index 2009 (cont’d.)

FINANCIAL INTERMEDIATION FINANCIAL ACCESS

4th pillar: Banking 5th pillar: Non-banking


financial services financial services 6th pillar: Financial markets 7th Pillar: Financial access
Country/Economy Rank Score Country/Economy Rank Score Country/Economy Rank Score Country/Economy Rank Score

Hong Kong SAR 1 5.39 United Kingdom 1 6.36 United States 1 5.65 Australia 1 5.19
United Kingdom 2 5.32 United States 2 5.93 United Kingdom 2 5.52 Austria 2 5.11
Japan 3 5.15 Australia 3 4.36 Singapore 3 5.10 Canada 3 4.75
Spain 4 5.07 Russian Federation 4 4.13 Switzerland 4 4.96 Belgium 4 4.73
Australia 5 5.01 Netherlands 5 4.10 Japan 5 4.81 Bahrain 5 4.73
Ireland 6 4.98 Japan 6 4.03 Australia 6 4.63 Denmark 6 4.59
Netherlands 7 4.90 Canada 7 3.99 Germany 7 4.45 United Arab Emirates 7 4.55
Canada 8 4.83 France 8 3.98 France 8 4.42 Switzerland 8 4.47
Belgium 9 4.79 Hong Kong SAR 9 3.74 Hong Kong SAR 9 4.40 Singapore 9 4.22
China 10 4.77 Germany 10 3.52 Netherlands 10 4.22 Saudi Arabia 10 4.21
Singapore 11 4.68 Singapore 11 3.37 Belgium 11 4.21 Egypt 11 4.19
Malaysia 12 4.66 China 12 3.31 Canada 12 4.02 United States 12 4.19
Sweden 13 4.61 Spain 13 3.25 Jordan 13 3.85 Hong Kong SAR 13 4.19
Switzerland 14 4.56 Ireland 14 3.21 Spain 14 3.81 Netherlands 14 4.16
Jordan 15 4.42 Brazil 15 3.20 Italy 15 3.74 Ireland 15 4.04
Norway 16 4.34 Switzerland 16 3.19 Sweden 16 3.64 United Kingdom 16 4.02
Denmark 17 4.34 India 17 3.12 Denmark 17 3.62 Panama 17 3.99
Austria 18 4.24 Korea, Rep. 18 3.02 Kuwait 18 3.53 Spain 18 3.95
Germany 19 4.23 Italy 19 2.82 Finland 19 3.37 France 19 3.86
United States 20 4.21 Kazakhstan 20 2.81 Korea, Rep. 20 3.35 Jordan 20 3.72
United Arab Emirates 21 4.17 Denmark 21 2.80 United Arab Emirates 21 3.07 Italy 21 3.72
Korea, Rep. 22 4.16 Sweden 22 2.67 India 22 2.96 Malaysia 22 3.71
France 23 4.05 Jordan 23 2.58 Austria 23 2.96 Norway 23 3.69
Panama 24 4.05 Belgium 24 2.48 Ireland 24 2.91 Israel 24 3.67
13
Italy 25 4.01 Malaysia 25 2.44 Pakistan 25 2.75 Chile 25 3.63
Israel 26 3.97 United Arab Emirates 26 2.40 China 26 2.74 Sweden 26 3.59
Czech Republic 27 3.85 Ukraine 27 2.39 Norway 27 2.73 Czech Republic 27 3.46
Kuwait 28 3.79 Argentina 28 2.28 Panama 28 2.64 Finland 28 3.44
Finland 29 3.78 Norway 29 2.26 Malaysia 29 2.47 Thailand 29 3.33
South Africa 30 3.75 Finland 30 2.26 South Africa 30 2.38 China 30 3.31
Saudi Arabia 31 3.58 Egypt 31 2.16 Saudi Arabia 31 2.33 Brazil 31 3.31
Bahrain 32 3.57 South Africa 32 2.13 Israel 32 2.28 Vietnam 32 3.30
Slovak Republic 33 3.50 Bahrain 33 2.10 Czech Republic 33 2.05 Slovak Republic 33 3.29
Thailand 34 3.49 Saudi Arabia 34 2.03 Egypt 34 2.04 Poland 34 3.14
Brazil 35 3.46 Mexico 35 2.01 Hungary 35 1.98 Peru 35 3.14
Chile 36 3.43 Indonesia 36 1.96 Thailand 36 1.96 Indonesia 36 3.11
Vietnam 37 3.29 Israel 37 1.89 Brazil 37 1.86 Japan 37 3.03
Poland 38 3.17 Austria 38 1.87 Poland 38 1.84 Turkey 38 3.01
India 39 3.12 Chile 39 1.87 Bahrain 39 1.77 Kuwait 39 2.98
Egypt 40 3.09 Turkey 40 1.83 Philippines 40 1.77 Bangladesh 40 2.97
Turkey 41 2.96 Philippines 41 1.81 Russian Federation 41 1.76 Germany 41 2.96
Argentina 42 2.78 Vietnam 42 1.73 Turkey 42 1.75 Hungary 42 2.95
Peru 43 2.77 Poland 43 1.73 Vietnam 43 1.71 Mexico 43 2.95
Indonesia 44 2.63 Colombia 44 1.65 Bangladesh 44 1.67 Colombia 44 2.90
Philippines 45 2.63 Peru 45 1.60 Venezuela 45 1.65 Ukraine 45 2.90
Pakistan 46 2.62 Panama 46 1.59 Slovak Republic 46 1.52 Kazakhstan 46 2.89
Colombia 47 2.57 Thailand 47 1.58 Chile 47 1.50 South Africa 47 2.89
Kazakhstan 48 2.52 Venezuela 48 1.52 Mexico 48 1.47 India 48 2.76
Venezuela 49 2.49 Hungary 49 1.48 Argentina 49 1.43 Russian Federation 49 2.73
Nigeria 50 2.45 Czech Republic 50 1.41 Peru 50 1.42 Pakistan 50 2.66
Bangladesh 51 2.44 Pakistan 51 1.40 Kazakhstan 51 1.38 Philippines 51 2.54
Ukraine 52 2.38 Nigeria 52 1.26 Indonesia 52 1.35 Korea, Rep. 52 2.50
Hungary 53 2.37 Slovak Republic 53 1.23 Nigeria 53 1.34 Nigeria 53 2.46
Mexico 54 2.37 Kuwait 54 1.13 Ukraine 54 1.33 Argentina 54 2.22
Russian Federation 55 1.80 Bangladesh 55 1.03 Colombia 55 1.27 Venezuela 55 2.14
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1.1: The Financial Development Index

Table 3: Countries ranked within the top three of each Index pillar

FINANCIAL DEVELOPMENT INDEX PILLARS


Financial Number of 4. Banking 5. Non-banking
Development times ranked 1. Institutional 2. Business 3. Financial financial financial 6. Financial 7. Financial
Country/Economy Index 2009 rank in top three environment environment stability services services markets access

Australia 2 2 — — — — 3 — 1
Austria 18 1 — — — — — — 2
Canada 6 1 — — — — — — 3
Denmark 10 2 2 1 — — — — —
Hong Kong SAR 5 2 — — 3 1 — — —
Japan 9 1 — — — 3 — — —
Norway 17 3 3 3 1 — — — —
Singapore 4 3 1 2 — — — 3 —
Switzerland 7 1 — — 2 — — — —
United Kingdom 1 3 — — — 2 1 2 —
United States 3 2 — — — — 2 1 —

in performance in the different dimensions of financial particularly by low scores in banking system and currency
systems represented. In Table 3 this finding is also appar- stability. At the same time, there is evidence of contin-
ent, as economies that are ranked in the top three spots ued strength across the financial intermediation pillars
in each pillar do not necessarily achieve a strong overall that capture such measures as the depth and efficiency of
score or high scores in other pillars. their banking systems (the United States is weaker than
A country such as Norway achieves very strong the United Kingdom here) the provision of important
performance across the more “foundational” pillars related non-banking financial services such as IPOs, M&A
to institutional environment, business environment, and activity, and insurance; and the size and activity of their
financial stability, yet is not as strong across the three financial markets.
14
financial intermediation pillars and the financial access If one believes that financial stability should take a
pillar. Austria achieves a first-place showing in financial more prominent role in the Index than factors such as
access, yet has scores that are not as strong in other pillars financial intermediation, what would that mean for the
with an overall ranking of 18th place in the Index. performance of countries like the United States and
Thus a strong performance in one or even several United Kingdom within the Index? Table 4 illustrates how
of the pillars does not necessarily translate to a strong the scores of the United States and the United Kingdom
performance for a country in the overall ranking.This would be affected by increased weighting of the financial
has important implications for how the Index should be stability pillar. All pillars are currently weighted equally
viewed in the context of the current global financial in the Index, which implies a weighting of approximately
crisis. Given the degree to which the current crisis has 14 percent for each. As the weighting of the financial
compromised the functioning of financial systems, stability pillar is increased, first by 20 percent and then
changed assumptions behind financial system governance, by 40 percent, one sees that the rankings for the United
and impacted the lives of many who have felt its effect States and the United Kingdom stay the same. It is only
in the real economy, it may be tempting to construe the when the weighting is increased by 60 percent (to an
Index as a proxy for how stable or unstable countries’ absolute weighting of 23 percent) that the ranking of
financial systems are. It may also be tempting to view the United States drops by one place.When the weight-
the Index as an indicator of how favorable an economy ing of the pillar is increased by 80 percent (representing
is for investment.These views are both inaccurate as the an absolute weighting of over 25 percent of the total
Index is both broader and longer term in scope: it looks Index), the United Kingdom still remains in the top
at many different and often complex factors that support position while the United States is still within the top 5.
the long-term development of the financial systems it Thus, even when increased weighting lends a greater
assesses. Financial stability is only part of the assessment of importance to financial stability, this appears to be offset
how well financial systems in these countries contribute by the other relative strengths of the financial systems in
to overall economic growth through the diversification these two countries.
of risks and the efficient allocation of capital to those
who most need it. Financial stability and access in developing countries
Consistent with the origins of the current financial This year’s Index points up some interesting findings
crisis in the United Kingdom and the United States, with respect to financial stability and access to financial
these countries show very low scores in the financial services in the developing economies covered. First, the
stability pillar (37th and 38th, respectively), driven rankings and scores within the financial stability pillar
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1.1: The Financial Development Index


Table 4: Financial stability pillar: Sensitivity analysis Table 5: Financial stability: Top 20 economies
2009
rank Economy Score
ORIGINAL WEIGHT 1 Norway 5.73
Pillar Weight (%) 2 Switzerland 5.66
1 14.29 3 Hong Kong SAR 5.63
4 Chile 5.62
2 14.29
5 Singapore 5.61
3 14.29
6 Saudi Arabia 5.60
4 14.29
7 Canada 5.57
5 14.29
8 Kuwait 5.49
6 14.29
9 Australia 5.48
7 14.29
10 Germany 5.34
Country/Economy Rank Score 11 Finland 5.27
United Kingdom 1 5.28 12 France 5.27
Australia 2 5.13 13 Malaysia 5.14
United States 3 5.12 14 Mexico 5.13
Singapore 4 5.03 15 Brazil 5.13
Hong Kong SAR 5 4.97 16 Czech Republic 5.08
17 United Arab Emirates 5.07
18 Sweden 5.07
1.20 x ORIGINAL WEIGHT 1.40 x ORIGINAL WEIGHT 19 Denmark 4.99
Pillar Weight (%) Pillar Weight (%) 20 Slovak Republic 4.92

1 13.81 1 13.33 Note: Highlighted countries are developing countries as defined by Moody’s
2 13.81 2 13.33 Statistical Handbook (November 2008). Some refinements have been made
3 17.14 3 20.00 to this year's Index that may affect comparability with the previous year's
results.
4 13.81 4 13.33
5 13.81 5 13.33
6 13.81 6 13.33
7 13.81 7 13.33
Country/Economy Rank Score Country/Economy Rank Score financial fundamentals than they had in previous financial 15
United Kingdom 1 5.25 United Kingdom 1 5.23 crises.This included lower liability dollarization, lower
Australia 2 5.14 Australia 2 5.15 fiscal and private debt, and a better aggregate balance
United States 3 5.11 United States 3 5.09 sheet for the financial services sector. For many countries,
Singapore 4 5.05 Singapore 4 5.07
such as Brazil, this was the result of effective macro-
Hong Kong SAR 5 4.99 Hong Kong SAR 5 5.02
economic and financial policy in the wake of past crises
as well as generally favorable economic conditions that
1.60 x ORIGINAL WEIGHT 1.80 x ORIGINAL WEIGHT
included higher commodity prices and strong capital
Pillar Weight (%) Pillar Weight (%)
in-flows in the period preceding the crisis.
1 12.86 1 12.38
For some developing countries, which perform
2 12.86 2 12.38
3 22.86 3 25.71 relatively well in this pillar but poorly in others, this
4 12.86 4 12.38 result may represent the relative lack of integration and
5 12.86 5 12.38 development of their financial intermediaries, which
6 12.86 6 12.38 limited their exposure to the global financial turmoil. As
7 12.86 7 12.38
described previously, in some instances financial stability
Country/Economy Rank Score Country/Economy Rank Score may imply a tradeoff with healthy risk-taking or the
United Kingdom 1 5.21 United Kingdom 1 5.18 efficient allocation of capital to the highest-return
Australia 2 5.17 Australia 2 5.18
investments.
Singapore 3 5.09 Singapore 3 5.11
United States 4 5.07 Hong Kong SAR 4 5.06 The measures of retail access to financial services,
Hong Kong SAR 5 5.04 United States 5 5.05 new to the financial access pillar this year, illustrate some
potentially interesting findings with respect to developing
countries. Figure 3 shows average scores with respect
to commercial and retail access for developing and
illustrate the degree to which the financial systems in developed countries. Commercial access measures
many developing countries have been able to weather include access to equity markets, private credit, and
the current crisis.Table 5 presents the top 20 performers foreign investment that is generally more applicable to
in this pillar. A number of developing economies are larger enterprises.The retail access measures include the
represented here—among them Chile, Malaysia, Mexico, market penetration of bank accounts, number of bank
Brazil, and the Czech and Slovak Republics. branches, ATMs, and the penetration of microfinance—
Many developing economies entered the recent measures that are more applicable to individuals and
downturn with much stronger macroeconomic and small businesses. On average, one sees that developing
Part 1.r3 10/14/09 2:22 PM Page 16

1.1: The Financial Development Index

Figure 3: Comparison of commercial and retail access 2009 scores

5 ■ Commercial access ■ Retail access

4
Score (1–7)

Developing Developed

Note: Categorization of developing and developed countries is based on Moody's Statistical Handbook (November 2008).

16
countries perform nearly as well as developed countries
EUROPE AND NORTH AMERICA
in measures of commercial access. Figure 4 shows that
half of those that score within the top 10 in this category The United Kingdom takes 1st place in the
are developing countries.This may be attributable at Financial Development Index this year with a pronounced
least in part to the ease with which large companies in contrast of strengths and weaknesses across the seven
these economies are able to access foreign capital. pillars.The financial intermediation pillars shows the
By contrast, developing countries appear signifi- greatest strength, offsetting weaknesses in other areas,
cantly weaker with respect to the retail access measures most notably a very poor performance in financial
described above. In addition to a lower average score, stability.The United Kingdom scores high marks with
no developing country scores within the top 10 in this respect to the size of its banking system (1st) though it
category.This finding has important implications given delivers relatively weak performance in its efficiency
the significant role that small enterprises can play in the (24th), which includes measures of both operating effi-
economic growth and welfare of developing countries. ciency and profitability. Strength in financial markets
This may indicate the need for greater emphasis on (2nd) is evident particularly for foreign exchange and
distinct policy responses that address the “last mile” derivatives.The country comes in 1st with respect to
in providing capital and financial services to more insurance, scoring top rankings in indicators such as
distributed, less individually wealthy, yet nonetheless insurance density (1st) and insurance penetration (1st).
important agents within the economy. M&A activity is a clear competitive advantage (1st)
across measures of transaction value and number of
M&A deals; securitization is also strong (1st).
Regional analysis It is important to note that the impact of activities
While some high-level trends were highlighted in the such as securitization on financial stability are not cap-
previous section, it is also at the country level that some tured in the non-banking financial services pillar but in
of the potentially more useful findings from this Report the financial stability pillar.The United Kingdom scores
can be drawn.The country profiles contained in Part 2 very low in overall financial stability (37th), particularly
of this Report provide detailed information with which in currency stability (44th) and banking system stability
to undertake this analysis. A summary of highlights (45th). Aspects of its institutional environment (15th) are
drawn from these profiles is presented below by region. in need of improvement, especially across areas related to
regulation and oversight, including official supervisory
power (28th), centralization of economic policymaking
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1.1: The Financial Development Index


(43rd), public trust of politicians (25th), and corporate Figure 4: Top 10 countries in the commercial and retail
governance (22nd).Taxation (20th) was also a specific access subpillars
area of weakness, as indicated by the distortive effect of
taxes and marginal tax rates. Measures of financial access
7th pillar: Financial access
(16th) are not exceptionally strong.
The United States comes in at 3rd place in the
overall Index this year, with a similar mix of contrasting
strengths and weaknesses across the seven pillars. Strengths
COMMERCIAL ACCESS RETAIL ACCESS
can be seen in the country’s financial intermediation,
particularly with respect to non-banking financial serv- Country Score Country Score

ices (2nd) and financial markets (1st).The United States Hong Kong SAR 1 Australia 1

has deep and active financial markets across the four Singapore 2 Austria 2
Panama 3 Denmark 3
types of markets we have captured. Size is an important
Netherlands 4 Belgium 4
component of performance across these financial markets,
Bahrain 5 Canada 5
but indicators of activity such as stock market turnover
Switzerland 6 United States 6
(3rd), stock market value traded (4th), and spot foreign United Arab Emirates 7 Italy 7
exchange turnover (2nd) also signify strengths.The Chile 8 Spain 8
country performs well in measures of non-banking Jordan 9 Switzerland 9
financial services such as M&A activity (2nd) and secu- Canada 10 France 10
ritization (1st). However, as with the United Kingdom,
the impact of the systemic risk potentially created by
some of these activities is captured only in the financial Note: Highlighted countries are developing countries as defined in Moody's
Statistical Handbook (November 2008).
stability pillar; the United States achieves very low scores
in overall financial stability (38th). Particular disadvan-
tages are evident in currency stability (50th) and bank-
ing stability (36th) measures.The banking system in
general also exhibits signs of weakness, with relatively 17
lower scores in size (21st) and efficiency (26th). Potential the current crisis, it nonetheless has performed very well
areas of improvement in the institutional environment with respect to overall financial stability (2nd). Potential
include the strength of auditing and reporting require- areas of improvement in its institutional environment
ments (25th), the regulation of securities exchanges include contract enforcement and the strength of investor
(29th), and public trust of politicians (26th). protection.The size of its banking system as scaled by
Canada comes in 6th in the FDI, with a generally GDP is a source of strength (5th), although its efficiency
solid performance across all the pillars of the Index. (22nd) and degree of financial disclosure (40th) lowers
Financial access is a particular area of strength: Canada is its score in the banking pillar (14th overall in this pillar).
3rd in this pillar, with strong showings across the meas- A 4th place ranking in financial markets is driven by the
ures of both commercial and retail access.The country strength of its equity and foreign exchange markets.
demonstrates consistent strength across all three financial Similar to Switzerland, the Netherlands delivers
intermediation pillars: banking financial services (8th), solid results across most of the FDI pillars, which earns
non-banking financial services (7th), and financial mar- it 8th place in the rankings. However, the effects of the
kets (12th). Despite its high degree of economic inte- crisis seem to weigh a bit more heavily on its score, as
gration with the United States, Canada shows clear reflected in its 21st place ranking in the financial stability
divergence from its biggest trading partner with respect pillar. Good corporate governance (4th) is a particular
to financial stability, where it comes in 7th out of the strength, as is its infrastructure (5th).The size of the
FDI country sample.The stability of the banking system Dutch banking system is a clear advantage, coming in
(2nd) is a particular strength within this pillar. In terms 3rd place, contrasted by its score in banking efficiency
of its institutional environment, Canada shows consistent (31st). Consistent high marks across other areas of finan-
high marks across most measures of corporate gover- cial intermediation are also evident in a strong showing
nance, though official supervisory power (34th) emerges in non-banking financial services (5th) and financial
as a potential area for improvement. Other potential markets (10th). Neighboring Belgium has weaker
areas of improvement include the strength of legal rights scores in financial stability (33rd) and in the financial
(29th) and the cost of enforcing contracts (23rd).The intermediation pillars such as non-banking financial
distortive effects of taxation (25th) also represents a services (24th); its overall rank of 13th place is
potential development area in the business environment. bolstered by a strong score in financial access (4th).
Switzerland ranks 7th in the Index, with strong Denmark has been added to the countries covered
scores across its institutional environment.While the by the FDI this year and it takes 10th place, propelled
country has not been immune to distress as a result of by strong scores in its institutional environment (2nd)
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1.1: The Financial Development Index

and business environment (1st). Consistent strengths corporate governance (52nd) and legal and regulatory
across areas such as legal and regulatory issues (3rd), issues (50th). Human capital (28th) emerges as a relative
human capital (2nd), and infrastructure contribute to the bright spot.
country’s good showing. Performance across the finan- The Russian Federation comes in 40th in the
cial intermediation pillars is less strong, although FDI, bolstered in large part by strength in non-banking
Denmark delivers solid scores in financial access (6th). financial services such as IPOs (3rd) and securitizations
Sweden (14th), Norway (17th), and Finland (19th) (3rd). Although a three-year average is used to smooth
showed a degree of similarity across their profiles, with out volatility in these types of transactions, the data may
strength in their institutional and business environments still reflect unusually high activity in this category. By
and contrasting relative weakness in their financial inter- contrast, Russia’s banking system scores poorly (53rd) and
mediation pillars. None of the Scandinavian countries there is room for improvement across most elements of
or Finland show particularly strong access to financial its institutional environment, such as corporate governance
services. (53rd), legal and regulatory issues (53rd), and contract
France takes 11th place in the overall FDI ranking, enforcement (35th).
with consistently solid scores across most of the pillars.
Its financial markets take 8th place, with advantages in
foreign exchange (9th), bonds (7th), and derivatives
(1st).The country comes in 8th in non-banking finan- ASIA AND THE PACIFIC
cial services but ranks a relatively weaker 23rd in bank- Countries in the Asia and Pacific region show a
ing, pulled down primarily by the relatively small size of high degree of variation across the FDI rankings, as they
its banking sector. Its banking system has shown a rela- did last year. Australia comes in 2nd in the overall
tively high degree of stability through the current crisis, rankings and leads the region through solid performance
with a 12th place ranking this year. Corporate gover- in both banking (5th) and non-banking (3rd) financial
nance (28th) emerges as a potential development area services.The efficiency of its banks, where it earns 1st
within France’s institutional environment, while taxation place in the rankings, is a key strength; the stability of its
(35th) and cost of doing business (29th) are areas of rel- banking system (10th) and a low risk of sovereign debt
18 ative weakness in the business environment. crisis (1st) underpins its relatively high degree of finan-
Similar to France, Germany (12th) shows relative cial stability through the current crisis. A less-developed
strength in its financial markets, with a 7th place ranking bond market is one of the country’s few weak spots,
in this pillar.The stability of its banking system (7th) also particularly in terms of public domestic bond market
bolsters its ranking. Although stable, banks in Germany capitalization (34th). Australia’s relative weakness in
score a relatively low 36th in terms of efficiency as commercial access to capital (21st) is offset by its high
measured across operational efficiency and profitability. level of retail access to capital (1st), enabling Australia to
In terms of its business environment, infrastructure is a achieve the highest level of overall financial access in the
particular area of strength (6th), while taxes and subsidies Index.
emerge as having a distortive effect on competition. Australia is followed closely by Singapore (4th)
Potential development areas include the need for greater and Hong Kong SAR (5th).These two economies
official supervisory power (28th) and stronger investor show consistent strength across their institutional and
protection (38th). Access to capital and financial services business environments, as well as high scores in financial
is a significant drag on the country’s ranking, with low stability (5th and 3rd, respectively).Within the banking
scores in both commercial (43rd) and retail (35th) access. pillar, both economies show room for improvement
Italy comes in 21st in the rankings, with its finan- with respect to financial information disclosure; however,
cial markets—particularly its bond markets (9th)—being this is offset by the efficiency of their banks (2nd
a relative strength. Financial access (21st) is consistent with and 4th, respectively).The size of Hong Kong’s banking
its overall ranking, although there is a stark contrast system (as scaled by GDP) is a particular competitive
between commercial access (52nd) and retail access advantage, with its 2nd place ranking. Non-banking
(7th). Key development areas within its institutional financial services are strong in both economies, a result
environment include corporate governance (54th) and that appears to translate into broad commercial access to
contract enforcement (52nd). capital. Singapore and Hong Kong place 2nd and 1st,
Of the Eastern European countries, the Czech respectively, in the Index for commercial access. And
Republic scores the highest, coming in at 33rd with a although they both exhibit healthy equity and foreign
generally even performance across the Index pillars. exchange markets, bond market development is an area
Financial stability, with a 16th place ranking, is a partic- for improvement in both economies, particularly Hong
ular strength. Ukraine (53rd) has the lowest ranking in Kong (34th); also some areas—such as securitization—
Eastern Europe, with a last-place finish in financial sta- appear relatively undeveloped, particularly in Hong
bility (55th) and room for improvement across most Kong (48th).
aspects of its institutional environment, including
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1.1: The Financial Development Index


Japan ranks four spots below Hong Kong, at 9th system (40th), and develop the country’s infrastructure
place in the overall FDI rankings.The country’s sound (43rd) are potential development areas in the country’s
financial intermediation is primarily responsible for business environment (40th).The country’s highly stable
its overall performance. Japan’s banks are sizeable and currency and low risk of sovereign debt crisis contribute
efficient, supporting a 3rd place ranking in the banking to the stability of the overall system (23rd), although the
financial services pillar. Similar strengths are seen across financial strength of its banking system scores relatively
non-banking financial services such as IPO and M&A poorly (47th). It is worth noting that implicit or explicit
activities and insurance.The country does less well with government guarantees are not considered as part of this
respect to its institutional environment, where high cen- measure. China’s banking financial services are sizeable
tralization in economic policymaking (46th) and lower (8th), yet are considerably less efficient (30th) and are
public trust of politicians (32nd) serve as major impedi- pulled down by a high degree of public ownership
ments. Japan’s business environment also demonstrates (48th) and weaker profitability (34th). Meanwhile, the
room for improvement, particularly in areas of human country’s non-banking financial services also provide
capital such as the quality of its management schools serious competitive advantages, particularly its IPO
(44th) and the effects of brain drain and the ease of activity (ranked 1st).
hiring foreign labor (29th). Financial stability represents Thailand (35th) displays a consistently sound
another development area for the country, with a less- performance across most of the Index pillars.The most
stable banking system (40th) and currency (36th). salient shortcoming for Thailand’s financial system can
The robust performance in measures of financial inter- be seen in the weak score for the stability of its banking
mediation noted above do not seem to translate into system (52nd), a disadvantage driven both by the frequency
enhanced financial access, with the country scoring a of past crises (48th) and a measure of the current financial
relatively weak 37th in this pillar. strength of its banks (42nd). By contrast, a relatively stable
Malaysia (22nd) does consistently well across most currency (9th) helps support the stability of the overall
aspects of its financial system. A stable currency underpins financial system.The country’s non-banking financial
the country’s relatively stable financial system (13th). Its services are hindered by under-developed securitization
strength as an Islamic banking center appears evident in a activity (50th) and a less-developed insurance sector
relatively high score in the banking pillar (12th), with a (49th). 19
high degree of financial disclosure being a key contributor India scores 38th in the overall FDI, with advantages
here. Substantial M&A activity (14th) in the country’s seen in financial intermediation across non-banking
non-banking financial services is offset by relatively financial services (17th), as well as robust derivatives
low development of the insurance sector (40th). Less- and foreign exchange markets. However, the country’s
developed derivatives and foreign exchange markets serve institutional environment (48th) is considerably weakened
as potential development areas for Malaysia’s financial by lower levels of financial sector liberalization (51st)
markets (29th), although the country’s well-developed as well as a low degree of contract enforcement (50th).
bond market (15th) is a clear advantage. India’s business environment (48th) is also affected by
Korea’s overall ranking of 23rd in the FDI is bol- two particular challenges—an absence of adequate infra-
stered by strong scores across its business environment. structure (51st) and a high cost of doing business (50th).
Key strengths include a healthy pool of human capital These areas of difficulty translate into highly constrained
supported by a high tertiary enrollment rate (2nd) and financial access; this is particularly evident in measure-
the high quality of math and science education (11th). ments of retail access to capital (47th).
A low cost of doing business (15th) and healthy Although Vietnam (45th) and Kazakhstan (47th)
telecommunications infrastructure also contribute to the display weaknesses across a number of aspects of their
country’s score in this pillar. Insurance (6th) emerges as financial systems, competitive advantages do also exist.
a particular advantage in the financial intermediation In Vietnam, a low degree of external vulnerability (4th)
categories, with consistently solid scores across banking and a relatively small percentage of external debt to
and non-banking activities as well as its financial markets. GDP (18th) boost the banking system’s stability. In
However, despite these competitive advantages, financial both countries, considerable IPO activity is an advantage
access in the country is highly constrained (52nd), with in non-banking financial services. Kazakhstan further
poor marks for both commercial (47th) and retail (45th) benefits from substantial securitization activity (4th),
access to capital. although—as with Russia—unusually high activity in
Despite some areas of integration of China’s (26th) this area may represent an anomaly in terms of a long-
financial system with that of Hong Kong’s, some notable term trend.
distinctions remain between the two economies. China’s Bright spots in the financial system of Indonesia
financial system is hindered by a less-developed institu- (48th) take the form of the country’s significantly stable
tional environment, with corporate governance (35th) currency (14th) as well as a fair degree of securitization
evident as a key development area. A need to develop activity (25th). However, these advantages are not enough
human capital (37th), improve the efficacy of the tax to offset generally weaker scores across other areas of
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1.1: The Financial Development Index

financial intermediation such as banking financial Financial stability is a key contributor to Brazil’s
services (44th) and the overall institutional (45th) and ranking of 34th in the overall Index, as the country
business environments (52nd). has exhibited stability across its banking system (25th)
Pakistan (49th), the Philippines (50th), and through the current crisis; its currency stability (3rd) is a
Bangladesh (54th) round out the representation of particular advantage. Although the country possesses the
Asian countries in the FDI, all falling within the bottom Index’s highest official supervisory power (1st), Brazil’s
10 countries of the Index. A high degree of political and institutional environment remains relatively weak in
economic instability are probably contributing to weak areas related to legal and regulatory issues (49th) and
scores across Pakistan’s institutional (52nd) and business contract enforcement (42nd).The country’s business
(50th) environments; likewise, the country shows a very environment is dragged down by an inefficient tax col-
high risk of sovereign debt crisis (54th).The stability lection system (55th), a high cost of doing business
of its banking system (29th) is relatively strong by con- (43rd), and less-developed human capital (42nd). A high
trast. Despite generally low levels of stability, the finan- degree of IPO activity (4th) contributes to the country’s
cial systems of Pakistan and the Philippines also provide relatively high scores in non-banking financial services.
some indications of strength.The Philippines benefits Peru’s placement at 42nd in the rankings is
from a relatively high degree of currency stability.The supported by the relative stability of its financial system
two countries also show relative advantages in their (22nd) and its banking system in particular (15th).
financial markets, as seen particularly in Pakistan’s fairly However, the country displays weaker performance
developed equity market (27th) and the Philippines’ across most other areas of its financial system, including
active bond market (23rd). Bangladesh’s clear competitive its institutional and business environments, its banking
advantage exists in its retail access to capital (16th).The and non-banking financial services, and, most signifi-
country’s solid performance here can be mainly attributed cantly, its financial markets (50th).Two bright spots are
to its achievement of the highest rate of microfinance seen in Peru’s non-distortionary tax system (16th) and
borrowers in the Index. the fairly good disclosure of financial information (21st)
within the country’s banking system.
Mexico (43rd) and Colombia (46th) demonstrate
20 lower levels of development in a number of areas of
LATIN AMERICA their respective financial systems. A stable currency and
A sound institutional environment and broad financial considerable stability in the banking system represent
access are the key drivers of Panama’s place as the advantages held by both countries. Additionally, Mexico’s
highest-ranked Latin American country on the Index non-banking financial services are boosted by a large
(29th).The country’s business environment is reasonably share of securitization deals (13th) and moderate M&A
developed with a fairly low cost of doing business. In activity (27th). Mexico’s strengths within financial stability
contrast, Panama’s stable banking system (9th) is offset and intermediation appear to translate into good retail
by an unstable currency (45th) and a fairly high risk access to capital (23rd) in the country. Colombia’s area
of a sovereign debt crisis (39th).The country’s banking of relative strength outside of financial stability is seen in
financial services are sizeable (19th) when scaled by the country’s lower cost of doing business (22nd).
GDP, and efficient (23rd). However, its non-banking Argentina (51st) and Venezuela (55th) round out
financial services (46th) are uniformly weak, with low the Latin American rankings and also place among the
IPO and M&A activity as well as limited securitization bottom five countries in the Index. Repeated episodes
and a less-robust insurance sector. Its financial markets of banking crises in Argentina, combined with a high
include a well-developed bond market (11th), which far risk of sovereign debt crisis, impact the overall stability
outpaces the development of its equity market (53rd). of the country’s financial system (53rd). A relative
Chile comes in two ranks below Panama at 31st strength of Argentina’s business environment is its
place this year.The high degree of overall stability in human capital (27th), which is driven by a high tertiary
the country’s financial system (4th) surpasses the level enrollment rate and good-quality management schools.
present in any other Latin American country included However, these advantages are more than countered by
in the FDI. Chile’s very stable banking system (3rd), a distortionary and inefficient tax system as well as the
fairly stable currency, and moderately low risk of a high cost of doing business in the country.Very strong
sovereign debt crisis all work to augment its financial financial information disclosure (2nd) is an advantage of
stability. Financial markets represent the least-developed its banking system, while a high degree of securitization
area of Chile’s financial system.This is particularly so in activity (6th) shows some robustness of non-banking
the case of the country’s bond market (40th). Commercial financial services. As an oil-producing nation,Venezuela
access to capital in the country (8th) is significant, while does show some areas of relative strength across the sta-
retail access is more constrained (28th), leading to a bility of its currency (2nd), a current account surplus
moderate level of overall financial access (25th). (8th), and a low level of external debt (6th).Yet these
few bright spots are not enough to lift Venezuela off of
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1.1: The Financial Development Index


its last-place finish in the overall FDI rankings. to stability. Despite a stable banking system (16th), the
Weaknesses across almost all areas of its institutional and country’s high risk of sovereign debt crisis and less stable
business environment are paralleled by undeveloped currency contribute to a low level of overall financial
financial intermediaries and the lowest possible ranking stability (50th).
in financial access (55th). Bahrain (27th) shows competitive advantages in
the quality of its institutional environment, including a
substantially liberalized financial sector (16th) and solid
corporate governance (20th).The country’s business
MIDDLE EAST AND NORTH AFRICA environment features a fairly low cost of doing business
The United Arab Emirates (UAE) achieves the (12th) as well as a favorable tax regime (4th). Like
highest ranking of all Middle Eastern and North African Jordan, the stability of the country’s financial system is
countries in the FDI at 20th place, demonstrating some bolstered by a stable banking system (13th) but weak-
contrasts in performance across the pillars of the Index. ened by an unstable currency (52nd). Bahrain joins all of
The country’s highly stable banking system (1st) con- the higher-ranked Middle Eastern countries in exhibit-
trasts with a high risk of sovereign debt crisis (41st). A ing strong IPO activity and high capital access for com-
favorable tax regime (2nd) is a key component of its mercial use (5th).
business environment, although this is partly offset by its Israel delivers a fairly sound performance across all
high cost of doing business (41st).The UAE’s banks are of the FDI measures to support its overall ranking of
efficient (18th), although financial information disclo- 28th. Some areas of weakness can be seen with respect
sure is poor. Data limitations preclude the effective to an unstable currency (47th) and moderately high risk
benchmarking of the size of its banks or its financial of a sovereign debt crisis (30th), which offset the banking
markets other than equities (25th). Consistent with its system’s high level of stability (11th). Strong financial
relatively developed equity markets, the UAE has shown information disclosure (15th) by banks in Israel stands in
significant IPO activity in recent years, though the last- contrast to its Middle Eastern peers.The banking system
ing impact of the financial crisis on these activities has and equity markets are the strongest financial intermedi-
yet to be seen.The ease of access to loans and financing aries in Israel, ranked at 26th and 15th, respectively.
through local equity markets contribute to high com- Retail access to capital in the country (14th) surpasses 21
mercial access to capital (7th) in the country. that available for commercial purposes (19th), in contrast
The financial system of Saudi Arabia (24th) mir- to the performance of other Middle Eastern countries
rors that of the UAE in several respects. Saudi Arabia’s in the access pillar.
banks are highly profitable according to the measures Kuwait (30th) and Egypt (36th) are the lowest-
captured in the FDI, yet they are not very big when placed countries in the region, although both rank near
scaled by GDP (42nd).They are also relatively weak in their geographical peers.The institutional environments
terms of financial information disclosure (43rd). Strong in the two countries are diminished by several factors,
IPO activity contrasts with a low level of M&A activity including poor contract enforcement and less-effective
in the country’s non-banking financial services.The corporate governance.While similar in their institutional
country’s highly stable banking system (5th) and fairly challenges, Kuwait and Egypt differ considerably in other
stable currency (15th) contribute to high stability in the areas. Kuwait’s business environment is strengthened by
overall financial system (6th). Broad access to capital in an effective tax policy (16th). As is true in Saudi Arabia,
Saudi Arabia for commercial use (15th) parallels a the high degree of stability in Kuwait’s financial system
strength found in the UAE. (8th) is due to a very stable banking system. As an oil-
Jordan places one rank below Saudi Arabia at 25th producing country, it exhibits a low risk of sovereign
in the FDI, but displays different areas of relative strength debt crisis and a stable currency. Kuwait’s banks score
and weakness. Jordan’s reasonably strong institutional well in efficiency (8th) though they are not particularly
environment is limited by poor corporate governance large, even when scaled by GDP. Financial access in
(41st) and a lack of sufficient contract enforcement Kuwait (39th) is the most restricted of the Middle
(38th). A favorable tax regime (23rd) represents one Eastern countries included in the Index.
bright spot within the country’s business environment By contrast, commercial access to capital is strong in
(37th), while a high cost of doing business and less- Egypt (16th).The country’s fairly stable banking system
developed infrastructure serve as disadvantages.The (19th) is countered by a less-stable currency and a high
country also features a well-developed equity market risk of sovereign debt crisis.The country’s banking
(14th), considerable IPO activity (16th), and banking system is sizeable (17th), but an opportunity for improve-
financial services (15th) that are both sizeable and effi- ment exists with respect to its efficiency (51st). Egypt’s
cient. A notable level of financial access exists in Jordan, insurance sector represents a competitive advantage for
particularly through commercial channels (9th). In con- the country and is ranked 18th for this indicator.
trast to the financial systems of the two highest-ranked
Middle Eastern countries, Jordan fares poorly with respect
Part 1.r3 10/14/09 2:22 PM Page 22

1.1: The Financial Development Index

Notes
SUB-SAHARAN AFRICA 1 Khan and Senhadji 2000.

South Africa (32nd) displays sound performance 2 Schumpeter held that financial intermediaries select the firms
that utilize an economy’s savings. More formally, his view
in most of the FDI pillars. Its institutional environment
stipulated that financial intermediaries tend to adjust the process
features strong corporate governance practices (7th) of savings allocation rather than alter the savings rate itself. Thus,
complemented by world-class accounting and auditing Schumpeter’s notion of finance and development focuses on the
effect of financial intermediaries on productivity growth and the
standards (1st). Its insurance sector is also well developed, rates of technological change.
with a high degree of penetration (2nd).The country’s 3 For a detailed review of the literature on finance and growth, see
banking system has fared reasonably well through the Levine 2004.
current crisis, ranking 17th of all countries covered by 4 For further discussion of the impact of financial crises on the
the FDI. In contrast, its business environment continues poor, please see Chapter 1.3, “Financial Development, Financial
Crises, and the Millennium Development Goals” by Erik Feyen.
to be negatively impacted by its lower development of
5 Ranciere et al. 2008. This research does not suggest that financial
human capital (50th) and bottlenecks in infrastructure
crises are good for economic growth. Rather, it suggests that
(48th). Retail access to financial services (43rd) is also the systemic risk taking that overcomes financial bottlenecks to
constrained. economic growth is associated with occasional financial crises.

With an overall ranking of 52nd, Nigeria exhibits 6 For a detailed review of the literature on finance and growth, see
Levine 2004.
strength in the stability of its banking system (4th) with
a generally low incidence of crises.Yet such stability is not 7 La Porta et al. 1997, 1998, 1999; Levine 1998, 1999; and Barth et
al. 1999.
accompanied by robust financial intermediation; both
8 Bekaert and Harvey 2005 also held explicitly that reforms that
banking and non-banking financial services demonstrate strengthen a country’s legal environment and investor protection
significant limitations.The banking system is small even are most likely the true cause for better growth prospects.
when scaled by GDP, with low levels of bank deposits 9 Barth et al. 2007.
(54th) and private credit (51st).The development of the 10 Barth et al. 2007.
country’s non-banking financial services sector is nega-
11 La Porta et al. 1997; King and Levine 1993.
tively affected by a less-robust insurance sector as well as
12 Schleifer and Vishny 1997.
limited equity offerings and M&A activity. As in South
22 Africa, capital availability is greater for commercial use 13 Tavares 2002.

than through retail channels, and overall financial access 14 Galor and Zeira 1993.
remains low (53rd). 15 Fitzgerald 2007.

16 See Grilli and Milesi-Ferretti 1995; Kraay 1998; Rodrik 1998; and
Edison et al. 2002a for findings related to the positive relationship
Conclusion between liberalization and growth. The works of Quinn 1997; Klein
and Olivei 1999; and Quinn and Toyoda 2008 support the relation-
The scale of the current financial crisis has rightfully stim- ship. Research presented in Edison et al. 2002b; Chanda 2003;
ulated movements to design and implement coordinated and Arteta et al. 2003 found the relationship to be ambiguous.

global governance of financial systems commensurate 17 De la Torre et al. 2008.


with their interdependence.Yet, as indicated in the brief 18 Ito and Chin 2007.
highlights above, the challenges and contexts for financial 19 Levine 1997.
systems across the world’s major economies are varied
20 Outreville 1999.
and complex. Solutions at the global level must be
21 Barro 1991.
accompanied by the rigorous prioritization and imple-
mentation of reforms at the local level that are targeted 22 Beck 2006.

to address the most pressing weaknesses and to cultivate 23 Loayza and Ranciere 2002.
existing strengths. 24 Rojas-Suarez 2003. The inaccuracy of these measures was found
Users of this Report are encouraged to explore the to be the result of poor accounting and regulatory frameworks and
an inability to establish the “real” worth of banks due to illiquid
wealth of data in the country profiles and data tables that markets for subordinated debt, bank shares and other liabilities
follow as a useful starting point to inform this analysis. and assets.

The data they contain are by no means exhaustive or 25 Goldsmith 1969.


without limitations.They should be scrutinized and, 26 Ito and Chinn 2007.
where appropriate, challenged. However, we believe 27 Levine 2004.
this Report is unique in the comprehensiveness of the
28 That such channeling and efficient allocation occurs is empha-
framework it provides and the richness of relevant data sized based on two premises: (1) financial intermediaries provide
it brings to bear on financial system development.We liquidity, and (2) financial intermediaries are capable of altering the
riskiness of assets; see Claus and Grimes 2003.
sincerely hope that others will find it useful and help
29 Gerschenkron 1962, in addition to others, asserts that banks
us achieve its goal of promoting the full potential of
finance growth in a more effective and efficient way than market-
financial systems to mobilize capital in the service of based systems, particularly in underdeveloped economies where
human welfare and prosperity. non-bank financial intermediaries are generally less sophisticated.

30 Rajan and Zingales 2001.


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1.1: The Financial Development Index


31 Levine 1997, 2001. Bekaert G., C. R. Harvey, and C. Lundblad. 2001. “Emerging Equity
Markets and Economic Development.” Journal of Development
32 Barth et al. 1999. Economics 66 (2001): 465–504.
33 Demirgüç-Kunt and Levine 2001. Bekaert, G. and C. R. Harvey. 2005. “Research in Emerging Markets
34 Noyer 2006. Finance: Looking to the Future.” Emerging Markets Review 3 (4):
429–48.
35 Lin 2007.
Browne, C., R. Bryden, M. Delgado, and T. Geiger. 2008. “The Executive
36 Carmichael and Dissou 2000. Opinion Survey: The Voice of the Business Community.” The
Global Competitiveness Report 2008–2009. Hampshire: Palgrave
37 Vittas 1998. MacMillan. 67–77.
38 Levine and Zervos 1996 employed several indicators for stock Carmichael, B. and Y. Dissou, 2000. “Health Insurance, Liquidity and
markets spanning size (market capitalization ratio) and liquidity Growth.” Scandinavian Journal of Economics 102 (2): 269–84.
(stock market turnover and stock market value traded both as
shares of GDP). Chanda, A. 2003. “The Influence of Capital Controls on Long Run
Growth: Where and How Much?” Journal of Development
39 Arestis et al. 2001. Economics 77: 441–66.
40 Demirgüç-Kunt and Levine 2001. Chinn, M. S. and H. Ito. 2008. “A New Measure of Financial Openness.”
41 Fink et al. 2003. Journal of Comparative Policy Analysis 10 (3): 309–22.

42 See http://imf.org/external/np/speeches/2007/082207.htm. Claus, I. and A. Grimes. 2003. “Asymmetric Information, Financial


Intermediation and the Monetary Transmission Mechanism: A
43 Beck et al. 2005. Critical Review.” Treasury Working Paper Series 03/19. New
Zealand Treasury.
44 Three countries were added to the Index this year—Bangladesh,
Denmark, and Jordan—which may contribute to the decline in Demirgüç-Kunt, A., T. Beck, and M. Peria. 2006. “Banking Services for
ranking for some countries depending on their rank relative to Everyone? Barriers to Bank Access and Use Around the World.”
these countries. World Bank Policy Research Working Paper No. 4079.
Washington DC: The World Bank.

Demirgüç-Kunt, A. and R. Levine. 2001. Financial Structures and


Economic Growth: A Cross- Country Comparison of Banks,
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La Porta, R., F. Lopez-de-Silanes, A. Shleifer, and R. W. Vishny. 1997. Shleifer, A. and D. Wolfenzon. 2000. “Investor Protection and Equity
“Legal Determinants of External Finance.” Journal of Finance 52: Markets.” Harvard Institute of Economic Research Paper 1906.
1131–50. Cambridge: Harvard University.

———. 1998. “Law and Finance.” Journal of Political Economy 106: Shleifer, A. and R. Vishny. 1997. “A Survey of Corporate Governance.”
1113–55. Journal of Finance 52 (2): 737–83.

———. 1999. “Corporate Ownership Around the World.” Journal of Tavares, J. 2002. “Firms, Financial Markets and the Law: Institutions
Finance 54: 471–17. and Economic Growth in Portugal.” Paper presented at the
Desenvolvimento Económico Português No Espaço Europeu:
Levine, R. 1997. “Financial Development and Economic Growth: Views Determinantes E Political, sponsored by Banco de Portugal. May
and Agenda.” Journal of Economic Literature 35: 688–726. 24–25.
———. 1998. “The Legal Environment, Banks, and Long-Run Economic
24 Growth.” Journal of Money, Credit and Banking 30 (3): 598–13.
Vittas, D. 1998. “The Role of Non-Bank Financial Intermediaries (with
Particular Reference to Egypt).” Policy Research Working Paper
———. 1999. “Law, Finance, and Economic Growth.” Journal of Series 1892. Washington, DC: World Bank.
Financial Intermediation 8 (1/2): 8–36.

———. 2001. “Bank-Based or Market-Based Financial Systems: Which


Is Better?” NBER Working Paper No. 9138. Cambridge: National
Bureau of Economic Research.

———. 2004. “Finance and Growth: Theory and Evidence.” NBER


Working Paper No. 10766. Cambridge: National Bureau of
Economic Research.

Levine, R. and S. Zervos. 1996. “Stock Markets, Banks, and Economic


Growth.” World Bank Policy Research Working Paper No. 1690.
Washington, DC: World Bank.

Lin, J.J. 2007. “The Nature and Importance of Insurance.” College


of Commerce at National Chengchi University. Available at
http://www.rmi.nccu.edu.Tw/modules/news/data/
2007%2020_Nature_and_Importance_Insurance.ppt.

Loayza, N. and R. Ranciere. 2002. “Financial Fragility, Financial


Development, and Growth.” World Bank Policy Research Working
Paper No. 3431. Washington DC: World Bank.

McKinnon, R. I. 1973. Money and Capital in Economic Development.


Washington, DC: Brookings Institution.

Nardo, M., M. Saisana, A. Saltelli, S. Tarantola, A. Hoffman, and E.


Giovannini. 2005. “Handbook On Constructing Composite
Indicators: Methodology and User Guide.” OECD Statistics
Working Paper JT00188147, STD/DOC(2005) 3. Paris:
Organisation for Economic Co-operation and Development.

Noyer, C. 2006. “Financial Systems for Economic Growth.” Paper


Presented at the Third Conference of the Monetary Stability
Foundation: Challenges to the Financial System—Ageing and Low
Growth. Frankfurt-am-Main. July 6.

Outreville, J. F. 1999. “Finanacial Development, Human Capital and


Political Stability.” UNCTAD Discussion Paper 142. Geneva:
United Nations Conference on Trade and Development.

Quinn, D. P. 1997. “The Correlates of Changes in International Financial


Regulation.” American Political Science Review 91: 531–51.
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1.1: The Financial Development Index


Appendix A: Structure of the Financial Development Index 2009

This appendix presents the structure of the Financial the equity and bond market subpillars, and a 20 percent
Development Index (FDI). weight was assigned to the foreign exchange and deriva-
The numbering of the variables matches the num- tives market subpillars.This was done to signify the rela-
bering of the data tables.The number preceding the tively greater importance of equity and bond market
period indicates to which pillar the variable belongs development.
(e.g., variable 1.01 belongs to the first pillar). For many variables, especially those related to the
The hard data indicators used in the FDI are nor- size and depth of the financial system, scaling by GDP
malized on a 1-to-7 scale in order to align them with was deemed necessary to control for country size.
the Executive Opinion Survey’s results.1 The Technical Scaling by GDP also allows for more relevant cross-
Notes and Sources at the end of this Report provide country comparisons.
detailed information on all the hard data indicators.
In some instances, the interaction among different
variables was also captured, because certain variables can Index structure
be considered more beneficial in the presence of others. The percentage next to each category in the list below
For instance, the effect of liberalizing the capital account represents the category’s weight within its immediate
and the domestic financial sector has been found in parent category.The computation of the FDI is based
empirical studies to be mixed, yielding both positive and on successive aggregations of scores, from the variable
negative results. However, the presence of a strong legal level (i.e., the lowest level) all the way up to the overall
and regulatory environment and a developed bond mar- FDI score (i.e., the highest level), using the weights
ket tends to mitigate the negative effects of the liberal- reported below. For example, the score a country
ization process.To account for this, the scores of the achieves on the bond market development subpillar
capital account liberalization, commitments to WTO comprises 30 percent of the country’s financial markets
agreement on trade in services within the financial serv- pillar (VI) score. Likewise, the score a country achieves
ices sector, and domestic financial sector liberalization in the 5th pillar accounts for 14.29 percent of the FDI
score. 25
indexes were adjusted. Any country above the average
standardized scores for the legal and regulatory environ- A dynamic weighting regime removes individual
ment and bond market development experienced posi- variables from the subpillar and pillar calculations when
tive effects as a result of the liberalization process, while no data are present.The weight normally attributed to a
the opposite is true for countries with scores lower than particular variable will be spread among variables for
these averages.2 which data are present.Therefore, the actual weight for
each variable by country may not be exactly as noted.

Weighting and scaling of variables 1st pillar: Institutional environment .................14.29%


One of the key design principles of the Index is the A. Financial sector liberalization ......................25.00%
inclusion of the breadth of variables relevant to the 1.01 Capital account liberalization
financial development of both emerging and developed 1.02 Commitments to WTO agreement on trade in
economies. Given the emphasis placed on the compo- services
nent parts of the Index as a framework for analysis, we 1.03 Domestic financial sector liberalization

have taken a very conservative approach to the weight- B. Corporate governance ..................................25.00%
1.04 Extent of incentive-based compensation
ing of variables.We have generally weighted different
1.05 Efficacy of corporate boards
components of the Index equally. 1.06 Reliance on professional management
In some instances, there was sufficient cause to 1.07 Willingness to delegate
assign different weights to the subpillars within the 1.08 Strength of auditing and reporting standards
Index.Within the financial stability pillar, banking sys- 1.09 Ethical behavior of firms
tem stability is weighted more (40 percent) than curren- 1.10 Protection of minority shareholders’ interests
1.11 Official supervisory power
cy stability and risk of sovereign debt crisis (30 percent
1.12 Private monitoring of the banking industry
each).Within the banking financial services pillar there
C. Legal and regulatory issues .........................25.00%
are three subgroups: the size of the banking system, the 1.13 Burden of government regulation
efficiency of the banking system, and the role of finan- 1.14 Centralization of economic policymaking
cial information disclosure.The first two variables were 1.15 Regulation of securities exchanges
weighted 40 percent each in this pillar, while the last 1.16 Property rights
variable was weighted at 20 percent, thus placing more 1.17 Intellectual property protection
1.18 Diversion of public funds
importance on the size and efficiency of the banking
1.19 Public trust of politicians
system than on the role of disclosure.Within the finan- 1.20 Corruption perceptions index
cial markets pillar, a 30 percent weight was assigned to
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1.1: The Financial Development Index

Appendix A: Structure of the Financial Development Index 2009 (cont’d.)

1.21 Strength of legal rights index 4th pillar: Banking financial services...............14.29%
A. Size index.......................................................40.00%
D. Contract enforcement...................................25.00% 4.01 Deposit money bank assets to GDP
1.22 Effectiveness of law-making bodies 4.02 Central bank assets to GDP
1.23 Judicial independence 4.03 Financial system deposits to GDP
1.24 Irregular payments in judicial decisions 4.04 M2 to GDP
1.25 Time to enforce a contract 4.05 Private credit to GDP
1.26 Number of procedures to enforce a contract 4.06 Bank deposits to GDP
1.27 Strength of investor protection 4.07 Money market instruments to GDP
1.28 Cost of enforcing contracts
B. Efficiency index..............................................40.00%
4.08 Aggregate profitability indicator
2nd pillar: Business environment ......................14.29% 4.09 Bank overhead costs
4.10 Public ownership of banks
A. Human capital ...............................................25.00%
4.11 Bank operating costs to assets
2.01 Quality of management schools
4.12 Non-performing bank loans to total loans
2.02 Quality of math and science education
2.03 Extent of staff training C. Financial information disclosure..................20.00%
2.04 Local availability of specialized research 4.13 Private credit bureau coverage
and training services 4.14 Public credit registry coverage
2.05 Brain drain and ease of hiring foreign labor
2.06 Tertiary enrollment
5th pillar: Non-banking financial services ......14.29%
B. Taxes ...............................................................25.00%
A. IPO activity.....................................................25.00%
2.07 Irregular payments in tax collection
5.01 IPO market share
2.08 Distortive effect on competition of taxes
5.02 IPO proceeds amount
and subsidies
5.03 Share of world IPOs
2.09 Marginal tax variation
2.10 Time to pay taxes B. M&A activity ..................................................25.00%
5.04 M&A market share
26 C. Infrastructure .................................................25.00%
5.05 M&A transaction value to GDP
2.11 Quality of overall infrastructure
5.06 Share of total number of M&A deals
2.12 Quality of telephone infrastructure
2.13 Internet users C. Insurance ........................................................25.00%
2.14 Broadband Internet subscribers 5.07 Insurance premiums, direct
2.15 Telephone lines 5.08 Insurance density
2.16 Mobile telephone subscribers 5.09 Real growth of direct insurance premiums
5.10 Insurance penetration
D. Cost of doing business .................................25.00%
5.11 Relative value-added of insurance to GDP
2.17 Cost of starting a business
2.18 Cost of registering property D. Securitization.................................................25.00%
2.19 Cost of closing a business 5.12 Securitization to GDP
2.20 Time to start a business 5.13 Share of total number of securitization deals
2.21 Time to register property
2.22 Time to close a business
6th pillar: Financial markets...............................14.29%
A. Foreign exchange markets...........................20.00%
3rd pillar: Financial stability...............................14.29% 6.01 Spot foreign exchange turnover
A. Currency stability ..........................................30.00% 6.02 Outright forward foreign exchange turnover
3.01 Change in real effective exchange rate 6.03 Foreign exchange swap turnover
3.02 External vulnerability indicator B. Derivatives markets ......................................20.00%
3.03 Current account balance to GDP 6.04 Interest rate derivatives turnover: Forward rate
3.04 Dollarization vulnerability indicator agreements
3.05 External debt to GDP (developing economies) 6.05 Interest rate derivatives turnover: Swaps
3.06 Net international investment position to GDP 6.06 Interest rate derivatives turnover: Options
(advanced economies) 6.07 Foreign exchange derivatives turnover: Currency
B. Banking system stability ..............................40.00% swaps
3.07 Frequency of banking crises 6.08 Foreign exchange derivatives turnover: Options
3.08 Financial strengths indicator C. Equity market development.........................30.00%
3.09 Manageability of private debt 6.09 Stock market turnover ratio
3.10 Aggregate measure of real estate bubbles 6.10 Stock market capitalization to GDP
C. Risk of sovereign debt crisis ........................30.00% 6.11 Stock market value traded to GDP
3.11 Local currency sovereign rating 6.12 Number of listed companies per 10,000 people
3.12 Foreign currency sovereign rating
3.13 Aggregate macroprudential indicator
3.14 Manageability of public debt (Cont’d.)
3.15 Credit default swap spreads
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1.1: The Financial Development Index


Appendix A: Structure of the Financial Development Index 2009 (cont’d.)

D. Bond market development ..........................30.00%


6.13 Private domestic bond market capitalization to GDP
6.14 Public domestic bond market capitalization to GDP
6.15 Private international bonds to GDP
6.16 Public international bonds to GDP

7th pillar: Financial access.................................14.29%


A. Commercial access .......................................50.00%
7.01 Financial market sophistication
7.02 Venture capital availability
7.03 Ease of access to credit
7.04 Financing through local equity market
7.05 Ease of access to loans
7.06 Foreign direct investment to GDP
B. Retail access ..................................................50.00%
7.07 Market penetration of bank accounts
7.08 Commercial bank branches
7.09 Total number of ATMs
7.10 Total number of point of sale (POS) devices
7.11 MFI borrowers’ penetration rate

Notes
1 See Browne et al. 2008. The standard formula for converting hard
data is the following:

27
(country score – sample minimum)
6 x + 1
(sample maximum – sample minimum)

The sample minimum and sample maximum are, respectively, the


lowest and highest country scores in the sample of countries cov-
ered by the FDI. In some instances, adjustments were made to
account for extreme outliers. For those hard data variables for
which a higher value indicates a worse outcome (e.g., Frequency
of banking crises, Entry restrictions for banks), we rely on a nor-
malization formula that, in addition to converting the series to a 1-
to-7 scale, reverses it so that 1 and 7 still corresponds to the
worst and best possible outcomes, respectively:

(country score – sample minimum)


–6 x + 7
(sample maximum – sample minimum)

2 The average score for the legal and regulatory environment was
4.07. The average score for the bond market development was
3.07.
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Part 1.r3 10/14/09 2:22 PM Page 29

1.2: This Time It’s Different


CHAPTER 1.2 In 2008 there was a lot of discussion about emerging
market economies being able to decouple from the US
recession and financial crisis. But, in spite of these argu-
This Time It’s Different: ments, first financial re-coupling and then real economic
re-coupling took place once the advanced economies’
Transmission of the Global financial tsunami became global after the summer and
fall of 2008.This led to a severe contagion in emerging
Financial Crisis to Emerging market economies. It is often said that “when the United
Market Economies and the States sneezes, the rest of the world catches the cold”;
this time around, the United States was not sneezing but
Domestic and International rather had caught a severe case of chronic pneumonia;
thus the financial contagion, followed by the real conta-
Policy Response gion, became virulent even in emerging markets.

NOURIEL ROUBINI, New York University and RGE Monitor


Status of emerging markets at the onset of the crisis
AYAH EL SAID, RGE Monitor
At the onset of the global financial crisis, economic and
financial fundamentals of the emerging market economies
were much more robust than they had been in previous
episodes of global turmoil.This was particularly evident
in Latin America and Asia.This time around, emerging
market economies entered the crisis with improved
macroeconomic and financial fundamentals: they had
moved from current account deficits to current account
surpluses, they had moved from fixed exchange rates to
more flexible ones, they had gone from having a low
stock of foreign reserves to having a war chest of 29
reserves, they had moved from fiscal deficits and primary
deficits to smaller deficits and primary surpluses, they
had reduced the stock of their public debt—domestic
and/or external—relative to GDP, and they had
improved the supervision and regulation of their banks
and other financial institutions.They had also lowered
their balance sheet imbalances by reducing maturity
mismatches, currency mismatches, and debt versus equity
mismatches. And they had less liability dollarization
than in the past, especially in Latin America where such
liability dollarization had been endemic for a long time.
The relative resilience of emerging markets to exter-
nal shocks was not only a result of the good policies
implemented, but also the result of good luck: 2004–07
was a very favorable period of external conditions for
emerging markets in a booming global economy. Among
the external conditions that positively affected emerging
markets prior to the crisis were the high level of global
growth (4.7 percent over the period 2003–07);1 the sharp
rise in commodity prices; and international investors’
search for yield, along with their low risk aversion,
which together led to their massive investment in the
asset markets of emerging countries. All these favorable
conditions led to huge capital inflows into emerging
markets in the boom years.
With the collapse of Lehman Brothers on September
15, 2008, however, the global financial crisis swiftly
spread beyond the United States and spillover effects
were felt in emerging markets very rapidly, triggering
the start of their own economic and financial downturn.
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1.2: This Time It’s Different

The financial tsunami was associated with a dramatic for countries that entered the crisis with large current
increase in risk aversion; massive liquidity shortages in account deficits; these countries experienced sharp
global financial markets; plunging asset prices in both depreciation pressures on their currencies because of
advanced and developing economies; increased emerging their large and unsustainable external balances.
market spreads; the unraveling of carry trades, which
translated into a sizeable weakening of the high-yielding Financial and bank credit channel
emerging market currencies; downward pressures on The direct impact of the global financial crisis on banks
currencies; and a significant retrenchment of bank lend- in emerging markets depended on the amount of toxic
ing to emerging economies.Thus, the global financial assets they were holding.With very few exceptions, this
crisis was seen to hit emerging markets through several exposure was extremely limited in the financial institu-
channels of transmission and re-coupling that will be tions of emerging markets. Among the Asian countries,
considered in more detail in the next section for example, China’s financial sector is still largely con-
trolled by the government, and because of this it had
only limited exposure to the sub-prime mortgages in
Transmission channels the United States.
The global financial crisis hit emerging markets through However, the indirect financial effects of the crisis
(1) trade channels, (2) financial channels, and (3) com- were more significant for emerging markets despite
modity channels via the sharp drop in commodity prices. their sound macroeconomic and financial fundamentals.
Among the strongest transmission channels, however, Such effects were reflected in the significant plunges in
was the trade channel, as the recession sharply lowered the stock markets of emerging countries and a sharp
demand for emerging market exports. reduction in capital flows, which in some cases took the
form of a sudden stop of capital.The latter was apparent
Trade and commodity channels especially in countries with external imbalances, such as
An important factor in the impressive growth of emerg- those in emerging Europe. As increasingly risk-averse
ing markets since 2004 was the rapid increase in their and capital-losing investors and financial institutions in
export earnings; this was especially the case for those advanced economies pulled capital out from emerging
30 in Asia. However, when the recession hit the United market economies, the stock markets, bond markets, and
States and other G-7 countries, their demand for currencies of emerging countries contracted sharply.
exports from emerging market economies diminished Since the ample global liquidity prior to the global
sharply, leaving them vulnerable to declining export financial crisis left many emerging markets exceedingly
receipts. China, Korea, Malaysia, Singapore, and Thailand dependent on external sources of capital, they became
were particularly hard hit through the trade channel. increasingly vulnerable to a sudden stop of these capital
It is worth noting that in January 2009, exports flows.Thus, when banks and international investors in
of goods in emerging markets plunged by 25 percent advanced economies significantly decreased their exposure
compared to a year earlier.The fall in the US dollar to emerging markets, funding for sovereign debt and
value of exports was also the result of plunging com- corporate borrowing severely dried up. Consequently, the
modity prices: after peaking in mid 2008, prices fell cost of external financing soared for emerging markets
rapidly, reflecting the fall in external demand for the with widening spreads on sovereign external debt and
exports of goods and services of emerging markets. corporate borrowing.
For example, oil prices peaked above US$140 a barrel The emerging markets whose banking systems are
in the summer of 2008, but then plunged to US$30 mostly owned by foreign financial institutions—such as
by the first quarter of 2009.The sharp fall in world those in emerging Europe—were relatively hurt more
trade and in commodity prices was also a result of a by the global liquidity and credit crunch.This occurred
“blockage” of world commercial credit after the Lehman as the capital losses in the home countries of banks
collapse. Some estimates suggest that almost 80 percent with massive exposure to emerging markets led them
of world trade is fairly contingent upon credit; clearly to retrench and cut their exposures to their foreign sub-
the lack of access to trade credit contributed to the sharp sidiaries in emerging markets.Yet it should be noted
fall in world exports.2 The World Bank estimated that that, for the most part, the problems of emerging market
world trade, which was growing over 7 percent in 2007, banks were limited to liquidity issues rather than concerns
will contract by about 10 percent in 2009 and will be about insolvency.Thus, emerging market banks did not
practically flat in 2010.3 need bank recapitalization funds as much as they needed
The sharp fall in commodity prices severely dam- liquidity support. However, the credit crunch and
aged the export earnings of a large number of countries reduced bank lending led to lower levels of investment
that are major exporters of commodities. Even non- and lower growth rates in 2009.
energy commodity prices plunged significantly, with
detrimental effects for emerging markets that export such
goods.4 The contraction in trade is particularly serious
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1.2: This Time It’s Different


Which emerging markets were affected by which participation of foreign banks in the Indian banking sec-
channels? tor managed to curtail any direct effects on the domestic
It is important to note that the countries that were economy.7 Yet India’s capital inflows had been hard hit,
affected most during the crisis were those with the least which exerted pressure on its balance of payments. Since
sound macro and financial fundamentals. At the outset some Indian banks relied on wholesale external funding,
of the global financial crisis, there were two types of rather than retail deposits alone, the global liquidity and
countries. First, there were those with current account credit crunch led to a domestic credit squeeze.
surpluses that—in some ways—withstood the crisis In the case of China, the global financial crisis
better.This group of countries continued to fare better manifested itself with a sharp drop in Chinese exports
than their counterparts with current account deficits, (as US consumers retrenched and reduced their imports
who experienced severe financial pressures because of of Chinese goods) and lower foreign direct investment
their large external imbalances. (FDI). Most significant was the fact that Chinese exports
Most of the countries with large external imbal- and imports in February 2009 had fallen 25.7 percent
ances—over 20 of them—are in emerging Europe and and 24.1 percent, respectively, on a year-on-year basis,
some of the former Commonwealth of Independent while FDI inflows dropped for seven consecutive months,
States (CIS) countries.These countries had, to different plunging 22.5 percent in April 2009 compared with
degrees, a number of macro and financial vulnerabilities: April 2008 when FDI was surging by 70.2 percent on a
current account deficits, fixed or very managed exchange year-on-year basis.8 China also witnessed a downward
rates, overvalued currencies, fiscal deficits and public correction in real estate prices coupled with sharp drops
debt accumulation, large foreign currency liabilities and in the Shanghai Stock Exchange index.
maturity mismatches leading to rollover/liquidity risks, a Generally, the banks in emerging markets appear to
low level of foreign currency reserves, and imbalances have been more sheltered from the global financial crisis
both in the public sector and the private sector (house- than their counterparts in advanced economies because
holds, financial institutions, and corporations). Many of their limited exposure to toxic assets, lower levels of
emerging countries, such as Russia and countries in leverage, and sounder supervision and regulation.
emerging Europe, experienced a large increase in private- Specifically, banks in emerging Asia and Latin America
sector external liabilities. In some countries, such as appear to have also limited their foreign currency expo- 31
Brazil and Mexico, corporations were also involved in sures and financed their credit growth through local
risky carry trades. deposits.Thus, the need for recapitalization funds was
Latin America and Asia, on the other hand, were limited to a few countries such as Hong Kong, India,
affected mostly through lower commodity prices, which and Korea.
sharply reduced their export revenues. In emerging Asia Eastern Europe, on the other hand, was hit hard,
there was also a sharp drop in manufactured exports. as its macro fundamentals were weak to begin with.
External funding risks, nevertheless, were less severe in This region witnessed a severe wave of capital outflows
these regions than they were in weaker emerging markets because of the liquidity dry-up and the global delever-
due to Latin America and Asia’s better external balances, aging. Real estate bubbles burst—most notably in Latvia
bigger international reserves, smaller refinancing needs, and Lithuania—where rapid increases in housing prices
and deeper local funding markets.5 In the case of India, had taken place during the years of the credit boom.
falling export receipts and tightened credit were the Lower commodity prices also hit CIS countries hard.
main channels through which it was hit. Cross-border bank funding was interrupted as a result of
In Latin America, plummeting stock markets and the banking crisis in Western Europe.The fact that banks
currencies, lower exports, lower commodity prices, and in Eastern Europe were dependent on cross-border
lower remittances from Latin workers in the United credit from banks in Western Europe was coupled with
States and Europe were among the conduits of the crisis. a high degree of foreign ownership of banks in Eastern
Portfolio flows experienced sharp declines because of Europe.Thus, financial pressures in Eastern Europe—
the increased risk aversion of international investors and especially in the Baltics, Belarus, Bulgaria, Hungary,
the increased currency vulnerabilities.Yet, as in the case Romania, and Ukraine—sharply increased.9
of other emerging markets, the accumulation of sizeable Because this time the global financial crisis took the
gross (non-reserve) assets invested abroad acted as a form of a liquidity crisis rather than an insolvency one
buffer, shielding Latin America from the worst of the for emerging markets, domestic support via central
crisis. Relative repatriation of such assets in 2008 man- banks’ injections of liquidity into the banking system
aged to improve the region’s external financial position was employed to avoid bank runs.
during the current crisis.6
The impact of the US sub-prime mortgage crisis
on Indian banks and its financial sector as a whole was
roughly insignificant, however, because of the sector’s
narrow exposure to toxic assets. Also, the fairly low
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1.2: This Time It’s Different

Current account imbalances and capital flows to of the global financial system—that is, from advanced
emerging markets economies.
The whirl in global asset markets since 2007 set off
sizeable fluctuations in global capital flows.Within this Four differences in terms of domestic and international
context, highly tenacious imbalances have unpredictably policy response
lessened, and the sudden stop of capital flows into Not only were there differences in terms of the origins
emerging markets implied significant corrections in of the financial crisis, there were also significant differ-
those markets’ external imbalances. Most notable were ences in the way the domestic and international policy
the corrections in current account imbalances. After responses to the crisis took form.
reaching a peak at the end of 2007/early 2008, current
account imbalances—especially those between advanced International policy response
economies—narrowed. In the case of emerging markets, In 2007, the conventional wisdom held that the
however, current account corrections occurred when International Monetary Fund (IMF) itself was in a crisis
global commodity prices plunged. because it had almost no clients left for its emergency
Thus, US$300 billion was knocked out of the lending facilities after the crises of the 1990s and of
Gulf Cooperation Council’s (GCC) external surplus the first part of the current decade.This was the case
of GCC countries in 2008. Russia’s current account because most emerging economies improved their macro
surplus has fallen by US$80 billion. Latin America’s and financial fundamentals and graduated from the
deficit has risen as the impact of the recession has been IMF’s emergency lending. But the most recent global
felt.10 In the case of Central and Eastern Europe (CEE), financial crisis has restored the role of the IMF as a
corrections in current account imbalances gained pace at major international lender of last resort.
the start of 2009 because of large currency depreciations Specifically, countries with macro and financial
and plunging domestic demand, import demand being weaknesses had to rely on traditional IMF conditionality
no exception. Specifically, the severe credit constraints lending (loans in exchange for macro/financial reforms).
endured by households and businesses resulted in a severe At the same time, countries with stronger macro funda-
retrenchment in import demand, leading in turn to hefty mentals were also at risk of a liquidity run.Thus, the
32 drops in their current accounts. Changing current account IMF resorted to creating new facilities to provide large
dynamics may also occur in case when a default on capital liquidity support with no strings attached to countries
payments occurs, either through debt restructuring or with strong fundamentals, which were also at risk of a
capital controls, or both.11 The changing dynamics of liquidity run in light of the reversal of capital inflows.
external imbalances may also be reflected in the plum- Hence, since the summer of 2008, the IMF has
meting of the deficits of the private sector—in light of authorized at least US$50 billion in “standby arrange-
the collapse of private demand—in addition to the sky- ments” (SBAs) to 14 countries. SBAs are intended to
rocketing of public-sector deficits.12 address financing needs for countries with less sound
The global economy fell sharply in the fourth quarter economic fundamentals and are conditional on macro-
of 2008 and the first quarter of 2009. GDP in the three economic targets, mainly fiscal targets. Hungary, Pakistan,
largest economies—the United States, the Euro area, and and Ukraine made the biggest arrangements.What is
Japan (G-3)—fell by an average of 8.8 percent, seasonally even more significant is the fact that amounts provided
adjusted annual rate, over that six-month period—a rate were generally much larger—relative to quota—than
of decline not previously witnessed in the post-war the rescue packages provided to emerging market
period.This pattern of extreme weakness was shared economies in any of the crises in the 1990s.To give
across all economies, and was propagated by a collapse just one example: in 1997, a very large emerging market
in world trade and global industrial activity. economy, such as Korea, received an IMF package that
Emerging markets endured large portfolio outflows was less than US$10 billion. In 2008 a much smaller
at the end of 2008; there is a high likelihood that such economy, such as Romania, received a package of US$20
outflows will persist beyond 2009 because of prolonged billion.
pressures for leveraged investors to cast off assets and the The IMF has so far provided US$3.9 billion out
risk of further redemptions from emerging market of the US$7.4 billion loan approved to Pakistan. In
funds, in addition to crowding out from government- Hungary’s case, the IMF announced a US$15.7 billion
guaranteed mature market bonds.13 agreement for an economic rescue package under a
17-month SBA. Hungary obtained a total of US$25.5
billion in a loan package from the IMF, the European
Differences between then and now Union, and the World Bank as early as October 2008 to
In previous crisis episodes, financial pressures in emerging avoid an economic crisis caused by its high level of debt.
markets were triggered by macro and financial vulnera- The IMF also expanded the magnitude its “normal”
bilities internal to those markets. In the current crisis, loans, stretched the conditions under which it can allow
instead, shocks have instead originated from the center
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1.2: This Time It’s Different


large loans, and abridged the structural component of its liquidity risk because foreign exchange reserves yield a
lending arrangements.14 very low return.
For countries with stronger economic fundamentals, Thus, since emerging markets need some interna-
the IMF created what is known as the flexible credit line tional lending of last resort to deal with liquidity risk,
(FCL), which is a vital element of its new approach to we consider alternatives to the expensive accumulation
lending designed to avoid liquidity runs in these coun- of foreign exchange reserves.19 One option is the IMF’s
tries.The FCL is a precautionary lending tool that should new FCL, which is a form of contingent credit line.
act toward restoring investors’ confidence in a sound Another option is the one of bilateral swap lines such as
economy that is at risk of an international liquidity run.15 those created by the Fed and the ECB for some emerg-
The FCL offers greater flexibility than the traditional ing markets.The open issue is whether such temporary
SBAs because it does not come with traditional IMF swap arrangements could be institutionalized and made
conditionality. It is also available to IMF member more permanent as forms of contingent liquidity support
countries deemed to possess very strong fundamentals, in times of pressure. A third option is to pool reserves
policies, and track records of policy implementation.16 among emerging market economies.This is—in part—
Access to an FCL arrangement is based on the requesting the spirit of the Chiang Mai Initiative (CMI) among
country having met the criteria of strong fundamentals the Association of Southeast Asian Nations (ASEAN)
and a track record of policy implementation instead countries on one hand and the three leading Asian
of satisfying ex-post performance standards. Countries economies (China, Japan, and Korea) on the other
that have received FCL support so far are Colombia, hand.20 The use of the pooled reserves among the CMI
Mexico, and Poland. Mexico’s FCLs were given with members has, so far, been limited, and an open issue
a US$47 billion precautionary arrangement, while remains of how much such reserve use should be subject
Poland and Colombia’s precautionary credit lines stood to IMF conditionality. A final option is to consider
at US$20.5 billion and US$10.4 billion, respectively.17 whether the international financial institutions should
In addition to IMF support, a variety of swap lines create new types of facilities that provide semi-automatic
were created between the Fed and the European insurance to emerging countries against liquidity risk.
Central Bank (ECB) on one side and several emerging The difficult and open question for insurance facilities
markets on the other side; this was indeed is a variant is whether the access and use of such facilities should be 33
of international lending of last resort. Specifically, in subject to policy conditionality.
April 2009, Mexico activated a US$30 billion swap line
with the Fed to assist domestic companies with debt Domestic policy responses
problems denominated in foreign currency. Mexico’s The nature and number of domestic policy responses
decision to tap the Fed swap line (coupled with FCLs) in emerging market in the wake of the current global
considerably lessened any existing apprehensions about financial crisis has been very different from that of
Mexico’s balance of payments vulnerabilities. Among the previous crises.Traditionally, the policy response of
other beneficiaries of such swap lines were Korea and emerging markets to domestic or international financial
Singapore with a US$30 billion swap line facility for pressures was pro-cyclical rather than countercyclical
each with the Fed, designed to increase dollar liquidity. because emerging markets had a history of poor macro
The Inter-American Development Bank (IADB) and financial policies and weak policy credibility. If a
also announced in late 2008 that it would provide a crisis was triggered by domestic vulnerabilities, emerg-
US$6 billion credit line to member governments and ing markets had to tighten monetary and fiscal policy as
increase its more traditional lending for specific projects. a way to avoid the risk of a liquidity crisis and the risk of
More broadly, as of April 2009, multilateral development a disorderly collapse of the currency value.This policy
banks jointly pledged US$88 billion to emerging and tightening—however necessary to avoid a more severe
developing countries in response to the global financial crisis—would usually lead to a more severe recession.
crisis.These funds cover policy loans, trade finance, But in the current crisis, emerging markets were able to
political insurance, and equity investment funds for bank implement countercyclical policies because of their
restructuring.18 much stronger macro and financial fundamentals, low
The international policy response to the crisis fiscal deficits, lower levels of inflation, and overall greater
poses a broad range of important questions: in the last policy credibility.
decade, emerging markets have dealt with the risk of a Policy intervention by emerging markets in the
liquidity/rollover crisis primarily with self-insurance. current crisis took the form of monetary easing to prop
Specifically, they built a war chest of foreign exchange up liquidity, via lower policy rates and reserve require-
reserves as a defense against a run on their currencies ments, as well as foreign exchange interventions to
or on the short-term foreign currency liabilities of their increase foreign currency liquidity for the private sector.
public and/or private sectors. But such self-insurance— Support to the banking system included deposit guaran-
as opposed to relying on IMF conditionality that comes tees and bank recapitalization, in addition to interven-
with many strings attached—is a costly way to deal with tions aimed at steadying money and capital markets.
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1.2: This Time It’s Different

Emerging countries also implemented measures that countercyclical monetary easing, and the overall slow-
would guarantee financing to priority borrowers such as down of economic growth.
small- and medium-sized enterprises.These measures The currency policy response differed widely across
have successfully contributed to lowering the cost of the emerging markets. Some economies aggressively
financing and maintaining the flow of bank credit in intervened to prevent excessive currency depreciation,
emerging markets.21 thus losing a significant amount of their foreign reserves
The largest fiscal stimuli were implemented in in their attempt to minimize currency movements.These
China, Hong Kong, Kazakhstan, Kuwait, Russia, and countries include Malaysia and Peru. Other economies,
the United Arab Emirates; each economy’s stimulus such as Chile, kept the intervention to a minimum, and
amounted to at least 10 percent of GDP,22 with the aim thus experienced a greater depreciation of their currency.
of boosting expenditure to counterbalance the decline Others, such as Brazil, Croatia, and Korea, took the mid-
in demand. Policy measures that involved propping up dle road, both allowing the currency to depreciate from
the private sector of emerging markets were introduced the external pressures and also intervening to prevent
in cases of debt roll-over incapability—particularly with excess depreciation.Yet others, such as Russia, initially
regard to the foreign component of such debt obliga- intervened aggressively to prevent currency depreciation,
tions.This was clear in Latin America, where the size- but then allowed significant depreciation once the stock
able drop in public external debt provided governments of foreign reserves became dangerously low.
with additional scope to alleviate some of the stress in The differential currency and reserve response
the private sector. reflected the size of the shocks experienced by different
CEE countries have gone through a brutal liquidity countries as well as some of their individual structural
and credit crunch because of their banks’ dependence on features.The terms of trade shocks experienced by Chile
external funding.As a result of their limited fiscal ability— were larger than those of Peru, and thus warranted a
apart from Russia and Kazakhstan—the amount of stim- greater depreciation. Liability dollarization is much greater
ulus implemented by their governments has been trivial in in Peru than in Chile and Brazil; thus the Peruvian
the face of the recession they have endured. If anything, authorities are reluctant to let the currency depreciate,
the emerging European countries with fiscal weakness— given the risks of negative balance sheet effects. Russia
34 such as Latvia and Hungary—had to implement fiscal was concerned about the risk of a bank run (it has a
contractions in order to restore policy credibility. history of such runs during episodes of currency crisis)
Also, because of the better financial conditions of and about the balance sheet effects of a depreciation of
emerging market banks and the fact that their problems the foreign currency liabilities of financial institutions
were associated with liquidity rather than solvency, most and corporate firms; thus, the government’s massive
emerging market domestic policy responses did not intervention in the foreign exchange market allowed
include much recapitalization for banks. But given the economic agents who needed to hedge foreign currency
rising rate of defaults—which may jeopardize banking liabilities to do so. Once such hedging occurred, letting
stability—that could be expected in some weaker the currency sharply depreciate became less risky.
emerging markets, and given also the fact that asset quality Malaysia has been concerned about excessive currency
deterioration is a lagging indicator of an economic depreciation since it re-pegged to the US dollar in 1998,
slowdown,23 an increase in the non-performing loans but it allowed limited currency depreciation within its
in emerging market banks may require a reconsideration managed basket peg.
of the policy responses for banks. One new important element of policy response in
this crisis is that the IMF did not request those countries
Currency: No pressure to depreciate with a fixed exchange rate regime that were in distress
Generally, the global financial crisis shed light on the to depreciate their currency as a condition for the IMF’s
foreign exchange liquidity shortages with which emerg- financial support.The clearest example of this policy is
ing markets had to deal.With the collapse of Lehman that of Latvia, where, so far, the IMF has—however ten-
Brothers, emerging market currencies depreciated sharply; tatively—accepted the view of the country’s authorities
Latin America is one prominent example, as countries and the European Union that currency depreciation
in the region witnessed severe currency depreciations.24 should be avoided. Concerns about regional contagion,
Some governments have responded by boosting foreign the uncertainty about the impact devaluation would have
exchange liquidity to restrain currency depreciation, on Latvia’s exports in light of the global slowdown, and
depending on the amount of foreign exchange reserves about the effects of such depreciation on the foreign
accumulated by the respective governments.The currency banks operating in Latvia and the severe balance sheet
pressures of emerging countries were driven by a com- effects of such devaluation would have in a country
bination of factors: the outflow of foreign capital, the with a large stock of foreign currency liabilities are
sharp fall in commodity prices, the weakening of exter- behind this resistance to a depreciation. A devaluation in
nal balances following the fall in exports, the significant Latvia could put pressure on the currency boards of
Estonia and Lithuania, jeopardizing an already wobbly
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1.2: This Time It’s Different


financial stability in neighboring countries.Yet it should financial support—in the form of liquidity and/or capital
be noted that, although the IMF and the European support or guarantees—for such private-sector agents
Union may continue to increase their financial support was warranted.
for Latvia, that support, as in the case of Argentina, may Indeed, in the current crisis financial pressures have
be tantamount to throwing good money after bad. Given been larger for private-sector agents than for sovereign
that Latvia is in the middle of severe near depression ones.The bulk of the rollover risk was concentrated in
and a real devaluation through domestic deflation will the financial and the corporate sectors.Within this con-
exacerbate the collapse of output, a nominal deprecia- text, government support of such private agents was
tion seems to be necessary and eventually unavoidable. deemed necessary and desirable.27 Corporate sectors in
International resources would be better used to mitigate emerging markets have been mostly affected because of
the collateral damage of such depreciation.25 the increased costs of financing and, in some instances,
foreign exchange losses. And although access to external
No bail-ins of private creditors finance by sovereign borrowers has—to some extent—
In previous episodes of financial crises in emerging been restored, corporate access to credit continued to
markets, the IMF requested some private-sector involve- remain very limited into 2009.28
ment in crisis resolution that took the form of bail-ins Some countries broadened their guarantees of bank
(debt-restructuring) of private creditors in these markets. debt to support the corporate sector, with a special focus
These bail-ins took various forms, from very mild to very on those linked to export markets. And some countries
coercive restructuring.The milder forms included the are propping up trade finance via a range of channels in
monitored commitment of foreign banks to maintain attempts to maintain the flow of trade and contain the
exposure to the emerging market in crisis (Brazil, adverse effects on the real economy. So far, banks in Asia
Turkey), or the semi-forced rollover of the cross-border and Latin America appear to be more and more anxious
interbank lines (and their conversion into medium-term about the quality of their loan books and are also reduc-
loans), as in the case of Korea; more coercive forms of ing working capital financing to corporations. Another
bail-in included restructuring via exchange offers (under apprehension is that funding larger corporations will
the implicit threat of default) of the external sovereign crowd out small- and medium-sized enterprises and
bonded debt of emerging markets with refinancing new entrants.Thus, given the increased threats of large- 35
problems (Pakistan, Ukraine, Uruguay) or the imposition scale corporate failures and defaults, in addition to the
of capital controls (Malaysia).The more radical forms possibility that a proportion of the losses in capital flows
of bail-in included the outright sovereign defaults of may be of a long-term nature, emerging markets should
Argentina, Ecuador, and Russia and the default on the plan to implement the measures needed to deal with
foreign liabilities of private agents (banks, other financial such possibilities.29
institutions, corporate firms).
One of the important features of the current crisis
is that the IMF has not imposed any form of private Conclusions
creditors’ bail-in as a condition for its lending.The Emerging markets were hit by the global the crisis at
reasons for this new approach—which relies much more a time when their macroeconomic and financial funda-
on large IMF lending, a true bail-out,26 and very little mentals were far more robust than they had been during
on creditors’ bail-ins—are several. First, the crisis was previous crises.Yet the financial tsunami resulted in
triggered by shocks external to emerging markets and spillover effects that were felt in these markets very
financial vulnerabilities in the United States and in the rapidly, triggering the start of their own economic and
financial centers of other advanced economies. Second, financial downturn. In previous episodes, financial pres-
there is a perception that this is more a crisis of liquidity— sures in emerging markets had been triggered by macro
which warrants the support of the international lender and financial vulnerabilities internal to emerging markets.
of last resort—than a crisis of solvency where debt Since the current crisis began with a different scenario
restructurings and bail-ins would be warranted.Third, for emerging markets, which had improved fundamentals
with few exceptions, problems in emerging markets while shocks originated from the center of the global
under financial stress have been greater among private- financial system, the policy responses were different as
sector agents than among sovereigns, thus reducing the well. Such differences in policy responses—of interna-
need for sovereign debt restructuring. Fourth, it is hard tional organizations and of particular countries—are in
for the IMF to impose, as precondition for loan condi- terms of magnitude and scale. Country-specific responses
tionality, a coercive restructuring of private external debts: were facilitated by the improved fundamentals of emerg-
in previous crises, such private-sector defaults were trig- ing markets. Despite a sluggish economic recovery for
gered by the crisis rather than imposed externally. Fifth, both emerging markets and advanced economies, the
there was a perception that even the financial pressures recovery of emerging markets is expected to be more
faced by private agents were in more of a liquidity robust than that of advanced economies.The issue of
rather than a solvency form, and thus government financial stability will continue to be a priority for
Part 1.r3 10/14/09 2:22 PM Page 36

1.2: This Time It’s Different

emerging markets as they become more cautious about ———. 2009b. “Fallout for the Emerging Market Economies.” BIS 79th
Annual Report. Available at http://www.bis.org/publ/arpdf/
the sequencing of financial sector liberalization, financial ar2009e5.pdf.
deepening,30 and financial development in general.
BNP Paribas. 2009. “Flexible Credit Lines and Emerging Markets.”
Available at www.rgemonitor.com/
redir.php?clid=13746&sid=1&tgid=0&cid=341280.
Notes Deutsche Bank Research. 2009. “Emerging Market Anti-Crisis
1 Truman 2009. Measures: Separating the Wheat from the Chaff.” Available at
www.dbresearch.com/PROD/DBR.../PROD0000000000242794.P
2 For further discussion of the effects of financial stress on DF.
economic activity, see La Caxia 2009.
Euromonitor. 2009. “The Global Financial Crisis: Eastern Europe and
3 For a comparison of world trade figures in goods and services for CIS Hit Hard.” Available at http://www.euromonitor.com/
the years 2007–10, see World Bank 2009a: Chapter 1, p. 24, The_global_financial_crisis_Eastern_Europe_and_CIS_hit_hard.
Figure 1.1.
IMF (International Monetary Fund). 2009a. Global Financial Stability
4 Commodity price index figures can be seen in Figure 1.2 of World Report: Responding to the Financial Crisis and Measuring
Bank 2009a, chapter 1, p. 26. Systemic Risks. Available at http://www.imf.org/external/pubs/ft/
gfsr/2009/01/index.htm.
5 Kato 2009b.
———. 2009b. “IMF Overhauls Lending Framework.” Press Release
6 Jara et al. 2009.
No. 09/85. March 24. Available at http://www.imf.org/external/np/
7 BIS 2009a. sec/pr/2009/pr0985.htm.

8 Morrison 2009. IIF (Institute of International Finance). 2009a. Capital Flows to Emerging
Markets. Available at http://www.iif.com/press/press+90.php.
9 Euromonitor 2009.
———. 2009b. Global Economic Monitor.
10 IIF 2009a.
———. 2009c. “2009 to See Sharp Declines in Capital Flows to
11 IIF 2009a. Emerging Markets, says IIF.” Press Release, January 27. Available
at http://www.iif.com/press/press+90.php.
12 For further discussion of emerging market economies’ external
financing, see IFF 2009a. Jara, A., R. Moreno, and C. E. Tovar. 2009. “The Global Crisis and Latin
America: Financial Impact and Policy Responses.” BIS Quarterly
13 IMF 2009a.
Review. June. Available at http://www.bis.org/publ/qtrpdf/
14 Kato 2009a. r_qt0906f.pdf?noframes=1.

15 BNP Paribas 2009. Kato, T. 2009a. “The IMF’s Response to the Global Crisis.” Available at
36 http://www.imf.org/external/np/speeches/2009/062509.htm.
16 IMF 2009b.
———. 2009b. “The Global Economic and Financial Outlook and
17 World Bank 2009b. Challenges for Emerging Economies.” IMF Keynote Speech at
the 21st Meeting of the Central Bank Governors’ Club,
18 World Bank 2009b.
Kazakhstan, May 28–31. Available at http://www.imf.org/external/
19 See World Bank 2009b for multilateral development banks’ np/speeches/2009/052809.htm.
planned 2009–11 financial response to the crisis.
La Caxia. 2009. “From Subprime Mortgage Crisis to Global Recession:
20 The CMI initiative has the goal of establishing a network of bilateral The Transmission to Emerging Economies.” Available at
swap arrangements among ASEAN+3 countries to deal with http://www.pdf.lacaixa.comunicacions.com/im/eng/
short-term liquidity difficulties and to aid the current international 200907box_eng.pdf.
financial arrangements.
Morrison, W. M. 2009. “China and the Global Financial Crisis:
21 BIS 2009b. Implications for the United States.” June. Available at
http://fpc.state.gov/documents/organization/125931.pdf
22 Deutsche Bank 2009.
RGE Monitor. 2009. “Global Economic Outlook: Q3 and Beyond.” July.
23 Deutsche Bank 2009. Available at www.rgemonitor.com.
24 Less than a month after the collapse of Lehman Brothers, the Roubini, N. 2009. “Latvi’s Currency Crisis Is a Rerun of Argentina’s.”
currencies of Brazil and Mexico depreciated by almost 30 percent. Available at www.rgemonitor.com/roubini-monitor/257052/
See Jara et al. 2009. latvias_currency_crisis_is_a_rerun_of_argentinas.
25 Roubini 2009. Truman, E. 2009. “The Global Financial Crisis: Lessons Learned
and Challenges for Developing Countries.” Available at
26 A bail-out is an injection of capital to prevent a situation of
www. rgemonitor.com/piie monitor/257209/the_global_financial_
bankruptcy, insolvency, or liquidation.
crisis_lessons_learned_and_challenges_for_developing_countries.
27 IMF 2009a.
World Bank. 2009a. Global Monitoring Report. Available at
28 World Bank 2009a. http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/
EXTGLOBALMONITOR/EXTGLOMONREP2009/
29 Kato 2009b. 0,,contentMDK:22149019~enableDHL:True~menuPK:5924427~pa
gePK:64168445~piPK:64168309~theSitePK:5924405,00.html.
30 RGE Monitor 2009.
World Bank. 2009b. Global Development Finance 2009: Charting a
Global Recovery. Available at http://web.worldbank.org/WBSITE/
EXTERNAL/EXTDEC/EXTDECPROSPECTS/EXTGDF/EXTGDF2009/
References 0,,contentMDK:22218327~menuPK:5924239~pagePK:64168445~
piPK:64168309~theSitePK:5924232,00.html.
BIS (Bank for International Settlements). 2009a. “Global Financial Crisis:
Causes, Impact, Policy Responses and Lessons.” Speech by Dr.
Rakesh Mohan, Deputy Governor of the Reserve Bank of India, at
the 7th Annual India Business Forum Conference, London Business
School, London, April 23. Available at http://www.bis.org/review/
r090506d.pdf?noframes=1.
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1.3: Financial Development, Financial Crises, and the MDGs


CHAPTER 1.3 There is no doubt that financial development contributes
to improving the lives of the poor by spurring economic
growth and providing those living in poverty with more
Financial Development, opportunities. It indirectly provides jobs and better wages,
and can directly help people to take out loans to buy
Financial Crises, and the productive inputs such as fertilizer, or to start a business.
Financial development also allows people to protect
Millennium Development Goals their money by using deposit accounts and to shield
themselves against income shocks by means of insurance
ERIK FEYEN, The World Bank
products, for example.
Yet financial systems are at risk of financial crises,
which can have devastating effects on the world’s most
vulnerable people and can sometimes even reverse
developmental progress made in better times. Although
a crisis has a differential impact on the poor, the weakest
members of society are often at the highest risk of
falling into a poverty trap as a result of unemployment;
rising food prices; eroding savings; and failing delivery
of core public services such as social welfare, healthcare,
and education.This trap can lead to long-term develop-
mental and economic losses.
However, despite the current global financial crisis,
financial development should not necessarily be limited. In
fact, countries that have experienced occasional financial
crises have, on average, grown faster than countries with
stable financial conditions because financial systems
encourage healthy risk taking.1 Therefore, it is important 37
to guard against excessive long-term government inter-
vention in financial systems and against rising financial
and trade protectionism, which have both been shown
to be detrimental to economic growth. Indeed, many
good initiatives are already underway to improve the
world’s financial architecture. However, the current crisis
has brought to the fore once again the realization that
developing countries need to strengthen their safety nets
and plan their crisis intervention scenarios to protect the
weakest in a timely, targeted, and cost-effective manner.

The bright side of finance


In September 2000, 189 countries unanimously adopted
the United Nations’ Millennium Declaration.This
Declaration lays out eight social development objectives—
the Millennium Development Goals (MDGs)—to be
achieved in 2015 (Figure 1).2 This chapter focuses mainly
on those goals in the areas of poverty, education, health,
and gender equality.
Many policy actions—such as those aimed at
improvements in infrastructure, the business environment,
and public services—can contribute to achieving the
MDGs. Often the financial sector plays a facilitating role
in raising the capital to finance these improvements. But

The author would like to thank Thorsten Beck, Stijn Claessens,


Consolate Rusagara and Constantinos Stephanou for helpful
discussions and/or comments.
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1.3: Financial Development, Financial Crises, and the MDGs

Figure 1: The Millennium Development Goals and targets

1. Eradicate extreme poverty 1. Halve proportion of people who live on <$1 a day
Poverty
and hunger 2. Halve proportion of people who suffer from hunger

Education 2. Achieve universal primary 3. Access to complete primary schooling


education

Gender 3. Promote gender equality and 4. Access for all genders to primary and secondary
Equality empower women schooling (2005) and all levels of education (2015)
MILLENNIUM DEVELOPMENT GOALS

4. Reduce child mortality 5. Reduce by 2/3, the under-five mortality rate

Health 6. Reduce by 3/4, the maternal mortality ratio


5. Improve maternal health

7. Halt and begin to reverse the spread of HIV/AIDS


6. Combat HIV/AIDS, malaria,
and other diseases 8. Halt and begin to reverse the incidence of malaria and
other diseases

9. Integrate principles of sustainable development


7. Ensure environmental
Environment 10. Access to safe drinking water and sanitation
stability
11. Improve lives of at least 100 million city dwellers
38

12. Develop trading and financial system


13. Address needs of least developed countries
14. Address needs of landlocked countries and islands
Global 8. Develop a global partnership 15. Deal with debt problems and make sustainable
Partnership for development
16. Provide decent and productive work for youth
17. Provide access to affordable and essential drugs
18. Availability of new technology and ICTs

Focus of this article

Source: World Bank MDG website (2006); author’s analysis.

there are several other channels through which financial countries over the period 1960–95, it would have
development contributes to the advancement of the enjoyed a boost to income per capita growth of 0.6
tightly interlinked MDGs.3 percentage points per year.5
In addition to the role played by domestic financial
Indirect benefits of finance-induced economic growth development in achieving the MDGs, international
A large literature shows that during normal times, financial integration can also contribute to growth by
both developed and developing countries with healthy allowing capital-constrained countries to tap into cheaper
banking and capital markets enjoy stronger per capita foreign savings, especially if capital comes in the form
income growth than countries without such markets of longer-term investments and is supported by sound
because they are able to allocate more of society’s savings macroeconomic and fiscal frameworks. For example,
to superior investment opportunities and also able to economic and domestic credit growth in many develop-
distribute and manage risks better.4 One study estimates ing countries has benefited from the large net private
that if India’s financial development—as measured by capital flows that reached over a trillion US dollars
the ratio of bank credit to the private sector as a fraction in 2007, amounting, for some countries, to almost 8
of GDP—had been at the average level of developing percent of GDP. However, the capital flows also left
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1.3: Financial Development, Financial Crises, and the MDGs


Figure 2: The bright side: How development of the financial sector helps in attaining the MDGs

SHORT-TERM LONG-TERM
Investment opportunities to EFFECTS EFFECTS
Direct effects increase productivity
of access to the
financial system: Consumption smoothing

Credit
FINANCIAL DEVELOPMENT

Savings Ease transactions


Insurance
Payments Improvements
Safeguard savings Poverty and in health,
inequality education, and
reduction gender equality
More job opportunities goals

Higher wages
Indirect effects of More business opportunities
general economic
growth Public investment in
• education
• healthcare
• infrastructure

many countries vulnerable, as discussed in the section services, which are better accessible when the financial
39
on the dark side of finance. sector is more developed, are:
Formal financial development not only spurs
growth, but it is also especially pro-poor. Recent studies • Credit for investments. Affordable credit gives
show that financial development results in fewer people households and entrepreneurs the opportunity to
living in poverty, since the poor indirectly benefit from improve their productivity by investing basic assets
economic growth from the subsequent increase in job such as in tractors, seeds, healthcare, or an educa-
and business opportunities and real wages, as well as tion—all of which contribute to future poverty
from investment in core healthcare and educational reduction. In particular, credit becomes more acces-
infrastructure (see Figure 2).6 In addition, research finds sible for the poor when financial development comes
that financial development leads to faster income with the opportunity to use their land as collateral.
growth for the poor than for the average person; that Evidence also suggests that access to credit has a
is why it reduces inequality. One study suggests, for large impact on hunger alleviation.8 Moreover, to
example, that the average real income of the poor in the extent that a more developed financial sector
Brazil would have grown at more than 1.5 percent cares only about the quality of an investment
annually instead of 0 percent over the period 1960–99 opportunity, talent is more important than family
if Brazil had had the same level of financial development wealth, gender, or the ethnicity of the prospective
as Korea.7 Economic growth and poverty alleviation borrower, thus helping to level the playing field.
have been shown to have beneficial effects on other
areas, including child mortality, nutrition, and schooling. • Savings, insurance, and consumer credit.
In this way, financial development contributes indirectly Savings services often provide the poor with more
to other MDGs (see Figure 1). attractive returns than those obtained by investing
in low-yielding livestock or in jewelry or cash that
Benefits of direct access to the financial system is at risk of theft, fire, or floods. In addition, savings,
Financial development can also help the poor by level- insurance, and consumer credit services can help
ing the playing field. Direct access to the financial system households smooth their income between harvests
helps people to better plan for their future, improve and reduce the impact of shocks such as job loss,
their diets, access healthcare, start a business, and provide drought, sickness, and death of a family member.
their children with an education (Figure 2). Examples of For example, weather insurance in Malawi helps
ways the poor benefit from different types of financial farmers cope with adverse weather conditions and
avoid hunger and inefficient sale of productive assets.
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1.3: Financial Development, Financial Crises, and the MDGs

Similarly, microinsurance programs in countries and liquidity spirals that lead to a credit crunch with
such as Nigeria have helped low-income house- negative spillover effects to the real sector. And although
holds to access basic health services, including credible currency pegs can help restore economic confi-
HIV/AIDS treatment. dence and reduce inflation in a developing country, they
can also suddenly become vulnerable to a run.
• Payment services. Payment services provided by Thus it is no wonder that systemic financial crises
the financial system are safer, cheaper, and easier have been pervasive: during the period 1970–2000,
than the traditional transfer methods used by the about 100 major currency, sovereign debt, and banking
poor, which are often cash based.These services cut crises were registered in emerging and developing mar-
out expensive middlemen, reduce traveling costs, kets.These crises can come at great economic costs in
encourage transactions between parties unfamiliar the form of (quasi)-fiscal expenditures, output drops,
with each other, and facilitate remittance flows that and long recovery times. For example, GDP contracted
in many developing countries represent a significant by 14 percent, 8 percent, and 6 percent, respectively,
portion of a household’s income. For example, the during the crises in Indonesia (1998), Malaysia (1998),
M-PESA system in countries such as Kenya enables and Mexico (1995). Overall, analysis suggests that during
users to transfer funds via mobile phones.9 the average crisis GDP contracts by 1.4 percent.16

Empirical analysis also supports the existence of How financial crises affect the poor
direct links between access to the formal financial system No two crises are the same, and specific circumstances
for the poor and other MDGs besides poverty reduction. ultimately determine how an economy is affected.
For example, one study shows that income shocks in Moreover, a crisis affects the various participants in an
Tanzania lead to fewer increases in child labor when economy differently and can produce both winners and
households have better access to credit.10 In addition, losers, even among the poor. For example, poor farmers
there is evidence that the incidence of child labor is can actually benefit from high food prices, while the
lower in countries with better-developed financial urban poor suffer.That said, a financial crisis likely has a
systems.11 Another study shows that Peruvian house- net negative effect on the most vulnerable people through
40 holds that face lower borrowing constraints experience a combination of the following private- , public- , and
higher primary school attendance.12 And there is abundant financial-sector channels:17
anecdotal evidence that the microfinance movement can
help the MDGs, especially the empowerment of women.13 • Lower income through employment shocks.
Microlending has increased women’s earning capacity The negative interaction between the financial
and “say” in their households, allowing them to take sector and the real economy slowdown triggers
their futures into their own hands.14 adverse labor market effects that first affect poor,
low-skilled workers. For example, Cote d’Ivoire’s
crisis in the early 1980s saw formal employment
The dark side of finance decline by almost 40 percent. As a consequence,
However, although the poor benefit disproportionately the poor can be forced to take pay cuts, work fewer
from financial development, they also tend to suffer dis- hours, or seek (informal) employment elsewhere—
proportionately from financial crises because they are less which can involve high relocation costs, often to
able to insulate themselves against shocks than wealthier rural areas where labor market pressures rise further
people. Note that typically the poor in wealthier coun- as a result. On average, unemployment increases by
tries are wealthier. In addition, wealthier countries have 1.4 percent during the crisis.18 Experience with
a better capacity absorb the shock. previous crises indicates that it takes at least four to
five years for employment to return to pre-crisis
The fragility of financial systems levels after economic recovery starts.
Financial systems are inherently fragile because they
spur growth by transforming liquid savings into long- • Potentially higher costs caused by relative
term investments that promise a return in an uncertain price changes. A weakening currency boosts
future. Some bankruptcies, job loss, and even an occa- import prices, particularly of imported foods.This
sional crisis can be a sign of healthy risk taking by hurts the urban poor, especially, although some
providers of capital.15 groups—such as poor farmers, for example—can
However, fragility has often been further exacerbated actually benefit from high food prices, as was the
by large inflows of volatile foreign capital, weak institu- case in Indonesia. In addition, currency deprecia-
tional arrangements, and irresponsible macroeconomic tions provoke a disruption in the labor dynamics
policy.This undermines the growth-enhancing function between the tradable and nontradable sectors and
of the financial system and can lead to public mistrust. can increase the debt burden of governments and
During crises, this fragility can induce adverse solvency
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1.3: Financial Development, Financial Crises, and the MDGs


companies with foreign currency liabilities, further Financial crises, poverty, and poverty traps
depressing employment and increasing prices. Since the (near) poor are less able to cope with shocks
than those who are better off, poverty—defined by the
• Erosion of savings. Crisis-induced inflation can hit number of people who live under 1 (or 2) dollars a day—
the poor harder than other groups since they often has risen in virtually all financial crises. For example,
hold their savings in cash and have few alternatives during the East-Asian crisis, overall poverty rose from 11
that provide protection for their savings. In previous to 18 percent in Indonesia; in Korea, urban poverty rose
crises, inflation rose by 92 percent during the crisis from 9 to 18 percent. Past trends in developing countries
relative to before.19 Furthermore, research shows suggest that 20 million people sink into poverty for each
that low-income and middle-class households in percentage point decline in the growth rate.
Latin America with bank savings suffered more The temporary income shocks of crises can create
because deposit freezes prevented them from long-term poverty traps, particularly for the poorest in
accessing their savings to cushion the shock, while developing countries. Research suggests, for example,
larger depositors typically had already pulled out that 50 percent of Indonesia’s poverty in 2002—when
their money.20 The poor also saw their savings the macroeconomic situation had already recovered—
evaporate because of pesofication (as in Argentina, can be attributed to the crisis that occurred in 1998.
in 2001) or dollarization at unfavorable rates (in And one study argues that if Latin America had reached
Ecuador, in 1998).This can have long-term effects the macroeconomic stability levels of industrial countries,
on trust in the financial system.This was seen in it could have prevented or reduced the impact of the
Argentina, for example, where post-crisis deposit crisis and contributed to economic growth that would
levels were much lower for many years than before have lifted 25 percent of the poor in the region out of
the crisis. poverty.21
The reason for this long-term impact is that even a
• Decreased access to finance. Troubled banks small shock can push households over the edge, forcing
might need to hoard liquidity or are willing to them to sell off productive assets such as land and live-
lend only to their safest clients when their funding stock, economize on food and healthcare, and pull their
dries up and the quality of their portfolios deterio- children out of school to make ends meet.This can have 41
rates.This means that smaller firms can see their irreversible negative effects on human capital and long-
access to finance further squeezed, making it harder term household productivity, which can ultimately
for them—and indirectly for the poor, who are depress economic growth.
employed by them—to cope with the shock. Thus, financial crises can endanger progress toward
Similarly, households will face more constrained attaining the MDGs, or even trigger a reversal in the
access to finance as banks tighten their credit process (see Figure 3). Crises can induce negative feed-
standards. back loops between poverty and other MDGs against
which the poor can hardly insure themselves, particularly
• Decrease in public spending. With economic when whole communities are affected simultaneously:
and trade decline, governments will see their tax
revenues decrease. Simultaneously, government’s • Health. Research shows that countries that experi-
(contingent) liabilities can spike because of bank enced output drops of over 10 percent had more
recapitalizations, asset restructuring, and the issuance than 1 million additional infant deaths. In Mexico,
of blanket guarantees. And as their fiscal position infant and preschool mortality rose in the 1980s
worsens and the currency weakens, their debt burden after the crisis there, reversing the trend of the
increases while access to international financial 1970s.22 In Peru, the crisis coincided with a large
markets decreases significantly. As a consequence, spike in infant mortality, which rose from 50 to
governments with little fiscal adjustment space need 75 per 1,000 children born.23 During Indonesia’s
to cut back on core spending such as infrastructure, crisis in 1997, the use of health facilities dropped
which has short-term labor market effects and long- dramatically as prices rose and stock shortages
term economic growth effects. In addition, the poor became pervasive.24
can be particularly hard hit through budget cuts to
social welfare plans, public health services, and edu- • Nutrition. Nutrition is essential for children’s
cation, exactly at the time when they need access to cognitive and physical development, and malnutrition
these public services the most. For example, absolute can have life-long negative effects.25 Malnutrition
health expenditures declined in Indonesia, Malaysia, also typically increases during a crisis. For example,
and Thailand during the East-Asian crisis. During daily protein intake per person dropped by 4 per-
the 1994 Mexican peso crisis, the government cut cent and 3 percent, respectively, during Argentina’s
spending on education by about 15 percent. (1995) and Venezuela’s (1994) crises.26 Teachers in
Indonesia and the Philippines during the East-Asian
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1.3: Financial Development, Financial Crises, and the MDGs

Figure 3: The dark side: How a financial crisis affects the MDGs

Income loss
POTENTIAL POVERTY TRAPS
• Job loss
• Fewer hours
• Lower wages Short-term effects Long-term effects
FINANCIAL, PRIVATE- , AND PUBLIC-SECTOR SHOCKS

Higher costs
• Food prices
• Relocation costs

• Poverty increase Regression


Savings erosion • Poorer nutrition of health,
• Inflation • Underinvestment education,
in health and and gender
• Deposit erosion
education equality

Decreasing financial sector access


• Less opportunity to smooth consumption for SMEs
• Less opportunity to smooth consumption for
households

Adverse effects on core public spending


• Less funding available for public health programs
• Less funding available for education support
programs

42

crisis complained that children were eating much The impact of the current global financial crisis
less and were less able to concentrate.27 The financial crisis that started in developed economies
and plunged them into recession has now spread around
• Education. Children’s education affects their the globe to developing countries.31 The impact is reflected
productivity as adults. However, in Thailand’s crisis, in sharp drops in average economic growth of developing
children were forced to find food on garbage sites countries to 1.6 percent, down precipitously from an
to support their families instead of going to school.28 average of over 8 percent in 2006–07.The shock comes
Research suggests that gross secondary enrollment on top of the effects of the 2007–08 spike in oil and food
in Mexico would have been 11 percentage points prices that had already left many countries vulnerable
higher in 1991 if the economy had grown in the and pushed as many as an additional 200 million people
1980s instead of remaining stagnant after the 1982 into poverty.
crisis.29 The Indonesia Family Life Survey recorded The crisis has triggered unprecedented policy
a decline in enrollment and an increase in dropouts actions around the world. Among these are liquidity
during the crisis. provision facilities between countries, bank capital
injections, the extension of deposit insurance schemes,
• Gender equality. Often girls are the first to be and the issuance of government guarantees on other
pulled out of school, and women are among the financial sector liabilities.The crisis has clearly shown
first to lose their jobs in a crisis.These conse- that rethinking the financial architecture is necessary,
quences can widen the gender gap over the long and much has already been written on this topic.32
term. Another manifestation of gender inequality Clearly, the global financial crisis will have far-reaching
is seen in one sobering study on child mortality in policy consequences as necessary improvements are
developing countries, which estimates that a large implemented in the areas of financial supervision,
GDP contraction results in an average increase in regulation, and market infrastructure.
girl infant mortality of 7.4 deaths per 1,000 births,
while the increase of boy mortality is 1.5 per Channels of transmission to developing countries
1,000.30 Some emerging countries had unsustainable macroeco-
nomic policies and financed credit booms with foreign
capital that left them exposed to a sudden deterioration
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1.3: Financial Development, Financial Crises, and the MDGs


in international financial markets. In contrast, many for developing economies that derive revenues and
other developing countries were not affected by first- foreign exchange predominantly from a small export
round effects since they have underdeveloped financial base—they will see their budgets shrink while their
markets with little exposure to troubled assets in devel- current accounts deficits rise.
oped countries. However, second-round effects are
transmitted through financial and real channels whose How the poor are affected
intensities and feedback loops depend on specific country The current financial crisis is particularly deep and
conditions.The poorest countries with large current has shown the interconnectedness of global markets
account deficits and little fiscal space will be less able to and institutions, reflecting financial globalization and
absorb shocks because of the following factors: the importance of capital flows.The country-level
shocks mentioned above will mainly feed through to
• Domestic financial markets deteriorate the poor via mechanisms similar to those seen in past
because of spillovers from the loss of liquidity crises: employment effects, relative price changes, and
and solvency. Tight international funding markets reduction in public spending, as discussed previously.
and the global economic slowdown have put However, the global nature of the crisis will make
domestic financial sectors and currencies in some recovery based on external financial and trade links much
countries under pressure and revealed home-grown more difficult.This puts more pressure on governments
weaknesses.This will have negative spillover effects to boost domestic demand, although some countries
on the real domestic economy, potentially affecting have little room to do so because they face increasing
people’s savings.The presence of foreign banks external financing and fiscal difficulties.
might become another channel transmitting liquidity Another important factor in the current crisis
and solvency problems as they curb credit while that hits the poor directly—and government revenues
their parent banks face difficulties at home. indirectly—is the major decline in remittances that
usually act as a stabilizer during economic volatility.
• Capital flows recede and investment declines. Global remittances reached over US$300 billion in 2008
As liquidity dried up in developed countries and and are the most important source of revenue for some
deleveraging gained pace, foreign investors started countries, trumping private capital flows and exports. 43
to pull out their capital.This was further exacerbated However, as foreign workers in the United States,
by increased currency volatility and weaknesses in Western Europe, the Gulf Cooperation Council coun-
debt workout and restructuring frameworks. As a tries, and Russia face labor market difficulties, their
consequence, some host countries face debt-servicing remittances have fallen; some workers are even forced
problems and growing external financing gaps.The to repatriate, putting additional pressure on local labor
World Bank estimates that 98 of 104 developing markets.
countries will experience severe external financing Several international organizations have projected
problems.This is particularly problematic for large the effects of the global financial crisis on the poor and
(infrastructure) projects, and it thwarts employment the MDGs. And their estimates indicate that the devel-
and future growth. opment consequences of the crisis are enormous.The
International Labour Organization expects 55 to 90
• Global trade, tourism, and commodity prices million additional people to fall into poverty in 2009,
drop. With the global economic slowdown and and as many as 50 million further people will lose their
depressed demand from developed countries, jobs. East Asia and Africa will feel the setback most.The
including tourism, vulnerable countries are less World Bank estimates that the economic slowdown will
likely to pursue a path of export-driven recovery, likely result in 200,000 to 400,000 infant deaths per year.
as happened after the East-Asian crisis. Commodity The Food and Agricultural Organization projected that
and oil exporters in developing countries have 200 million more people will suffer from hunger because
undiversified economies and will suffer because of the financial crisis.33 And although food prices have
volumes and prices have dropped precipitously. come down during the financial crisis—they were high
And, with an economic decline, credit quality because of the food crisis that happened before the
deteriorates, thus putting further pressure on the financial crisis—they are likely to remain at elevated
financial system and foreign investors. levels and will aggravate other crisis effects on the poor.

• Foreign aid is reduced and more volatile.


Foreign aid represents about 7 percent of GDP Concluding remarks
on average for low-income countries, but is often Financial development is a force for good—a fact that can
higher in some. Now that developed countries are be easily forgotten in the midst of a crisis.Therefore it
in recession, it is likely that they will economize is important to pursue policies that encourage financial
on their development assistance.This is bad news development and avoid those that lead to excessive
Part 1.r3 10/14/09 2:22 PM Page 44

1.3: Financial Development, Financial Crises, and the MDGs

long-term intervention in systems or those that increase 19 Baldacci et al. 2002.

protectionism. 20 Halac and Schmukler 2004. For a discussion on banking crises


and inequality, see also Honohan 2005.
And although the changes to financial-sector policies
should strengthen financial systems, these systems will 21 Lustig 2000.

remain inherently fragile and future financial crises will 22 Lustig 2000.
occur. International organizations such as the World 23 Lustig 2000.
Bank and the International Monetary Fund can play a 24 Frankenberg et al. 1999.
role in helping governments cope with the crisis and
25 See, for example, Ferreira and Schady 2008, which also studies
avoid poverty traps that can have lasting and damaging the impact of shocks on educational attainment.
effects on economic growth and the MDGs. 26 Lustig 2000.
In addition, countries should strengthen their safety
27 World Bank 1998, Chapter 5.
nets and pro-poor policies before a crisis hits.These
28 World Bank 1998, Chapter 5.
contingency plans should be comprehensive and include
public work programs, food for education programs, and 29 Lustig 2000.

targeted conditional cash transfers for schooling, health- 30 Baird et al. 2007.
care, and food. Prior planning will make continued 31 Many reports about the impact of the financial crisis have been
delivery of core social services during crises much written recently, from which most numbers in this section are
drawn. These publications include IMF 2009; World Bank 2008,
more likely, as past experience has shown that ad hoc 2009a; 2009b; and United Nations 2009a.
improvisations in the heat of the crisis are often much 32 For a short overview, see for example Stephanou 2009.
less effective or even have adverse effects on the poor
33 World Bank 2009a.
because they are poorly administered or even abused.
34 Lustig 2000.
Moreover, previous crises have also shown that distribu-
tive political conflicts can significantly reduce public
spending programs specifically targeted to the poor,
putting them even more at risk when they need support References
Baird, S., J. Friedman, and N. Schady. 2007. “Aggregate Income
the most. But well-thought-out safety nets and crisis Shocks and Infant Mortality in the Developing World.” World Bank
44 policies might cost as little 1 percent of GDP,34 and Policy Research Working Paper 4346. Washington, DC: World
Bank.
would do much to mitigate the worst effects of a crisis.
Baldacci, E., L. de Mello, and G. Inchauste. 2002. “Financial Crises,
Poverty, and Income Distribution.” IMF Working Paper 02/4.
Washington, DC: IMF.
Notes
Beck, T., A. Demirgüç-Kunt, and R. Levine. 2007. “Finance, Inequality,
1 Ranciere et al. 2008.
and the Poor.” Journal of Economic Growth 12 (1): 27–49.
2 See also the United Nations’ The Millennium Development Goals
Beck, T., R. Levine, and N. Loayza. 2000. “Finance and the Sources of
Report 2009.
Growth.” Journal of Financial Economics 58 (1–2): 261–300.
3 See Claessens and Feyen 2006a for an overview of the impact
Beegle, K., R. Dehejia, and R. Gatti. 2003. “Child Labor, Income Shocks
of financial sector development on the Millennium Development
and Access to Credit.” World Bank Policy Research Working
Goals.
Paper 3075. Washington, DC: World Bank.
4 See Levine 2005 and Demirgüç-Kunt and Levine 2008 for an
Claessens, C. and E. Feyen. 2006a. “Financial Sector Development and
overview of the academic finance and growth literature.
the Millennium Development Goals.” World Bank Policy Research
5 Beck et al. 2000. Working Paper 89. Washington, DC: World Bank.

6 See, for example, Beck et al. 2007. ———. 2006b. “Finance and Hunger: Empirical Evidence of the
Agricultural Productivity Channel.” World Bank Policy Research
7 See Demirgüç-Kunt and Levine 2009 and Claessens and Perotti Working Paper 4080. Washington, DC: World Bank.
2007 for an overview of the links between finance and inequality.
Claessens, C. and E. Perotti. 2007. “The Links between Finance and
8 Claessens and Feyen 2006b. Inequality: Channels and Evidence.” World Bank mimeo.
9 See Rosenberg 2008. Dehejia, R. H. and R. Gatti. 2002. “Child Labor: The Role of Income
Variability and Access to Credit in a Cross Section of Countries.”
10 Beegle et al. 2003.
World Bank Policy Research Working Paper 2767. Washington,
11 Dehejia and Gatti 2002. DC: World Bank.

12 Jacoby 1994. Demirgüç-Kunt, A. and R. Levine. 2008. “Finance, Financial Sector


Policies, and Long-Run Growth.” World Bank Policy Research
13 For examples and case studies of the links among microfinance, Working Paper 4469. Washington, DC: World Bank.
poverty, and the Millennium Development Goals, see Morduch
and Haley 2002 and Littlefield et al. 2003. ———. 2009. “Finance and Inequality: Theory and Evidence.” Annual
Review of Financial Economics, 1, forthcoming.
14 Jacoby 1994.
Fallon, P. and R. Lucas. 2002. “The Impact of Financial Crises on Labor
15 Ranciere et al. 2008. Markets, Household Incomes, and Poverty: A Review of the
Evidence.” World Bank Research Observer 17 (1): 21–45.
16 Baldacci et al. 2002.
Ferreira, F. and N. Schady. 2008. “Aggregate Economic Shocks, Child
17 For an overview of ways a financial crisis impacts the poor, see,
Schooling and Child Health.” World Bank Policy Research
for example, Baldacci et al. 2002 and Fallon and Lucas 2002.
Working Paper 4701. Washington, DC: World Bank.
18 Baldacci et al. 2002.
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Frankenberg, E., D. Thomas, and K. Beegle. 1999. “The Real Costs of
Indonesia’s Economic Crisis: Preliminary Findings from the
Indonesia Family Life Surveys.” RAND paper DRU-2064-
NIA/NICHD.

Halac, M. and S. Schmukler. 2004. “Distributional Effects of Crises: The


Financial Channel.” Economia 5 (1): 1–67.

Honohan, P. 2005. “Banking Sector Crises and Inequality.” World Bank


Policy Research Working Paper 3659. Washington, DC: World
Bank.

IMF (International Monetary Fund). 2009. The Implications of the Global


Financial Crisis for Low-Income Countries. Washington, DC: IMF.

Jacoby, H. 1994. “Borrowing Constraints and Progress through School:


Evidence from Peru.” Review of Economics and Statistics 76 (1):
151–60.

Levine, R. 2005. “Finance and Growth: Theory and Evidence.” In


Handbook of Economic Growth, ed. P. Aghion and S. Durlauf. The
Netherlands: Elsevier Science.

Littlefield, E., S. Hashemi, and J. Morduch. 2003. “Is Microfinance an


Effective Strategy to Reach the Millennium Development Goals?”
Focus Note 24. CGAP.

Lustig, N. 2000. “Crises and the Poor: Socially Responsible


Macroeconomics.” Economia 1: 1–30.

Morduch, J. and B. Haley. 2002. “Analysis of the Effects of


Microfinance on Poverty Reduction.” NY Wagner Working Paper
No. 1014. June 28. Prepared for the Canadian International
Development Agency.

Ranciere, R., A. Tornell, and F. Westermann. 2008. “Systemic Crises


and Growth.” Quarterly Journal of Economics 123 (1): 359–406.

Rosenberg, J. 2008. “Why Has M-PESA Become so Popular in Kenya?”


CGAP. June 17. Available at http://technology.cgap.org/2008/06/17
/why-has-m-pesa-become-so-popular-in-kenya/.

Stephanou, C. 2009. “The Reform Agenda: Charting the Future of


45
Financial Regulation.” World Bank Crisis Response Policy Brief 2.
Washington, DC: World Bank.

United Nations. 2009a. “The World Financial and Economic Crisis and
Its Impact on Development.” Report of the Secretary-General for
the Conference on the World Financial and Economic Crisis and
Its Impact on Development. New York, June 24–26.

———. 2009b. The Millennium Development Goals Report 2009.


Available at http://www.un.org/millenniumgoals/.

World Bank. 1998. “East Asia: The Road to Recovery.” World Bank
mimeo. Washington, DC: World Bank.

———. 2008. Weathering the Storm: Economic Policy Responses to


the Financial Crisis. Washington, DC: World Bank. Available at
http://siteresources.worldbank.org/NEWS/Resources/
weatheringstorm.pdf.

———. 2009a. Global Monitoring Report 2009: A Development


Emergency. Washington, DC: World Bank.

———. 2009b. “Swimming against the Tide: How Developing Countries


Are Coping with the Global Crisis.” Background paper prepared
for the G-20 Finance Ministers and Central Bank Governors
Meeting, Horsham, United Kingdom, March 13–14.
Part 1.r3 10/14/09 2:22 PM Page 46
Part 1.r3 10/14/09 2:22 PM Page 47

Part 2
Country/Economy Profiles
Part 1.r3 10/14/09 2:22 PM Page 48
Part 1.r3 10/14/09 2:22 PM Page 49

How to Read the Country/Economy Profiles


How to Read the Country/Economy Profiles

The Profiles section presents a four-page profile for each


of the 55 economies covered by The Financial Argentina
Development Report 2009. Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................39.7 US$ bn
GDP (US$ billions), 2008 .........................................................326.5 27.7%
47.0% ■ Public debt securities .......147.2
GDP (current prices) per capita, 2008 ..............................8,214.1 ■ Private debt securities........20.6
GDP (PPP) as share (%) of world total, 2008 ........................0.83 ■ Banking deposits .................58.4
Average rate of real GDP growth (%), 2004–08....................8.46
18.7% ■ Equity securities ..................86.7
Total 312.9
6.6%

Page 1 Total/GDP: 120.2%

Financial Development Index 2009

Key indicators 2009 Index......................................................51 2.8


Rank (out of 55) Score (1–7 scale)

1 2 3 4 5 6 7

The first section of each Country/Economy Profile 1st pillar: Institutional environment .........................................50
Factors, policies, and institutions

3.2
INPUTS

Financial sector liberalization ....................................................46 2.7

presents a selection of key indicators: Corporate governance.................................................................45


Legal and regulatory issues .......................................................54
Contract enforcement..................................................................43
4.1
2.5
3.7
2nd pillar: Business environment .............................................44 3.8
Human capital ...............................................................................27 4.3
Taxes...............................................................................................54 2.6
Infrastructure ................................................................................35 3.6
Cost of doing business ................................................................40 4.7

• Population, GDP, and related data come from the 3rd pillar: Financial stability......................................................53
Currency stability..........................................................................24
3.7
4.4
Banking system stability..............................................................48 4.0

International Monetary Fund’s World Economic Risk of sovereign debt crisis ......................................................52 2.5
1 2 3 4 5 6 7

Financial intermediation

Outlook Database of April 2009. 4th pillar: Banking financial services......................................42


Size index.......................................................................................47
2.8
1.5
Efficiency index.............................................................................54 2.7
Financial information disclosure..................................................2 5.6
5th pillar: Non-banking financial services .............................28 2.3
IPO activity.....................................................................................42 1.6
M&A activity..................................................................................46 1.3

Financial assets by major type, 2007 Insurance .......................................................................................38


Securitization...................................................................................6
6th pillar: Financial markets......................................................49
1.9
4.3
1.4
Foreign exchange markets .........................................................43 1.0
Derivatives markets....................................................................n/a n/a

• Public debt figures are from the Economist Equity market development ........................................................54
Bond market development..........................................................32
1.2
2.0
1 2 3 4 5 6 7

Intelligence Unit’s CountryData Database, as accessed Financial access 49


7th pillar: Financial access........................................................54 2.2
Commercial access......................................................................55 2.5

in March 2009. Private debt data come from the Retail access.................................................................................41 2.0
1 2 3 4 5 6 7
OUTPUTS

Bank of International Settlements Quarterly Review,


September 2009. Data on banking deposits are from
the IMF International Financial Statistics database,
electronic version, accessed September 2009 or the
June 2009 PDF version. Equity securities data were Financial Development Index
downloaded from the market capitalization dataset This section details the economy’s performance on the
on the World Bank’s World Development Indicators various components of the Financial Development
database in August 2009. Index (FDI). At the top is the country’s overall rank out
of 55 economies, its score on the 1-to-7 scale, and a
• The four financial asset indicators (public and pri-
graphical representation of the score.
vate debt securities, banking deposits, and equity
Below, the seven pillars of the Index are organized
securities) are added to measure total financial assets
by category.The three categories—factors, policies, and
in the Index economies.The share of depth attrib-
institutions; financial intermediation; and financial
utable to each component is displayed in the pie
access—are displayed according to their role in the con-
chart. Percentages displayed may not add to 100
tinuum of the financial system from inputs to outputs.
percent because of rounding. Private debt data were
Each pillar and subpillar is listed under the appro-
not available for Bangladesh or Jordan.
priate category. After the pillar or subpillar name, the
• The total financial assets data are shown as a per- first column shows each economy’s rank for that pillar
centage of GDP, using the GDP figure from the or subpillar among the 55 economies included in the
Key indicators section. Index.The second column presents the score for that
pillar or subpillar on the 1-to-7 normalized scale. On
• The pie chart shows the share of total financial
the right, the normalized score is represented graphical-
assets attributable to each of the four types of finan-
ly. For more information on the methodology and
cial asset indicators in a given economy.
results of the FDI, please refer to Chapter 1.1 of this
Report.
Part 1.r3 10/14/09 2:22 PM Page 50

How to Read the Country/Economy Profiles

Page 2
The Financial Development Index in detail Argentina
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

This page presents the rank achieved by a country on INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment

each of the indicators entering the composition of the 1.01


1.02
Financial sector liberalization
Capital account liberalization .................................................45 .....■ ...............–0.8
Commitments to WTO agreement on trade in services.......39 .....■ ...............43.5
Multiple (18) ..........................2.5
Turkey ..................................83.5
1.03 Domestic financial sector liberalization .................................36 .....■ .................1.0 Multiple (33) ..........................1.0

FDI. Indicators are organized by pillar. Please refer to 1.04


Corporate governance
Extent of incentive-based compensation ..............................33 .....■ .................4.4 United States ........................5.4
1.05 Efficacy of corporate boards .................................................48 .....■ .................4.3 Sweden .................................5.9

Appendix A of Chapter 1.1 for a detailed structure of 1.06


1.07
1.08
Reliance on professional management .................................33 .....■ .................4.7
Willingness to delegate.........................................................39 .....■ .................3.9
Strength of auditing and reporting standards........................50 .....■ .................3.9
Sweden .................................6.5
Sweden .................................6.2
South Africa...........................6.2
1.09 Ethical behavior of firms........................................................52 .....■ .................3.2 Sweden .................................6.7

the FDI. 1.10


1.11
1.12
Protection of minority shareholders’ interests......................50 .....■ .................3.7
Official supervisory power ....................................................20 .....■ ...............11.0
Private monitoring of the banking industry ...........................10 .....■ .................7.0
Sweden .................................6.0
Multiple (3) ..........................14.0
South Africa...........................9.0
Legal and regulatory issues

Next to the rank, a colored square indicates 1.13


1.14
1.15
Burden of government regulation .........................................41 .....■ .................2.7
Centralization of economic policymaking ..............................54 .....■ .................1.6
Regulation of securities exchanges ......................................48 .....■ .................4.1
Singapore ..............................5.6
Switzerland............................5.7
Sweden .................................5.9
1.16 Property rights.......................................................................53 .....■ .................2.9 Switzerland............................6.5

whether the indicator constitutes an advantage (blue 1.17


1.18
1.19
Intellectual property protection .............................................53 .....■ .................2.5
Diversion of public funds.......................................................54 .....■ .................2.2
Public trust of politicians .......................................................55 .....■ .................1.5
Singapore ..............................6.2
Denmark................................6.6
Singapore ..............................6.4
Corruption perceptions index ................................................44 .....■ .................2.9

square) or a disadvantage (gray square) for the country. 1.20


1.21 Strength of legal rights index ................................................39 .....■ .................4.0

Contract enforcement
Multiple (2) ............................9.3
Multiple (3) ..........................10.0

1.22 Effectiveness of law-making bodies .....................................54 .....■ .................2.0 Singapore ..............................6.5

In order to identify variables as advantages or disad- 1.23


1.24
1.25
Judicial independence ...........................................................53 .....■ .................2.4
Irregular payments in judicial decisions ................................50 .....■ .................2.8
Time to enforce a contract ....................................................37 .....■ .............590.0
Sweden .................................6.6
Singapore ..............................6.6
Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................33 .....■ ...............36.0 Ireland..................................20.0

vantages, the following rules were applied: 1.27


1.28
Strength of investor protection .............................................43 .....■ .................4.7
Cost of enforcing contracts...................................................14 .....■ ...............16.5
Singapore ..............................9.3
United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................19 .....■ .................5.1 Switzerland............................6.1

• For those economies ranked in the top 10 in the 2.02


2.03
2.04
Quality of math and science education.................................44 .....■ .................3.3
Extent of staff training...........................................................43 .....■ .................3.7
Local availability of specialized research
Singapore ..............................6.4
Sweden .................................5.7

and training services .............................................................38 .....■ .................4.2 Switzerland............................6.3

overall FDI, individual variables ranked between 1 2.05


2.06
Brain drain and ease of hiring foreign labor ..........................35 .....■ .................4.0
Tertiary enrollment ................................................................14 .....■ ...............63.8

Taxes
United Arab Emirates ............6.0
Finland .................................93.2

2.07 Irregular payments in tax collection ......................................49 .....■ .................2.8 Singapore ..............................6.5

and 10 are considered to be advantages. Any vari- 2.08


2.09
2.10
Distortive effect on competition of taxes and subsidies ......54 .....■ .................2.3
Marginal tax variation ............................................................53 .....■ ...............32.2
Time to pay taxes ..................................................................44 .....■ .............453.0
Hong Kong SAR ....................6.1
Germany ..............................–6.9
United Arab Emirates ..........12.0

ables below 10 are considered to be disadvantages. 2.11


2.12
Infrastructure
Quality of overall infrastructure .............................................47 .....■ .................3.2
Quality of telephone infrastructure .......................................45 .....■ .................5.5
Switzerland............................6.8
Finland ...................................6.9
2.13 Internet users ........................................................................35 .....■ ...............25.9 Norway ................................85.0

For instance, in the case of Switzerland, which is 2.14


2.15
2.16
Broadband Internet subscribers ............................................30 .....■ .................6.6
Telephone lines .....................................................................32 .....■ ...............24.0
Mobile telephone subscribers...............................................28 .....■ .............102.2
Denmark..............................36.0
Switzerland..........................65.9
United Arab Emirates ........176.5

ranked 7 overall, its 5th rank in the variable Bank (Cont’d.)

deposits to GDP makes this variable a competitive


advantage, whereas Foreign exchange derivatives
turnover: Currency swaps, on which it ranks 24th,
constitutes a competitive disadvantage for the coun-
• In the gray box at the right of the profile is the
try.
name and raw score for the top-ranked economy of
the given indicator. For indicators in which there is
• For those economies ranked from 11 to 27 in the
50 a tie for the top rank, the word “Multiple” appears
overall FDI, variables ranked equal to or higher
with the number of economies that share that score
than the economy’s overall rank are considered to
in parentheses.
be advantages. Any variables ranked lower than the
economy’s overall rank are considered to be disad-
vantages. In the case of Malaysia, ranked 22nd over-
all, its 10th rank in the variable Bank deposits to
GDP makes this variable a competitive advantage,
whereas Foreign exchange derivatives turnover: Currency
swaps, on which it ranks 30th, constitutes a compet-
itive disadvantage for the country.

• For those economies ranked lower than 27 in the


overall FDI, any individual variables ranked 27 or
higher are considered as advantages. Any variables
ranked 28th or lower are considered to be disad-
vantages. For Argentina, ranked 51st overall, its rank
of 19 in Relative value-added of insurance constitutes a
competitive advantage for the country, whereas its
52nd rank in the variable Bank deposits to GDP
makes this variable a competitive disadvantage.

• After the advantage/disadvantage marker is the raw


score of the listed indicator for the profiled econo-
my. For more information on the significance of the
raw score, such as the units in which it is measured
or the source, please see the data tables in Part 3 of
this Report.
Part 1.r3 10/14/09 2:22 PM Page 51

List of Countries/Economies
List of Countries/Economies

Country/Economy Page Country/Economy Page

Argentina 52 Poland 204


Australia 56 Russian Federation 208
Austria 60 Saudi Arabia 212
Bahrain 64 Singapore 216
Bangladesh 68 Slovak Republic 220
Belgium 72 South Africa 224
Brazil 76 Spain 228
Canada 80 Sweden 232
Chile 84 Switzerland 236
China 88 Thailand 240
Colombia 92 Turkey 244
Czech Republic 96 Ukraine 248
Denmark 100 United Arab Emirates 252
Egypt 104 United Kingdom 256
Finland 108 United States 260
51
France 112 Venezuela 264
Germany 116 Vietnam 268
Hong Kong SAR 120
Hungary 124
India 128
Indonesia 132
Ireland 136
Israel 140
Italy 144
Japan 148
Jordan 152
Kazakhstan 156
Korea, Rep. 160
Kuwait 164
Malaysia 168
Mexico 172
Netherlands 176
Nigeria 180
Norway 184
Pakistan 188
Panama 192
Peru 196
Philippines 200
Part 1.r3 10/14/09 2:22 PM Page 52

2: Country/Economy Profiles

Argentina
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................39.7 US$ bn
27.7%
GDP (US$ billions), 2008 .........................................................326.5 ■ Public debt securities .......147.2
47.0%
GDP (current prices) per capita, 2008 ..............................8,214.1 ■ Private debt securities........20.6
GDP (PPP) as share (%) of world total, 2008 ........................0.83 ■ Banking deposits .................58.4
Average rate of real GDP growth (%), 2004–08....................8.46
18.7% ■ Equity securities ..................86.7

Total 312.9
6.6%

Total/GDP: 120.2%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................51 2.8


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................50 3.2


Financial sector liberalization ....................................................46 2.7
Corporate governance.................................................................45 4.1
Legal and regulatory issues .......................................................54 2.5
Contract enforcement..................................................................43 3.7
2nd pillar: Business environment .............................................44 3.8
Human capital ...............................................................................27 4.3
52
Taxes...............................................................................................54 2.6
Infrastructure ................................................................................35 3.6
Cost of doing business ................................................................40 4.7
3rd pillar: Financial stability......................................................53 3.7
Currency stability..........................................................................24 4.4
Banking system stability..............................................................48 4.0
Risk of sovereign debt crisis ......................................................52 2.5
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................42 2.8


Size index .......................................................................................47 1.5
Efficiency index.............................................................................54 2.7
Financial information disclosure..................................................2 5.6
5th pillar: Non-banking financial services .............................28 2.3
IPO activity.....................................................................................42 1.6
M&A activity..................................................................................46 1.3
Insurance .......................................................................................38 1.9
Securitization...................................................................................6 4.3
6th pillar: Financial markets......................................................49 1.4
Foreign exchange markets .........................................................43 1.0
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................54 1.2
Bond market development..........................................................32 2.0
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................54 2.2


Commercial access......................................................................55 2.5
Retail access.................................................................................41 2.0
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 53

2: Country/Economy Profiles
Argentina
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–0.8 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......39 .....■ ...............43.5 Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................36 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................33 .....■ .................4.4 United States ........................5.4
1.05 Efficacy of corporate boards .................................................48 .....■ .................4.3 Sweden .................................5.9
1.06 Reliance on professional management .................................33 .....■ .................4.7 Sweden .................................6.5
1.07 Willingness to delegate.........................................................39 .....■ .................3.9 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................50 .....■ .................3.9 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................52 .....■ .................3.2 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................50 .....■ .................3.7 Sweden .................................6.0
1.11 Official supervisory power ....................................................20 .....■ ...............11.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................41 .....■ .................2.7 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................54 .....■ .................1.6 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................48 .....■ .................4.1 Sweden .................................5.9
1.16 Property rights.......................................................................53 .....■ .................2.9 Switzerland............................6.5
1.17 Intellectual property protection .............................................53 .....■ .................2.5 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................54 .....■ .................2.2 Denmark................................6.6
1.19 Public trust of politicians .......................................................55 .....■ .................1.5 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................44 .....■ .................2.9 Multiple (2) ............................9.3 53
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................54 .....■ .................2.0 Singapore ..............................6.5
1.23 Judicial independence ...........................................................53 .....■ .................2.4 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................50 .....■ .................2.8 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................37 .....■ .............590.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................33 .....■ ...............36.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................43 .....■ .................4.7 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................14 .....■ ...............16.5 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................19 .....■ .................5.1 Switzerland............................6.1
2.02 Quality of math and science education.................................44 .....■ .................3.3 Singapore ..............................6.4
2.03 Extent of staff training...........................................................43 .....■ .................3.7 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................38 .....■ .................4.2 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................35 .....■ .................4.0 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................14 .....■ ...............63.8 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................49 .....■ .................2.8 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......54 .....■ .................2.3 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................53 .....■ ...............32.2 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................44 .....■ .............453.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................47 .....■ .................3.2 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................45 .....■ .................5.5 Finland ...................................6.9
2.13 Internet users ........................................................................35 .....■ ...............25.9 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................30 .....■ .................6.6 Denmark..............................36.0
2.15 Telephone lines .....................................................................32 .....■ ...............24.0 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................28 .....■ .............102.2 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 54

2: Country/Economy Profiles

Argentina
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................32 .....■ .................9.0 Denmark................................0.0
2.18 Cost of registering property ..................................................45 .....■ .................7.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................28 .....■ ...............12.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................42 .....■ ...............32.0 Australia.................................2.0
2.21 Time to register property.......................................................40 .....■ ...............51.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................31 .....■ .................2.8 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................32 .....■ .................0.4 Brazil....................................11.7
3.02 External vulnerability indicator...............................................22 .....■ .............102.8 Egypt ...................................13.9
3.03 Current account balance to GDP...........................................22 .....■ .................1.4 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ........................................29 .....■ ...............15.2 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .....................22 .....■ ...............47.2 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................55 .....■ .................5.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................42 .....■ .................3.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................14 .....■ .................6.5 Nigeria ...................................0.3
54 3.10 Aggregate measure of real estate bubbles...........................10 .....■ .................6.1 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................52 .....■ .................5.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................51 .....■ .................5.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................17 .....■ .................5.3 Peru .......................................6.5
3.14 Manageability of public debt .................................................37 .....■ ...............48.6 Chile ......................................5.2
3.15 Credit default swap spreads .................................................45 .....■ ..........2,135.9 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................50 .....■ ...............22.8 Denmark............................199.3
4.02 Central bank assets to GDP ....................................................6 .....■ .................7.0 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................50 .....■ ...............20.5 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................52 .....■ ...............31.4 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................52 .....■ ...............12.5 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................52 .....■ ...............20.4 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................24 .....■ .................0.0 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................52 .....■ .................2.5 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................52 .....■ .................8.0 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................47 .....■ ...............46.2 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................45 .....■ .................5.5 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................22 .....■ .................2.5 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
4.14 Public credit registry coverage ................................................5 .....■ ...............31.2 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................34 .....■ .................0.4 China ...................................19.3
5.02 IPO proceeds amount ...........................................................31 .....■ .................0.3 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................37 .....■ .................0.3 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 55

2: Country/Economy Profiles
Argentina
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................39 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................44 .....■ .................1.7 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................35 .....■ .................0.3 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................36 .....■ ..........6,315.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................37 .....■ .............159.8 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................31 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................37 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................19 .....■ .................1.3 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................29 .....■ .................1.8 United States ......................16.3
5.13 Share of total number of securitization deals .........................4 .....■ .................2.6 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................38 .....■ .................0.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................41 .....■ .................0.0 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 55
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................50 .....■ .................9.8 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................50 .....■ ...............31.9 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................51 .....■ .................3.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................38 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............25 .....■ .................4.1 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............29 .....■ ...............19.7 Japan .................................198.6
6.15 Private international bonds to GDP .......................................37 .....■ .................2.4 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................8 .....■ ...............17.3 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................52 .....■ .................3.4 Switzerland............................6.6
7.02 Venture capital availability .....................................................54 .....■ .................2.1 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................51 .....■ .................2.7 Panama..................................5.2
7.04 Financing through local equity market ..................................55 .....■ .................2.7 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................55 .....■ .................2.0 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................42 .....■ .................2.2 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................20 .....■ ........87,527.4 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................30 .....■ ...............13.3 Italy......................................53.0
7.09 Total number of ATMs...........................................................35 .....■ ...............33.0 Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................19 .....■ .................0.8 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 56

2: Country/Economy Profiles

Australia
Key indicators Financial assets by major type, 2007
4.0%
Population (millions), 2008 .......................................................21.3 US$ bn
GDP (US$ billions), 2008 ......................................................1,010.7 36.8% ■ Public debt securities .......140.0
GDP (current prices) per capita, 2008 ............................47,400.4 32.9% ■ Private debt securities...1,160.7
GDP (PPP) as share (%) of world total, 2008 ........................1.16 ■ Banking deposits ...............926.8
Average rate of real GDP growth (%), 2004–08....................3.11 ■ Equity securities .............1,298.4

Total 3,525.9
26.3%
Total/GDP: 387.6%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................2 5.1


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................14 5.6


Financial sector liberalization ....................................................24 5.4
Corporate governance...................................................................3 5.6
Legal and regulatory issues .........................................................7 5.5
Contract enforcement....................................................................5 5.7
2nd pillar: Business environment .............................................11 5.7
Human capital ...............................................................................12 5.1
56
Taxes.................................................................................................9 5.8
Infrastructure ................................................................................17 5.5
Cost of doing business ..................................................................7 6.3
3rd pillar: Financial stability........................................................9 5.5
Currency stability..........................................................................27 4.3
Banking system stability..............................................................10 5.7
Risk of sovereign debt crisis ........................................................1 6.4
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................5 5.0


Size index .......................................................................................14 4.1
Efficiency index...............................................................................1 6.5
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services ...............................3 4.4
IPO activity.......................................................................................8 4.0
M&A activity....................................................................................4 6.1
Insurance .......................................................................................12 3.5
Securitization.................................................................................12 3.8
6th pillar: Financial markets........................................................6 4.6
Foreign exchange markets ...........................................................7 4.8
Derivatives markets .......................................................................5 6.7
Equity market development ..........................................................9 4.7
Bond market development..........................................................20 3.1
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................1 5.2


Commercial access......................................................................21 4.0
Retail access...................................................................................1 6.4
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 57

2: Country/Economy Profiles
Australia
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................27 .....■ .................1.2 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......34 .....■ ...............28.8 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................4 .....■ .................5.1 United States ........................5.4
1.05 Efficacy of corporate boards ...................................................4 .....■ .................5.6 Sweden .................................5.9
1.06 Reliance on professional management ...................................6 .....■ .................6.0 Sweden .................................6.5
1.07 Willingness to delegate.........................................................11 .....■ .................5.0 Sweden .................................6.2
1.08 Strength of auditing and reporting standards..........................8 .....■ .................6.0 South Africa...........................6.2
1.09 Ethical behavior of firms..........................................................9 .....■ .................6.2 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................10 .....■ .................5.2 Sweden .................................6.0
1.11 Official supervisory power ......................................................5 .....■ ...............13.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................24 .....■ .................3.2 Singapore ..............................5.6
1.14 Centralization of economic policymaking ................................9 .....■ .................4.4 Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................5 .....■ .................5.8 Sweden .................................5.9
1.16 Property rights.......................................................................11 .....■ .................6.2 Switzerland............................6.5
1.17 Intellectual property protection ...............................................9 .....■ .................5.8 Singapore ..............................6.2
1.18 Diversion of public funds.........................................................7 .....■ .................5.9 Denmark................................6.6
1.19 Public trust of politicians .......................................................10 .....■ .................4.9 Singapore ..............................6.4
1.20 Corruption perceptions index ..................................................7 .....■ .................8.7 Multiple (2) ............................9.3 57
1.21 Strength of legal rights index ..................................................4 .....■ .................9.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................4 .....■ .................5.6 Singapore ..............................6.5
1.23 Judicial independence .............................................................4 .....■ .................6.4 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ..................................9 .....■ .................6.0 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................16 .....■ .............395.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .........................8 .....■ ...............28.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................21 .....■ ...............20.7 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................15 .....■ .................5.3 Switzerland............................6.1
2.02 Quality of math and science education.................................18 .....■ .................4.9 Singapore ..............................6.4
2.03 Extent of staff training...........................................................16 .....■ .................4.8 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................17 .....■ .................5.3 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................24 .....■ .................4.3 United Arab Emirates ............6.0
2.06 Tertiary enrollment ..................................................................8 .....■ ...............72.7 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ........................................8 .....■ .................6.0 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......13 .....■ .................4.8 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................15 .....■ .................2.8 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................11 .....■ .............107.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................25 .....■ .................5.0 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................39 .....■ .................5.9 Finland ...................................6.9
2.13 Internet users ........................................................................12 .....■ ...............69.0 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................15 .....■ ...............23.3 Denmark..............................36.0
2.15 Telephone lines .....................................................................11 .....■ ...............47.1 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................27 .....■ .............102.5 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 58

2: Country/Economy Profiles

Australia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................8 .....■ .................0.8 Denmark................................0.0
2.18 Cost of registering property ..................................................36 .....■ .................4.9 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................17 .....■ .................8.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................1 .....■ .................2.0 Australia.................................2.0
2.21 Time to register property.........................................................5 .....■ .................5.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................8 .....■ .................1.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................3 .....■ .................7.2 Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................42 .....■ ...............–4.2 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................21 .....■ .............–71.6 Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................37 .....■ .............142.4 Nigeria ...................................0.3
58 3.10 Aggregate measure of real estate bubbles...........................17 .....■ .................5.5 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................31 .....■ .................4.9 Peru .......................................6.5
3.14 Manageability of public debt ...................................................9 .....■ ...............14.7 Chile ......................................5.2
3.15 Credit default swap spreads ...................................................7 .....■ ...............57.6 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................16 .....■ .............114.3 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................13 .....■ .................4.3 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................17 .....■ ...............85.4 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................14 .....■ .............107.6 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................12 .....■ .............113.9 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................18 .....■ ...............85.4 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................8 .....■ .................4.1 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................6 .....■ .................5.2 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................11 .....■ .................1.6 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................16 .....■ .................2.3 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................15 .....■ .................1.6 Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................3 .....■ .................0.5 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................12 .....■ .................2.1 China ...................................19.3
5.02 IPO proceeds amount ...........................................................15 .....■ .................0.5 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ................................................................4 .....■ .................7.6 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 59

2: Country/Economy Profiles
Australia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................7 .....■ .................3.2 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................5 .....■ ...............11.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................5 .....■ .................5.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................13 .....■ ........62,240.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................15 .....■ ..........3,000.5 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................31 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................17 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................10 .....■ .................2.3 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................10 .....■ .................5.1 United States ......................16.3
5.13 Share of total number of securitization deals .......................15 .....■ .................1.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................6 .....■ .................3.5 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ..........................8 .....■ .................3.4 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................7 .....■ .................5.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 59
agreements ...........................................................................10 .....■ .................1.1 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................10 .....■ .................1.1 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................12 .....■ .................0.5 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......3 .....■ .................5.6 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................8 .....■ .................1.9 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................19 .....■ .............109.8 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.........................................8 .....■ .............146.6 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................13 .....■ .............161.0 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people.....................5 .....■ .................0.9 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............4 .....■ ...............81.3 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............34 .....■ ...............14.8 Japan .................................198.6
6.15 Private international bonds to GDP .......................................12 .....■ ...............61.3 Ireland................................279.1
6.16 Public international bonds to GDP ........................................32 .....■ .................1.7 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................11 .....■ .................6.2 Switzerland............................6.6
7.02 Venture capital availability .......................................................8 .....■ .................4.0 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................47 .....■ .................2.9 Panama..................................5.2
7.04 Financing through local equity market ..................................18 .....■ .................4.6 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................7 .....■ .................4.4 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................40 .....■ .................2.4 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches.....................................................9 .....■ ...............31.8 Italy......................................53.0
7.09 Total number of ATMs.............................................................3 .....■ .............159.3 Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................2 .....■ ..........3,938.8 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 60

2: Country/Economy Profiles

Austria
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................8.3 17.4% 16.7% US$ bn
GDP (US$ billions), 2008 .........................................................415.3 ■ Public debt securities .......220.6
GDP (current prices) per capita, 2008 ............................50,098.4 ■ Private debt securities......505.1
GDP (PPP) as share (%) of world total, 2008 ........................0.48 ■ Banking deposits ...............363.1
Average rate of real GDP growth (%), 2004–08....................2.72 ■ Equity securities ................228.7
27.6%
38.3% Total 1,317.5

Total/GDP: 354.9%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................18 4.3


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................6 5.7


Financial sector liberalization ......................................................1 7.0
Corporate governance.................................................................10 5.2
Legal and regulatory issues .......................................................10 5.2
Contract enforcement..................................................................11 5.5
2nd pillar: Business environment .............................................17 5.3
Human capital ...............................................................................19 4.7
60
Taxes...............................................................................................21 5.2
Infrastructure ................................................................................14 5.8
Cost of doing business ................................................................23 5.4
3rd pillar: Financial stability......................................................24 4.8
Currency stability..........................................................................33 4.1
Banking system stability..............................................................39 4.6
Risk of sovereign debt crisis ......................................................16 5.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................18 4.2


Size index .......................................................................................13 4.1
Efficiency index.............................................................................20 5.4
Financial information disclosure................................................32 2.3
5th pillar: Non-banking financial services .............................38 1.9
IPO activity.....................................................................................30 1.9
M&A activity..................................................................................34 1.6
Insurance .......................................................................................24 2.7
Securitization.................................................................................46 1.3
6th pillar: Financial markets......................................................23 3.0
Foreign exchange markets .........................................................20 1.4
Derivatives markets .....................................................................22 2.3
Equity market development ........................................................36 2.1
Bond market development............................................................2 5.3
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................2 5.1


Commercial access......................................................................17 4.2
Retail access...................................................................................2 6.1
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 61

2: Country/Economy Profiles
Austria
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................1.7 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............71.6 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................22 .....■ .................4.6 United States ........................5.4
1.05 Efficacy of corporate boards .................................................21 .....■ .................5.1 Sweden .................................5.9
1.06 Reliance on professional management .................................14 .....■ .................5.6 Sweden .................................6.5
1.07 Willingness to delegate.........................................................10 .....■ .................5.0 Sweden .................................6.2
1.08 Strength of auditing and reporting standards..........................9 .....■ .................6.0 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................10 .....■ .................6.2 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................11 .....■ .................5.2 Sweden .................................6.0
1.11 Official supervisory power ....................................................22 .....■ ...............10.5 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................18 .....■ .................3.5 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................10 .....■ .................4.4 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................22 .....■ .................4.9 Sweden .................................5.9
1.16 Property rights.........................................................................6 .....■ .................6.4 Switzerland............................6.5
1.17 Intellectual property protection ...............................................5 .....■ .................6.1 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................13 .....■ .................5.6 Denmark................................6.6
1.19 Public trust of politicians .......................................................13 .....■ .................4.2 Singapore ..............................6.4
1.20 Corruption perceptions index ..................................................9 .....■ .................8.1 Multiple (2) ............................9.3 61
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................19 .....■ .................4.3 Singapore ..............................6.5
1.23 Judicial independence ...........................................................11 .....■ .................6.1 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................15 .....■ .................5.8 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................17 .....■ .............397.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .........................4 .....■ ...............25.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................50 .....■ .................4.0 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................19 .....■ ...............18.0 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................20 .....■ .................5.1 Switzerland............................6.1
2.02 Quality of math and science education.................................23 .....■ .................4.7 Singapore ..............................6.4
2.03 Extent of staff training...........................................................18 .....■ .................4.8 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................12 .....■ .................5.5 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................37 .....■ .................3.9 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................25 .....■ ...............49.9 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................15 .....■ .................5.8 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......17 .....■ .................4.7 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................33 .....■ .................9.9 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................19 .....■ .............170.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure ...............................................4 .....■ .................6.6 Switzerland............................6.8
2.12 Quality of telephone infrastructure .........................................3 .....■ .................6.9 Finland ...................................6.9
2.13 Internet users ........................................................................15 .....■ ...............67.0 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................19 .....■ ...............19.4 Denmark..............................36.0
2.15 Telephone lines .....................................................................20 .....■ ...............40.7 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................10 .....■ .............118.6 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 62

2: Country/Economy Profiles

Austria
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................20 .....■ .................5.1 Denmark................................0.0
2.18 Cost of registering property ..................................................34 .....■ .................4.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................37 .....■ ...............18.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................36 .....■ ...............28.0 Australia.................................2.0
2.21 Time to register property.......................................................27 .....■ ...............32.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................11 .....■ .................1.1 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................30 .....■ .................0.7 Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................19 .....■ .................2.9 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................9 .....■ ...............–0.3 Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................41 .....■ .................2.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple (9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria ...................................0.3
62 3.10 Aggregate measure of real estate bubbles...........................29 .....■ .................4.7 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................12 .....■ .................5.4 Peru .......................................6.5
3.14 Manageability of public debt .................................................45 .....■ ...............62.6 Chile ......................................5.2
3.15 Credit default swap spreads .................................................20 .....■ .............119.5 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................12 .....■ .............124.2 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................26 .....■ .................1.2 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................16 .....■ ...............86.2 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................16 .....■ .............100.4 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................13 .....■ .............111.2 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................17 .....■ ...............86.2 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................5 .....■ .................6.9 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................23 .....■ .................4.2 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................42 .....■ .................4.1 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................29 .....■ .................8.8 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................20 .....■ .................2.0 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................15 .....■ .................1.7 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................24 .....■ ...............40.9 Australia.............................100.0
4.14 Public credit registry coverage ..............................................19 .....■ .................1.3 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................23 .....■ .................0.8 China ...................................19.3
5.02 IPO proceeds amount ...........................................................20 .....■ .................0.5 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................33 .....■ .................0.4 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 63

2: Country/Economy Profiles
Austria
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................27 .....■ .................0.3 United States ......................41.7
5.05 M&A transaction value to GDP .............................................36 .....■ .................2.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................28 .....■ .................0.5 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................23 .....■ ........21,741.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................18 .....■ ..........2,619.7 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................44 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................20 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................17 .....■ .................1.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................44 .....■ .................0.9 United States ......................16.3
5.13 Share of total number of securitization deals .......................44 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................20 .....■ .................0.4 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................19 .....■ .................0.4 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................20 .....■ .................0.5 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 63
agreements ...........................................................................20 .....■ .................0.2 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................18 .....■ .................0.3 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................20 .....■ .................0.1 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....18 .....■ .................0.5 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................16 .....■ .................0.3 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................35 .....■ ...............57.5 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................37 .....■ ...............56.1 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................37 .....■ ...............32.2 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people..................n/a .........................n/a Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............19 .....■ ...............42.5 Japan .................................198.6
6.15 Private international bonds to GDP .......................................10 .....■ ...............93.2 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................2 .....■ ...............39.4 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................17 .....■ .................5.9 Switzerland............................6.6
7.02 Venture capital availability .....................................................27 .....■ .................3.2 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................48 .....■ .................2.8 Panama..................................5.2
7.04 Financing through local equity market ..................................29 .....■ .................4.3 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................26 .....■ .................3.5 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................14 .....■ .................8.3 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................4 .....■ ......244,180.8 Ukraine .......................375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
7.09 Total number of ATMs.............................................................6 .....■ .............118.4 Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................1 .....■ ..........4,889.6 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 64

2: Country/Economy Profiles

Bahrain
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................0.8 9.9% US$ bn
GDP (US$ billions), 2008 ...........................................................21.2 ■ Public debt securities ...........5.3
10.3%
GDP (current prices) per capita, 2008 ............................27,247.8 ■ Private debt securities..........5.4
GDP (PPP) as share (%) of world total, 2008 ........................0.04 ■ Banking deposits .................14.0
53.2%
Average rate of real GDP growth (%), 2004–08....................6.87 ■ Equity securities ..................28.1
26.6% Total 52.9

Total/GDP: 286.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................27 3.8


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................20 5.0


Financial sector liberalization ....................................................16 6.7
Corporate governance.................................................................20 4.9
Legal and regulatory issues .......................................................24 4.2
Contract enforcement..................................................................30 4.3
2nd pillar: Business environment .............................................18 5.2
Human capital ...............................................................................34 4.1
64
Taxes.................................................................................................4 6.1
Infrastructure ................................................................................25 4.7
Cost of doing business ................................................................12 6.1
3rd pillar: Financial stability......................................................40 4.5
Currency stability..........................................................................52 2.5
Banking system stability..............................................................13 5.7
Risk of sovereign debt crisis ......................................................28 4.9
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................32 3.6


Size index .......................................................................................24 3.2
Efficiency index.............................................................................33 4.7
Financial information disclosure................................................35 2.1
5th pillar: Non-banking financial services .............................33 2.1
IPO activity.....................................................................................15 3.0
M&A activity..................................................................................38 1.5
Insurance .....................................................................................n/a n/a
Securitization.................................................................................35 1.8
6th pillar: Financial markets......................................................39 1.8
Foreign exchange markets .........................................................35 1.1
Derivatives markets .....................................................................31 1.3
Equity market development ........................................................29 2.6
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................5 4.7


Commercial access........................................................................5 4.7
Retail access ...............................................................................n/a n/a
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 65

2: Country/Economy Profiles
Bahrain
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......19 .....■ ...............54.0 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................31 .....■ .................4.5 United States ........................5.4
1.05 Efficacy of corporate boards .................................................25 .....■ .................4.9 Sweden .................................5.9
1.06 Reliance on professional management .................................45 .....■ .................4.1 Sweden .................................6.5
1.07 Willingness to delegate.........................................................23 .....■ .................4.5 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................21 .....■ .................5.3 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................21 .....■ .................5.3 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................19 .....■ .................5.0 Sweden .................................6.0
1.11 Official supervisory power ....................................................13 .....■ ...............12.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................14 .....■ .................3.7 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................45 .....■ .................2.5 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................19 .....■ .................5.1 Sweden .................................5.9
1.16 Property rights.......................................................................22 .....■ .................5.5 Switzerland............................6.5
1.17 Intellectual property protection .............................................21 .....■ .................5.1 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................18 .....■ .................5.1 Denmark................................6.6
1.19 Public trust of politicians .......................................................18 .....■ .................3.9 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................24 .....■ .................5.4 Multiple (2) ............................9.3 65
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................29 .....■ .................3.7 Singapore ..............................6.5
1.23 Judicial independence ...........................................................22 .....■ .................5.0 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................20 .....■ .................5.4 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................42 .....■ .............635.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................53 .....■ ...............48.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................13 .....■ ...............14.7 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................27 .....■ .................4.6 Switzerland............................6.1
2.02 Quality of math and science education.................................32 .....■ .................4.3 Singapore ..............................6.4
2.03 Extent of staff training...........................................................27 .....■ .................4.5 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................54 .....■ .................3.4 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................14 .....■ .................4.8 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................39 .....■ ...............32.1 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................16 .....■ .................5.7 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ........4 .....■ .................5.7 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ..............................................................9 .....■ .................0.0 Germany ..............................–6.9
2.10 Time to pay taxes ....................................................................2 .....■ ...............36.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................18 .....■ .................5.4 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................27 .....■ .................6.3 Finland ...................................6.9
2.13 Internet users ........................................................................29 .....■ ...............33.2 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................25 .....■ .................9.1 Denmark..............................36.0
2.15 Telephone lines .....................................................................30 .....■ ...............26.3 Switzerland..........................65.9
2.16 Mobile telephone subscribers.................................................4 .....■ .............148.3 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 66

2: Country/Economy Profiles

Bahrain
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................4 .....■ .................0.6 Denmark................................0.0
2.18 Cost of registering property ..................................................11 .....■ .................0.9 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................27 .....■ ...............10.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................11 .....■ .................9.0 Australia.................................2.0
2.21 Time to register property.......................................................25 .....■ ...............31.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................28 .....■ .................2.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................52 .....■ ...............–5.4 Brazil....................................11.7
3.02 External vulnerability indicator...............................................33 .....■ .............523.5 Egypt ...................................13.9
3.03 Current account balance to GDP.............................................9 .....■ ...............10.6 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .....................32 .....■ .............167.2 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................32 .....■ .................5.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................23 .....■ ...............20.0 Nigeria ...................................0.3
66 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................32 .....■ ...............15.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................26 .....■ ...............15.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ......................................4 .....■ .................6.0 Peru .......................................6.5
3.14 Manageability of public debt .................................................17 .....■ ...............30.0 Chile ......................................5.2
3.15 Credit default swap spreads .................................................41 .....■ .............356.5 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................35 .....■ ...............58.2 Denmark............................199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................20 .....■ ...............73.9 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................17 .....■ ...............96.5 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................30 .....■ ...............66.2 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................28 .....■ ...............59.4 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................3 .....■ .................6.1 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................33 .....■ .................3.0 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................35 .....■ ...............16.6 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................54 .....■ .................7.6 Japan .....................................0.8
4.12 Non-performing bank loans to total loans ............................n/a .........................n/a Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................26 .....■ ...............35.8 Australia.............................100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................44 .....■ .................0.1 China ...................................19.3
5.02 IPO proceeds amount .............................................................4 .....■ .................1.4 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................44 .....■ .................0.1 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 67

2: Country/Economy Profiles
Bahrain
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................53 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................25 .....■ .................3.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................53 .....■ .................0.0 United States ......................30.2
Insurance
5.07 Insurance premiums, direct..................................................n/a .........................n/a United States ..........1,230,526.0
5.08 Insurance density .................................................................n/a .........................n/a United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums ..........................n/a .........................n/a United Arab Emirates ............0.3
5.10 Insurance penetration...........................................................n/a .........................n/a United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP ...........................n/a .........................n/a Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................23 .....■ .................2.3 United States ......................16.3
5.13 Share of total number of securitization deals .......................50 .....■ .................0.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................34 .....■ .................0.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................26 .....■ .................0.2 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................37 .....■ .................0.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 67
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................29 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....27 .....■ .................0.1 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................24 .....■ .................0.1 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................52 .....■ .................6.6 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................17 .....■ .............120.0 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................50 .....■ .................5.5 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people.....................8 .....■ .................0.6 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................23 .....■ .................5.5 Switzerland............................6.6
7.02 Venture capital availability .......................................................9 .....■ .................3.9 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................3 .....■ .................4.6 Panama..................................5.2
7.04 Financing through local equity market ..................................40 .....■ .................3.9 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................2 .....■ .................4.7 Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................7 .....■ .................9.5 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 68

2: Country/Economy Profiles

Bangladesh
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................161.9 10.0% US$ bn
GDP (US$ billions), 2008 ...........................................................81.9 ■ Public debt securities .........25.0
36.8%
GDP (current prices) per capita, 2008 .................................506.1 ■ Private debt securities.........n/a
GDP (PPP) as share (%) of world total, 2008 ........................0.33 ■ Banking deposits .................36.2
Average rate of real GDP growth (%), 2004–08....................6.17 ■ Equity securities ....................6.8

53.2% Total 68.0

Total/GDP: 92.3%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................54 2.6


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................55 2.5


Financial sector liberalization ....................................................55 1.0
Corporate governance.................................................................55 3.4
Legal and regulatory issues .......................................................51 2.9
Contract enforcement..................................................................55 2.6
2nd pillar: Business environment .............................................55 2.7
Human capital ...............................................................................55 2.7
68
Taxes...............................................................................................47 3.6
Infrastructure ................................................................................55 1.8
Cost of doing business ................................................................54 2.8
3rd pillar: Financial stability......................................................30 4.7
Currency stability........................................................................n/a n/a
Banking system stability............................................................n/a n/a
Risk of sovereign debt crisis ......................................................34 4.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................51 2.4


Size index .......................................................................................34 2.4
Efficiency index.............................................................................52 3.1
Financial information disclosure................................................53 1.0
5th pillar: Non-banking financial services .............................55 1.0
IPO activity.....................................................................................53 1.0
M&A activity..................................................................................55 1.0
Insurance .......................................................................................51 1.1
Securitization.................................................................................55 1.0
6th pillar: Financial markets......................................................44 1.7
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................44 1.7
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................40 3.0


Commercial access......................................................................53 2.8
Retail access.................................................................................16 3.1
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 69

2: Country/Economy Profiles
Bangladesh
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......47 .....■ .................0.0 Turkey..................................83.5
1.03 Domestic financial sector liberalization ................................n/a .........................n/a Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................55 .....■ .................2.8 United States ........................5.4
1.05 Efficacy of corporate boards .................................................52 .....■ .................3.9 Sweden .................................5.9
1.06 Reliance on professional management .................................51 .....■ .................3.9 Sweden .................................6.5
1.07 Willingness to delegate.........................................................55 .....■ .................2.9 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................55 .....■ .................3.6 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................54 .....■ .................3.1 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................51 .....■ .................3.6 Sweden .................................6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................49 .....■ .................2.5 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................53 .....■ .................1.8 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................38 .....■ .................4.4 Sweden .................................5.9
1.16 Property rights.......................................................................51 .....■ .................3.5 Switzerland............................6.5
1.17 Intellectual property protection .............................................54 .....■ .................2.4 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................49 .....■ .................2.6 Denmark................................6.6
1.19 Public trust of politicians .......................................................49 .....■ .................1.8 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................53 .....■ .................2.1 Multiple (2) ............................9.3 69
1.21 Strength of legal rights index ................................................11 .....■ .................8.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................42 .....■ .................2.9 Singapore ..............................6.5
1.23 Judicial independence ...........................................................44 .....■ .................3.5 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................54 .....■ .................2.2 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................55 .....■ ..........1,442.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................45 .....■ ...............41.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................13 .....■ .................6.7 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................54 .....■ ...............63.3 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................52 .....■ .................3.6 Switzerland............................6.1
2.02 Quality of math and science education.................................50 .....■ .................2.9 Singapore ..............................6.4
2.03 Extent of staff training...........................................................55 .....■ .................2.6 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................55 .....■ .................3.0 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................54 .....■ .................3.0 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................54 .....■ .................6.8 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................54 .....■ .................2.2 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......31 .....■ .................4.1 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................48 .....■ ...............17.7 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................35 .....■ .............302.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................54 .....■ .................2.5 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................55 .....■ .................4.4 Finland ...................................6.9
2.13 Internet users ........................................................................55 .....■ .................0.3 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................55 .....■ .................0.0 Denmark..............................36.0
2.15 Telephone lines .....................................................................55 .....■ .................0.7 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................54 .....■ ...............21.7 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 70

2: Country/Economy Profiles

Bangladesh
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................48 .....■ ...............25.7 Denmark................................0.0
2.18 Cost of registering property ..................................................51 .....■ ...............10.4 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................17 .....■ .................8.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................52 .....■ ...............73.0 Australia.................................2.0
2.21 Time to register property.......................................................55 .....■ .............245.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................41 .....■ .................4.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate................................n/a .........................n/a Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................24 .....■ .................0.9 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................20 .....■ .................1.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator.................................................n/a .........................n/a Multiple (9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria ...................................0.3
70 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating............................................n/a .........................n/a Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating ........................................n/a .........................n/a Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................30 .....■ .................4.9 Peru .......................................6.5
3.14 Manageability of public debt .................................................27 .....■ ...............39.4 Chile ......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................38 .....■ ...............51.7 Denmark............................199.3
4.02 Central bank assets to GDP ....................................................8 .....■ .................5.9 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................35 .....■ ...............49.5 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................32 .....■ ...............61.2 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................42 .....■ ...............34.4 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................35 .....■ ...............49.5 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................7 .....■ .................5.0 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................24 .....■ .................2.4 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................53 .....■ ...............65.9 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................48 .....■ .................5.8 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................48 .....■ ...............13.0 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
4.14 Public credit registry coverage ..............................................21 .....■ .................0.9 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share .................................................................n/a .........................n/a China ...................................19.3
5.02 IPO proceeds amount ...........................................................53 .....■ .................0.0 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................53 .....■ .................0.0 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 71

2: Country/Economy Profiles
Bangladesh
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................55 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................54 .....■ .................0.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................55 .....■ .................0.0 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................53 .....■ .............456.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................53 .....■ .................2.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums ..........................n/a .........................n/a United Arab Emirates ............0.3
5.10 Insurance penetration............................................................50 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................44 .....■ .................0.5 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................53 .....■ .................0.1 United States ......................16.3
5.13 Share of total number of securitization deals .......................50 .....■ .................0.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 71
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................22 .....■ ...............92.1 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................54 .....■ .................7.7 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................47 .....■ .................7.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................43 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................55 .....■ .................2.9 Switzerland............................6.6
7.02 Venture capital availability .....................................................55 .....■ .................2.0 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................23 .....■ .................3.7 Panama..................................5.2
7.04 Financing through local equity market ..................................23 .....■ .................4.5 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................51 .....■ .................2.4 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................50 .....■ .................0.9 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................33 .....■ ........31,868.2 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................43 .....■ .................5.2 Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................1 .....■ ...............41.2 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 72

2: Country/Economy Profiles

Belgium
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................10.8 21.5% 21.4% US$ bn
GDP (US$ billions), 2008 .........................................................506.4 ■ Public debt securities .......384.5
GDP (current prices) per capita, 2008 ............................47,107.8 ■ Private debt securities......537.4
GDP (PPP) as share (%) of world total, 2008 ........................0.57 ■ Banking deposits ...............491.0
Average rate of real GDP growth (%), 2004–08....................2.33 ■ Equity securities ................386.4
27.3% 29.9%
Total 1,799.3

Total/GDP: 392.0%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................13 4.5


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................16 5.5


Financial sector liberalization ......................................................1 7.0
Corporate governance.................................................................19 5.0
Legal and regulatory issues .......................................................15 4.8
Contract enforcement..................................................................15 5.4
2nd pillar: Business environment .............................................21 5.1
Human capital .................................................................................7 5.4
72
Taxes...............................................................................................36 4.3
Infrastructure ................................................................................16 5.7
Cost of doing business ................................................................36 4.9
3rd pillar: Financial stability......................................................33 4.7
Currency stability..........................................................................35 4.0
Banking system stability..............................................................35 4.8
Risk of sovereign debt crisis ......................................................24 5.1
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................9 4.8


Size index .......................................................................................16 3.9
Efficiency index...............................................................................7 6.1
Financial information disclosure................................................12 3.9
5th pillar: Non-banking financial services .............................24 2.5
IPO activity.....................................................................................40 1.6
M&A activity..................................................................................22 2.3
Insurance .......................................................................................13 3.5
Securitization.................................................................................22 2.5
6th pillar: Financial markets......................................................11 4.2
Foreign exchange markets .........................................................12 2.3
Derivatives markets .....................................................................11 5.2
Equity market development ........................................................30 2.6
Bond market development............................................................1 6.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................4 4.7


Commercial access......................................................................12 4.3
Retail access...................................................................................4 5.2
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 73

2: Country/Economy Profiles
Belgium
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................1.7 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............72.8 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................26 .....■ .................4.5 United States ........................5.4
1.05 Efficacy of corporate boards .................................................13 .....■ .................5.2 Sweden .................................5.9
1.06 Reliance on professional management .................................16 .....■ .................5.5 Sweden .................................6.5
1.07 Willingness to delegate.........................................................12 .....■ .................5.0 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................14 .....■ .................5.6 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................16 .....■ .................5.5 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................16 .....■ .................5.1 Sweden .................................6.0
1.11 Official supervisory power ....................................................11 .....■ ...............12.5 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................43 .....■ .................2.7 Singapore ..............................5.6
1.14 Centralization of economic policymaking ................................2 .....■ .................5.1 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................20 .....■ .................5.1 Sweden .................................5.9
1.16 Property rights.......................................................................17 .....■ .................5.8 Switzerland............................6.5
1.17 Intellectual property protection .............................................18 .....■ .................5.3 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................17 .....■ .................5.1 Denmark................................6.6
1.19 Public trust of politicians .......................................................24 .....■ .................3.5 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................15 .....■ .................7.3 Multiple (2) ............................9.3 73
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................35 .....■ .................3.4 Singapore ..............................6.5
1.23 Judicial independence ...........................................................17 .....■ .................5.4 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................19 .....■ .................5.4 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................27 .....■ .............505.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .........................4 .....■ ...............25.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................11 .....■ .................7.0 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................16 .....■ ...............16.6 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................7 .....■ .................5.8 Switzerland............................6.1
2.02 Quality of math and science education...................................3 .....■ .................6.1 Singapore ..............................6.4
2.03 Extent of staff training...........................................................12 .....■ .................4.9 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................10 .....■ .................5.6 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................20 .....■ .................4.5 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................15 .....■ ...............62.8 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................20 .....■ .................5.4 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......26 .....■ .................4.3 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................52 .....■ ...............28.1 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................18 .....■ .............156.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................13 .....■ .................5.8 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................21 .....■ .................6.5 Finland ...................................6.9
2.13 Internet users ........................................................................16 .....■ ...............67.0 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................10 .....■ ...............26.0 Denmark..............................36.0
2.15 Telephone lines .....................................................................15 .....■ ...............44.6 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................26 .....■ .............102.7 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 74

2: Country/Economy Profiles

Belgium
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................21 .....■ .................5.2 Denmark................................0.0
2.18 Cost of registering property ..................................................54 .....■ ...............12.7 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................2 .....■ .................4.0 Australia.................................2.0
2.21 Time to register property.......................................................51 .....■ .............132.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................5 .....■ .................0.9 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................20 .....■ .................2.3 Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................36 .....■ ...............–2.5 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................10 .....■ ...............–0.3 Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................41 .....■ .................2.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple (9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria ...................................0.3
74 3.10 Aggregate measure of real estate bubbles...........................21 .....■ .................5.1 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................16 .....■ ...............19.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................16 .....■ ...............19.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................26 .....■ .................5.0 Peru .......................................6.5
3.14 Manageability of public debt .................................................52 .....■ ...............89.6 Chile ......................................5.2
3.15 Credit default swap spreads .................................................11 .....■ ...............68.3 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................18 .....■ .............108.7 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................37 .....■ .................0.4 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................12 .....■ ...............98.7 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................13 .....■ .............108.3 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................24 .....■ ...............85.4 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................13 .....■ ...............98.7 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................7 .....■ .................5.2 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................9 .....■ .................4.8 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................32 .....■ .................3.0 Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
4.11 Bank operating costs to assets...............................................9 .....■ .................1.2 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................13 .....■ .................1.5 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
4.14 Public credit registry coverage ................................................2 .....■ ...............57.7 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................33 .....■ .................0.4 China ...................................19.3
5.02 IPO proceeds amount ...........................................................42 .....■ .................0.2 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................20 .....■ .................0.9 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 75

2: Country/Economy Profiles
Belgium
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................21 .....■ .................0.8 United States ......................41.7
5.05 M&A transaction value to GDP .............................................16 .....■ .................5.3 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................24 .....■ .................0.7 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................15 .....■ ........44,897.0 United States ..........1,230,526.0
5.08 Insurance density ....................................................................8 .....■ ..........4,022.7 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................35 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................10 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................20 .....■ .................1.3 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................14 .....■ .................3.7 United States ......................16.3
5.13 Share of total number of securitization deals .......................26 .....■ .................0.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................13 .....■ .................1.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................11 .....■ .................1.7 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................13 .....■ .................1.2 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 75
agreements ...........................................................................14 .....■ .................0.5 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................12 .....■ .................1.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................5 .....■ .................1.5 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....15 .....■ .................0.9 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................14 .....■ .................0.6 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................31 .....■ ...............64.8 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................28 .....■ ...............88.0 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................29 .....■ ...............57.0 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people..................n/a .........................n/a Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP .........................................6 .....■ .............125.2 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................3 .....■ ...............36.8 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................18 .....■ .................5.9 Switzerland............................6.6
7.02 Venture capital availability .....................................................21 .....■ .................3.5 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................45 .....■ .................2.9 Panama..................................5.2
7.04 Financing through local equity market ..................................34 .....■ .................4.2 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................16 .....■ .................3.9 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................12 .....■ .................8.9 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................2 .....■ ......372,457.0 Ukraine .......................375,499.3
7.08 Commercial bank branches.....................................................2 .....■ ...............50.0 Italy......................................53.0
7.09 Total number of ATMs...........................................................11 .....■ ...............86.0 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................14 .....■ ..........1,086.1 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 76

2: Country/Economy Profiles

Brazil
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................191.9 18.3% US$ bn
GDP (US$ billions), 2008 ......................................................1,572.8 ■ Public debt securities .......601.0
GDP (current prices) per capita, 2008 ..............................8,197.4 41.8% ■ Private debt securities......325.6
9.9%
GDP (PPP) as share (%) of world total, 2008 ........................2.86 ■ Banking deposits ...............984.3
Average rate of real GDP growth (%), 2004–08....................4.72 ■ Equity securities .............1,370.4

Total 3,281.3
30.0%

Total/GDP: 246.1%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................34 3.5


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................42 3.6


Financial sector liberalization ....................................................40 3.2
Corporate governance.................................................................26 4.7
Legal and regulatory issues .......................................................49 2.9
Contract enforcement..................................................................42 3.7
2nd pillar: Business environment .............................................47 3.6
Human capital ...............................................................................42 3.7
76
Taxes...............................................................................................52 3.0
Infrastructure ................................................................................38 3.4
Cost of doing business ................................................................43 4.4
3rd pillar: Financial stability......................................................15 5.1
Currency stability............................................................................3 6.0
Banking system stability..............................................................25 5.1
Risk of sovereign debt crisis ......................................................38 4.2
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................35 3.5


Size index .......................................................................................27 3.1
Efficiency index.............................................................................47 3.7
Financial information disclosure................................................13 3.9
5th pillar: Non-banking financial services .............................15 3.2
IPO activity.......................................................................................4 4.9
M&A activity..................................................................................21 2.4
Insurance .......................................................................................28 2.6
Securitization.................................................................................18 2.9
6th pillar: Financial markets......................................................37 1.9
Foreign exchange markets .........................................................32 1.1
Derivatives markets .....................................................................26 1.7
Equity market development ........................................................39 2.0
Bond market development..........................................................30 2.4
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................31 3.3


Commercial access......................................................................29 3.9
Retail access.................................................................................27 2.7
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 77

2: Country/Economy Profiles
Brazil
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................34 .....■ .................1.0 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......47 .....■ .................7.6 Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................31 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................29 .....■ .................4.5 United States ........................5.4
1.05 Efficacy of corporate boards .................................................32 .....■ .................4.7 Sweden .................................5.9
1.06 Reliance on professional management .................................26 .....■ .................5.1 Sweden .................................6.5
1.07 Willingness to delegate.........................................................31 .....■ .................4.2 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................41 .....■ .................4.7 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................44 .....■ .................3.6 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................31 .....■ .................4.6 Sweden .................................6.0
1.11 Official supervisory power ......................................................1 .....■ ...............14.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................54 .....■ .................1.8 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................40 .....■ .................2.8 Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................8 .....■ .................5.6 Sweden .................................5.9
1.16 Property rights.......................................................................39 .....■ .................4.4 Switzerland............................6.5
1.17 Intellectual property protection .............................................44 .....■ .................3.0 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................52 .....■ .................2.3 Denmark................................6.6
1.19 Public trust of politicians .......................................................52 .....■ .................1.6 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................39 .....■ .................3.5 Multiple (2) ............................9.3 77
1.21 Strength of legal rights index ................................................49 .....■ .................3.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................52 .....■ .................2.3 Singapore ..............................6.5
1.23 Judicial independence ...........................................................42 .....■ .................3.6 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................39 .....■ .................3.7 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................41 .....■ .............616.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................50 .....■ ...............45.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................34 .....■ .................5.3 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................14 .....■ ...............16.5 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................40 .....■ .................4.1 Switzerland............................6.1
2.02 Quality of math and science education.................................51 .....■ .................2.7 Singapore ..............................6.4
2.03 Extent of staff training...........................................................34 .....■ .................4.2 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................24 .....■ .................4.8 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................28 .....■ .................4.2 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................45 .....■ ...............25.5 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................39 .....■ .................3.7 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......45 .....■ .................3.8 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................40 .....■ ...............12.7 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................55 .....■ ..........2,600.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................42 .....■ .................3.4 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................22 .....■ .................6.5 Finland ...................................6.9
2.13 Internet users ........................................................................28 .....■ ...............35.2 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................36 .....■ .................3.5 Denmark..............................36.0
2.15 Telephone lines .....................................................................37 .....■ ...............20.5 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................43 .....■ ...............63.1 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 78

2: Country/Economy Profiles

Brazil
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................29 .....■ .................8.2 Denmark................................0.0
2.18 Cost of registering property ..................................................23 .....■ .................2.7 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................28 .....■ ...............12.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................55 .....■ .............152.0 Australia.................................2.0
2.21 Time to register property.......................................................34 .....■ ...............42.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................41 .....■ .................4.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................1 .....■ ...............11.7 Brazil....................................11.7
3.02 External vulnerability indicator...............................................12 .....■ ...............42.1 Egypt ...................................13.9
3.03 Current account balance to GDP...........................................34 .....■ ...............–1.8 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .......................3 .....■ ...............18.3 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................51 .....■ .................2.5 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................26 .....■ ...............24.8 Nigeria ...................................0.3
78 3.10 Aggregate measure of real estate bubbles...........................15 .....■ .................5.6 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................35 .....■ ...............13.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................36 .....■ ...............11.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................35 .....■ .................4.8 Peru .......................................6.5
3.14 Manageability of public debt .................................................24 .....■ ...............36.9 Chile ......................................5.2
3.15 Credit default swap spreads .................................................27 .....■ .............189.8 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................28 .....■ ...............77.9 Denmark............................199.3
4.02 Central bank assets to GDP ....................................................3 .....■ ...............13.1 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................30 .....■ ...............56.1 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................28 .....■ ...............70.2 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................35 .....■ ...............43.6 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................31 .....■ ...............56.1 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................20 .....■ .................0.1 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................37 .....■ .................3.7 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................53 .....■ .................9.2 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................30 .....■ .................9.1 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................47 .....■ .................5.6 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................30 .....■ .................2.9 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................19 .....■ ...............62.2 Australia.............................100.0
4.14 Public credit registry coverage ..............................................10 .....■ ...............20.2 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................4 .....■ .................6.6 China ...................................19.3
5.02 IPO proceeds amount ...........................................................10 .....■ .................1.1 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................11 .....■ .................2.7 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 79

2: Country/Economy Profiles
Brazil
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................16 .....■ .................1.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................34 .....■ .................2.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................17 .....■ .................1.6 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................18 .....■ ........39,251.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................34 .....■ .............204.7 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................18 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................34 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................15 .....■ .................1.7 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................37 .....■ .................1.3 United States ......................16.3
5.13 Share of total number of securitization deals .......................10 .....■ .................1.5 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................21 .....■ .................0.4 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................35 .....■ .................0.1 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................41 .....■ .................0.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 79
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................30 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................31 .....■ .................0.0 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....16 .....■ .................0.7 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................34 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................36 .....■ ...............56.1 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................31 .....■ ...............79.3 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................33 .....■ ...............44.5 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................40 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............17 .....■ ...............20.0 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............17 .....■ ...............44.8 Japan .................................198.6
6.15 Private international bonds to GDP .......................................32 .....■ .................4.6 Ireland................................279.1
6.16 Public international bonds to GDP ........................................24 .....■ .................3.6 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................12 .....■ .................6.0 Switzerland............................6.6
7.02 Venture capital availability .....................................................43 .....■ .................2.7 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................2 .....■ .................5.0 Panama..................................5.2
7.04 Financing through local equity market ..................................30 .....■ .................4.2 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................37 .....■ .................3.0 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................38 .....■ .................2.6 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................29 .....■ ........63,980.0 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................33 .....■ ...............12.2 Italy......................................53.0
7.09 Total number of ATMs.............................................................7 .....■ .............110.2 Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................9 .....■ ..........1,471.1 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................17 .....■ .................1.6 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 80

2: Country/Economy Profiles

Canada
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................33.3 16.2% US$ bn
GDP (US$ billions), 2008 ......................................................1,511.0 ■ Public debt securities .......915.8
GDP (current prices) per capita, 2008 ............................45,428.2 38.7% ■ Private debt securities......822.1
14.5%
GDP (PPP) as share (%) of world total, 2008 ........................1.89 ■ Banking deposits ............1,730.9
Average rate of real GDP growth (%), 2004–08....................2.46 ■ Equity securities .............2,186.6

Total 5,655.4
30.6%
Total/GDP: 393.8%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................6 5.0


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................12 5.6


Financial sector liberalization ....................................................12 6.9
Corporate governance.................................................................14 5.1
Legal and regulatory issues .......................................................12 5.1
Contract enforcement..................................................................16 5.4
2nd pillar: Business environment ...............................................4 5.9
Human capital .................................................................................9 5.3
80
Taxes.................................................................................................5 6.0
Infrastructure ................................................................................12 5.8
Cost of doing business ..................................................................2 6.7
3rd pillar: Financial stability........................................................7 5.6
Currency stability..........................................................................28 4.3
Banking system stability................................................................2 6.4
Risk of sovereign debt crisis ......................................................18 5.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................8 4.8


Size index .......................................................................................10 4.4
Efficiency index.............................................................................17 5.6
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services ...............................7 4.0
IPO activity.....................................................................................21 2.3
M&A activity....................................................................................3 6.5
Insurance .......................................................................................20 2.9
Securitization...................................................................................8 4.2
6th pillar: Financial markets......................................................12 4.0
Foreign exchange markets .........................................................11 2.3
Derivatives markets .......................................................................6 6.5
Equity market development ........................................................10 4.5
Bond market development..........................................................21 3.0
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................3 4.7


Commercial access......................................................................10 4.4
Retail access...................................................................................5 5.1
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 81

2: Country/Economy Profiles
Canada
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......13 .....■ ...............63.3 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................3 .....■ .................5.2 United States ........................5.4
1.05 Efficacy of corporate boards ...................................................3 .....■ .................5.7 Sweden .................................5.9
1.06 Reliance on professional management ...................................8 .....■ .................6.0 Sweden .................................6.5
1.07 Willingness to delegate...........................................................9 .....■ .................5.1 Sweden .................................6.2
1.08 Strength of auditing and reporting standards..........................6 .....■ .................6.1 South Africa...........................6.2
1.09 Ethical behavior of firms..........................................................8 .....■ .................6.2 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests........................6 .....■ .................5.6 Sweden .................................6.0
1.11 Official supervisory power ....................................................34 .....■ .................7.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................17 .....■ .................3.6 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................11 .....■ .................4.4 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................15 .....■ .................5.2 Sweden .................................5.9
1.16 Property rights.......................................................................10 .....■ .................6.2 Switzerland............................6.5
1.17 Intellectual property protection .............................................14 .....■ .................5.5 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................14 .....■ .................5.6 Denmark................................6.6
1.19 Public trust of politicians .......................................................12 .....■ .................4.2 Singapore ..............................6.4
1.20 Corruption perceptions index ..................................................7 .....■ .................8.7 Multiple (2) ............................9.3 81
1.21 Strength of legal rights index ................................................29 .....■ .................6.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................7 .....■ .................5.1 Singapore ..............................6.5
1.23 Judicial independence .............................................................9 .....■ .................6.2 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ..................................8 .....■ .................6.0 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................35 .....■ .............570.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................33 .....■ ...............36.0 Ireland..................................20.0
1.27 Strength of investor protection ...............................................4 .....■ .................8.3 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................23 .....■ ...............22.3 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................2 .....■ .................6.0 Switzerland............................6.1
2.02 Quality of math and science education...................................8 .....■ .................5.3 Singapore ..............................6.4
2.03 Extent of staff training...........................................................11 .....■ .................5.0 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................11 .....■ .................5.6 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................17 .....■ .................4.6 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................16 .....■ ...............62.4 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................10 .....■ .................6.0 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......25 .....■ .................4.3 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ..............................................................2 .....■ ...............–6.0 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................13 .....■ .............119.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................11 .....■ .................5.9 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................11 .....■ .................6.8 Finland ...................................6.9
2.13 Internet users ..........................................................................8 .....■ ...............73.0 Norway ................................85.0
2.14 Broadband Internet subscribers ..............................................8 .....■ ...............27.6 Denmark..............................36.0
2.15 Telephone lines .......................................................................6 .....■ ...............55.5 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................45 .....■ ...............61.7 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 82

2: Country/Economy Profiles

Canada
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................3 .....■ .................0.5 Denmark................................0.0
2.18 Cost of registering property ..................................................16 .....■ .................1.8 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................4 .....■ .................5.0 Australia.................................2.0
2.21 Time to register property.......................................................15 .....■ ...............17.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................3 .....■ .................0.8 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................14 .....■ .................3.5 Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................25 .....■ .................0.6 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................18 .....■ .............–11.1 Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................30 .....■ ...............57.1 Nigeria ...................................0.3
82 3.10 Aggregate measure of real estate bubbles...........................12 .....■ .................6.0 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................13 .....■ .................5.4 Peru .......................................6.5
3.14 Manageability of public debt .................................................46 .....■ ...............63.8 Chile ......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................9 .....■ .............141.3 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................14 .....■ .................3.2 Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................5 .....■ .............132.4 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................24 .....■ ...............75.8 Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................8 .....■ .............157.1 United States ....................202.4
4.06 Bank deposits to GDP .............................................................6 .....■ .............132.4 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................18 .....■ .................0.2 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................36 .....■ .................3.7 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................27 .....■ .................2.6 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................13 .....■ .................1.2 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................24 .....■ .................2.3 Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................9 .....■ .................1.1 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................18 .....■ .................1.3 China ...................................19.3
5.02 IPO proceeds amount ...........................................................40 .....■ .................0.2 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ................................................................9 .....■ .................3.0 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 83

2: Country/Economy Profiles
Canada
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................3 .....■ .................4.7 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................8 .....■ ...............10.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................4 .....■ .................5.3 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................9 .....■ ......100,148.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................14 .....■ ..........3,046.2 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................38 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................16 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................37 .....■ .................0.7 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................15 .....■ .................3.3 United States ......................16.3
5.13 Share of total number of securitization deals .........................6 .....■ .................1.9 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................15 .....■ .................1.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................15 .....■ .................1.0 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................11 .....■ .................1.9 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 83
agreements .............................................................................7 .....■ .................1.8 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................14 .....■ .................0.7 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................6 .....■ .................1.3 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......4 .....■ .................4.2 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................10 .....■ .................1.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................26 .....■ ...............84.2 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.........................................7 .....■ .............147.4 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................17 .....■ .............124.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people.....................2 .....■ .................1.2 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............12 .....■ ...............30.0 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ...............9 .....■ ...............51.1 Japan .................................198.6
6.15 Private international bonds to GDP .......................................19 .....■ ...............27.4 Ireland................................279.1
6.16 Public international bonds to GDP ........................................18 .....■ .................6.1 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................2 .....■ .................6.4 Switzerland............................6.6
7.02 Venture capital availability .....................................................16 .....■ .................3.8 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................42 .....■ .................2.9 Panama..................................5.2
7.04 Financing through local equity market ..................................12 .....■ .................4.7 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................17 .....■ .................3.9 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................16 .....■ .................7.6 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................13 .....■ ...............23.7 Italy......................................53.0
7.09 Total number of ATMs.............................................................1 .....■ .............202.8 Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................5 .....■ ..........2,201.6 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 84

2: Country/Economy Profiles

Chile
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................16.8 1.9% US$ bn
10.3%
GDP (US$ billions), 2008 .........................................................169.6 ■ Public debt securities ...........6.7
GDP (current prices) per capita, 2008 ............................10,123.8 ■ Private debt securities........35.8
GDP (PPP) as share (%) of world total, 2008 ........................0.36 ■ Banking deposits .................92.1
26.5%
Average rate of real GDP growth (%), 2004–08....................4.81 ■ Equity securities ................212.9
61.3%
Total 347.6

Total/GDP: 212.1%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................31 3.6


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................30 4.3


Financial sector liberalization ....................................................33 3.8
Corporate governance.................................................................25 4.7
Legal and regulatory issues .......................................................29 3.9
Contract enforcement..................................................................25 4.7
2nd pillar: Business environment .............................................25 4.8
Human capital ...............................................................................25 4.4
84
Taxes...............................................................................................10 5.8
Infrastructure ................................................................................28 4.1
Cost of doing business ................................................................32 5.1
3rd pillar: Financial stability........................................................4 5.6
Currency stability..........................................................................17 4.7
Banking system stability................................................................3 6.3
Risk of sovereign debt crisis ......................................................19 5.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................36 3.4


Size index .......................................................................................37 2.3
Efficiency index.............................................................................38 4.5
Financial information disclosure................................................18 3.5
5th pillar: Non-banking financial services .............................39 1.9
IPO activity.....................................................................................49 1.1
M&A activity..................................................................................32 1.6
Insurance .......................................................................................25 2.7
Securitization.................................................................................29 2.1
6th pillar: Financial markets......................................................47 1.5
Foreign exchange markets .........................................................28 1.1
Derivatives markets .....................................................................35 1.0
Equity market development ........................................................34 2.1
Bond market development..........................................................40 1.4
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................25 3.6


Commercial access........................................................................8 4.5
Retail access.................................................................................28 2.7
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 85

2: Country/Economy Profiles
Chile
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................29 .....■ .................2.5 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......47 .....■ .................8.7 Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................30 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................12 .....■ .................4.8 United States ........................5.4
1.05 Efficacy of corporate boards .................................................10 .....■ .................5.4 Sweden .................................5.9
1.06 Reliance on professional management .................................18 .....■ .................5.4 Sweden .................................6.5
1.07 Willingness to delegate.........................................................35 .....■ .................4.1 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................16 .....■ .................5.6 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................17 .....■ .................5.5 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................18 .....■ .................5.0 Sweden .................................6.0
1.11 Official supervisory power ....................................................20 .....■ ...............11.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................16 .....■ .................3.6 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................48 .....■ .................2.4 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................34 .....■ .................4.5 Sweden .................................5.9
1.16 Property rights.......................................................................21 .....■ .................5.5 Switzerland............................6.5
1.17 Intellectual property protection .............................................38 .....■ .................3.6 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................28 .....■ .................3.9 Denmark................................6.6
1.19 Public trust of politicians .......................................................27 .....■ .................3.4 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................18 .....■ .................6.9 Multiple (2) ............................9.3 85
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................31 .....■ .................3.6 Singapore ..............................6.5
1.23 Judicial independence ...........................................................26 .....■ .................4.7 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................12 .....■ .................6.0 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................26 .....■ .............480.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................33 .....■ ...............36.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................21 .....■ .................6.0 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................39 .....■ ...............28.6 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................14 .....■ .................5.4 Switzerland............................6.1
2.02 Quality of math and science education.................................49 .....■ .................2.9 Singapore ..............................6.4
2.03 Extent of staff training...........................................................29 .....■ .................4.4 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................29 .....■ .................4.6 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ............................7 .....■ .................5.0 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................29 .....■ ...............46.6 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................12 .....■ .................6.0 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ........5 .....■ .................5.5 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ..............................................................7 .....■ ...............–1.3 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................36 .....■ .............316.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................17 .....■ .................5.6 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................13 .....■ .................6.7 Finland ...................................6.9
2.13 Internet users ........................................................................31 .....■ ...............30.9 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................29 .....■ .................7.9 Denmark..............................36.0
2.15 Telephone lines .....................................................................36 .....■ ...............20.7 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................37 .....■ ...............83.7 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 86

2: Country/Economy Profiles

Chile
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................27 .....■ .................7.5 Denmark................................0.0
2.18 Cost of registering property ..................................................15 .....■ .................1.3 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................30 .....■ ...............15.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................34 .....■ ...............27.0 Australia.................................2.0
2.21 Time to register property.......................................................25 .....■ ...............31.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................49 .....■ .................4.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................7 .....■ .................4.8 Brazil....................................11.7
3.02 External vulnerability indicator...............................................24 .....■ .............108.7 Egypt ...................................13.9
3.03 Current account balance to GDP...........................................35 .....■ ...............–2.0 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .....................15 .....■ ...............34.1 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................10 .....■ .................8.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................25 .....■ ...............24.2 Nigeria ...................................0.3
86 3.10 Aggregate measure of real estate bubbles.............................2 .....■ .................6.5 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................19 .....■ ...............18.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................22 .....■ ...............16.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................39 .....■ .................4.7 Peru .......................................6.5
3.14 Manageability of public debt ...................................................1 .....■ .................5.2 Chile ......................................5.2
3.15 Credit default swap spreads .................................................22 .....■ .............127.8 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................31 .....■ ...............67.2 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................16 .....■ .................2.4 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................37 .....■ ...............49.1 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................34 .....■ ...............59.3 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................26 .....■ ...............80.2 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................37 .....■ ...............49.1 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................51 .....■ .................2.5 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................36 .....■ .................3.3 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................36 .....■ ...............16.7 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................38 .....■ .................3.8 Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................5 .....■ .................0.9 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................27 .....■ ...............34.5 Australia.............................100.0
4.14 Public credit registry coverage ................................................7 .....■ ...............28.1 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................48 .....■ .................0.1 China ...................................19.3
5.02 IPO proceeds amount ...........................................................47 .....■ .................0.1 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................47 .....■ .................0.1 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 87

2: Country/Economy Profiles
Chile
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................34 .....■ .................0.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................26 .....■ .................3.7 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................39 .....■ .................0.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................37 .....■ ..........6,169.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................29 .....■ .............370.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................15 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................28 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................16 .....■ .................1.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................25 .....■ .................2.2 United States ......................16.3
5.13 Share of total number of securitization deals .......................22 .....■ .................0.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................31 .....■ .................0.2 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................21 .....■ .................0.4 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................39 .....■ .................0.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 87
agreements ...........................................................................34 .....■ .................0.0 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................36 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....31 .....■ .................0.1 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................40 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................46 .....■ ...............22.8 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................18 .....■ .............118.9 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................38 .....■ ...............27.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................19 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............19 .....■ ...............18.7 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............36 .....■ ...............10.5 Japan .................................198.6
6.15 Private international bonds to GDP .......................................30 .....■ .................5.5 Ireland................................279.1
6.16 Public international bonds to GDP ........................................31 .....■ .................1.8 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................19 .....■ .................5.9 Switzerland............................6.6
7.02 Venture capital availability .....................................................22 .....■ .................3.5 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................19 .....■ .................3.9 Panama..................................5.2
7.04 Financing through local equity market ..................................10 .....■ .................4.7 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................18 .....■ .................3.9 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................13 .....■ .................8.8 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................25 .....■ ........74,632.1 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................27 .....■ ...............15.0 Italy......................................53.0
7.09 Total number of ATMs...........................................................19 .....■ ...............55.6 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................23 .....■ .............450.1 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................6 .....■ ...............15.3 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 88

2: Country/Economy Profiles

China
Key indicators Financial assets by major type, 2007
Population (millions), 2008 ..................................................1,327.7 4.8% US$ bn
4.6%
GDP (US$ billions), 2008 ......................................................4,401.6 ■ Public debt securities .......598.6
GDP (current prices) per capita, 2008 ..............................3,315.3 ■ Private debt securities......583.3
GDP (PPP) as share (%) of world total, 2008 ......................11.40 ■ Banking deposits ............5,155.3
49.6%
Average rate of real GDP growth (%), 2004–08..................10.83 41.0% ■ Equity securities .............6,226.3

Total 12,563.5

Total/GDP: 371.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................26 3.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................35 4.1


Financial sector liberalization ....................................................43 3.0
Corporate governance.................................................................35 4.4
Legal and regulatory issues .......................................................28 3.9
Contract enforcement..................................................................20 4.9
2nd pillar: Business environment .............................................40 4.1
Human capital ...............................................................................37 4.0
88
Taxes...............................................................................................40 4.1
Infrastructure ................................................................................43 3.1
Cost of doing business ................................................................31 5.1
3rd pillar: Financial stability......................................................23 4.8
Currency stability............................................................................7 5.6
Banking system stability..............................................................54 3.4
Risk of sovereign debt crisis ......................................................10 6.0
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................10 4.8


Size index .........................................................................................8 5.0
Efficiency index.............................................................................30 4.9
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services .............................12 3.3
IPO activity.......................................................................................1 6.7
M&A activity..................................................................................19 2.6
Insurance .......................................................................................26 2.7
Securitization.................................................................................44 1.3
6th pillar: Financial markets......................................................26 2.7
Foreign exchange markets .........................................................27 1.2
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................13 4.1
Bond market development..........................................................29 2.4
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................30 3.3


Commercial access......................................................................45 3.3
Retail access ...............................................................................n/a n/a
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 89

2: Country/Economy Profiles
China
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......27 .....■ ...............55.0 Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................45 .....■ .................2.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................18 .....■ .................4.6 United States ........................5.4
1.05 Efficacy of corporate boards .................................................45 .....■ .................4.4 Sweden .................................5.9
1.06 Reliance on professional management .................................31 .....■ .................4.9 Sweden .................................6.5
1.07 Willingness to delegate.........................................................41 .....■ .................3.9 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................42 .....■ .................4.7 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................31 .....■ .................4.3 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................39 .....■ .................4.3 Sweden .................................6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................10 .....■ .................3.9 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................18 .....■ .................3.7 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................50 .....■ .................4.0 Sweden .................................5.9
1.16 Property rights.......................................................................25 .....■ .................5.2 Switzerland............................6.5
1.17 Intellectual property protection .............................................28 .....■ .................4.0 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................29 .....■ .................3.7 Denmark................................6.6
1.19 Public trust of politicians .......................................................15 .....■ .................4.0 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................36 .....■ .................3.6 Multiple (2) ............................9.3 89
1.21 Strength of legal rights index ................................................29 .....■ .................6.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................17 .....■ .................4.4 Singapore ..............................6.5
1.23 Judicial independence ...........................................................36 .....■ .................3.9 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................32 .....■ .................4.3 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................19 .....■ .............406.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................25 .....■ ...............34.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................38 .....■ .................5.0 Singapore ..............................9.3
1.28 Cost of enforcing contracts.....................................................5 .....■ ...............11.1 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................42 .....■ .................4.0 Switzerland............................6.1
2.02 Quality of math and science education.................................20 .....■ .................4.8 Singapore ..............................6.4
2.03 Extent of staff training...........................................................32 .....■ .................4.2 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................33 .....■ .................4.4 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................19 .....■ .................4.6 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................47 .....■ ...............21.6 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................33 .....■ .................4.3 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......18 .....■ .................4.7 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................41 .....■ ...............13.0 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................46 .....■ .............504.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................36 .....■ .................4.0 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................40 .....■ .................5.8 Finland ...................................6.9
2.13 Internet users ........................................................................46 .....■ ...............16.0 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................32 .....■ .................5.0 Denmark..............................36.0
2.15 Telephone lines .....................................................................28 .....■ ...............27.5 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................48 .....■ ...............41.2 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 90

2: Country/Economy Profiles

China
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................30 .....■ .................8.4 Denmark................................0.0
2.18 Cost of registering property ..................................................29 .....■ .................3.2 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................45 .....■ ...............22.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................47 .....■ ...............40.0 Australia.................................2.0
2.21 Time to register property.......................................................24 .....■ ...............29.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................19 .....■ .................1.7 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................41 .....■ ...............–0.3 Brazil....................................11.7
3.02 External vulnerability indicator.................................................2 .....■ ...............16.0 Egypt ...................................13.9
3.03 Current account balance to GDP...........................................10 .....■ ...............10.0 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .......................1 .....■ ...............10.9 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................47 .....■ .................2.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................27 .....■ ...............28.0 Nigeria ...................................0.3
90 3.10 Aggregate measure of real estate bubbles...........................42 .....■ .................1.8 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................24 .....■ ...............16.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................22 .....■ ...............16.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ......................................6 .....■ .................5.8 Peru .......................................6.5
3.14 Manageability of public debt .................................................10 .....■ ...............15.6 Chile ......................................5.2
3.15 Credit default swap spreads .................................................13 .....■ ...............87.6 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP ....................................n/a .........................n/a Denmark............................199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
4.03 Financial system deposits to GDP .......................................n/a .........................n/a Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................2 .....■ .............163.1 Hong Kong SAR ................312.7
4.05 Private credit to GDP............................................................n/a .........................n/a United States ....................202.4
4.06 Bank deposits to GDP .............................................................3 .....■ .............147.1 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................34 .....■ .................3.8 Saudi Arabia ..........................6.4
4.09 Bank overhead costs...............................................................3 .....■ .................1.1 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................48 .....■ ...............49.0 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................16 .....■ .................1.8 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................22 .....■ .................2.5 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
4.14 Public credit registry coverage ................................................1 .....■ ...............58.8 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................1 .....■ ...............19.3 China ...................................19.3
5.02 IPO proceeds amount .............................................................8 .....■ .................1.2 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ................................................................1 .....■ ...............12.9 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 91

2: Country/Economy Profiles
China
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................15 .....■ .................1.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................50 .....■ .................1.1 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................8 .....■ .................2.8 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................10 .....■ ........92,483.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................44 .....■ ...............69.6 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................7 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................35 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................41 .....■ .................0.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................52 .....■ .................0.2 United States ......................16.3
5.13 Share of total number of securitization deals .......................23 .....■ .................0.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................17 .....■ .................0.7 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................40 .....■ .................0.0 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................36 .....■ .................0.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 91
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................7 .....■ .............180.2 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................12 .....■ .............131.8 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................7 .....■ .............237.5 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................48 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............13 .....■ ...............26.6 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............11 .....■ ...............49.0 Japan .................................198.6
6.15 Private international bonds to GDP .......................................40 .....■ .................1.4 Ireland................................279.1
6.16 Public international bonds to GDP ........................................38 .....■ .................0.2 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................46 .....■ .................4.0 Switzerland............................6.6
7.02 Venture capital availability .....................................................28 .....■ .................3.2 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................17 .....■ .................4.0 Panama..................................5.2
7.04 Financing through local equity market ..................................42 .....■ .................3.9 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................49 .....■ .................2.7 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................39 .....■ .................2.5 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................24 .....■ .................0.2 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 92

2: Country/Economy Profiles

Colombia
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................48.3 US$ bn
GDP (US$ billions), 2008 .........................................................240.7 ■ Public debt securities .........90.8
38.6%
GDP (current prices) per capita, 2008 ..............................4,985.2 ■ Private debt securities..........4.2
GDP (PPP) as share (%) of world total, 2008 ........................0.58 43.4% ■ Banking deposits .................38.2
Average rate of real GDP growth (%), 2004–08....................5.48 ■ Equity securities ................102.0

1.8%
Total 235.1
16.2%
Total/GDP: 113.1%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................46 2.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................49 3.3


Financial sector liberalization ....................................................45 2.9
Corporate governance.................................................................46 4.1
Legal and regulatory issues .......................................................45 3.2
Contract enforcement..................................................................53 3.1
2nd pillar: Business environment .............................................38 4.1
Human capital ...............................................................................45 3.6
92
Taxes...............................................................................................41 4.1
Infrastructure ................................................................................41 3.2
Cost of doing business ................................................................22 5.5
3rd pillar: Financial stability......................................................25 4.8
Currency stability..........................................................................12 5.3
Banking system stability..............................................................27 5.1
Risk of sovereign debt crisis ......................................................40 3.9
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................47 2.6


Size index .......................................................................................49 1.2
Efficiency index.............................................................................43 4.0
Financial information disclosure................................................33 2.3
5th pillar: Non-banking financial services .............................44 1.7
IPO activity.....................................................................................34 1.8
M&A activity..................................................................................40 1.4
Insurance .......................................................................................48 1.7
Securitization.................................................................................37 1.7
6th pillar: Financial markets......................................................55 1.3
Foreign exchange markets .........................................................39 1.0
Derivatives markets .....................................................................37 1.0
Equity market development ........................................................52 1.3
Bond market development..........................................................37 1.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................44 2.9


Commercial access......................................................................39 3.4
Retail access.................................................................................38 2.4
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 93

2: Country/Economy Profiles
Colombia
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................42 .....■ ...............–0.1 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......42 .....■ ...............33.6 Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................34 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................49 .....■ .................3.7 United States ........................5.4
1.05 Efficacy of corporate boards .................................................38 .....■ .................4.5 Sweden .................................5.9
1.06 Reliance on professional management .................................43 .....■ .................4.2 Sweden .................................6.5
1.07 Willingness to delegate.........................................................42 .....■ .................3.8 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................46 .....■ .................4.2 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................37 .....■ .................3.9 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................45 .....■ .................4.1 Sweden .................................6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................39 .....■ .................2.7 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................32 .....■ .................3.1 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................46 .....■ .................4.1 Sweden .................................5.9
1.16 Property rights.......................................................................43 .....■ .................4.0 Switzerland............................6.5
1.17 Intellectual property protection .............................................46 .....■ .................3.0 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................46 .....■ .................2.9 Denmark................................6.6
1.19 Public trust of politicians .......................................................40 .....■ .................2.2 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................35 .....■ .................3.8 Multiple (2) ............................9.3 93
1.21 Strength of legal rights index ................................................36 .....■ .................5.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................41 .....■ .................3.0 Singapore ..............................6.5
1.23 Judicial independence ...........................................................41 .....■ .................3.6 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................38 .....■ .................3.7 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................53 .....■ ..........1,346.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................25 .....■ ...............34.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................16 .....■ .................6.3 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................53 .....■ ...............52.6 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................37 .....■ .................4.2 Switzerland............................6.1
2.02 Quality of math and science education.................................39 .....■ .................3.6 Singapore ..............................6.4
2.03 Extent of staff training...........................................................50 .....■ .................3.4 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................39 .....■ .................4.1 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................43 .....■ .................3.7 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................40 .....■ ...............31.8 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................38 .....■ .................3.7 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......46 .....■ .................3.8 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................46 .....■ ...............15.1 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................29 .....■ .............256.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................43 .....■ .................3.4 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................34 .....■ .................6.0 Finland ...................................6.9
2.13 Internet users ........................................................................34 .....■ ...............26.2 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................39 .....■ .................2.6 Denmark..............................36.0
2.15 Telephone lines .....................................................................41 .....■ ...............17.2 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................42 .....■ ...............73.5 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 94

2: Country/Economy Profiles

Colombia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................37 .....■ ...............14.1 Denmark................................0.0
2.18 Cost of registering property ..................................................19 .....■ .................2.4 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................1 .....■ .................1.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................46 .....■ ...............36.0 Australia.................................2.0
2.21 Time to register property.......................................................21 .....■ ...............23.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................34 .....■ .................3.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................19 .....■ .................2.5 Brazil....................................11.7
3.02 External vulnerability indicator...............................................15 .....■ ...............54.0 Egypt ...................................13.9
3.03 Current account balance to GDP...........................................38 .....■ ...............–2.8 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .......................8 .....■ ...............26.0 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................48 .....■ .................2.3 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................37 .....■ .................4.0 Multiple (9) ............................9.0
3.09 Manageability of private debt..................................................6 .....■ .................1.9 Nigeria ...................................0.3
94 3.10 Aggregate measure of real estate bubbles.............................9 .....■ .................6.1 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................35 .....■ ...............13.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................41 .....■ ...............10.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................41 .....■ .................4.5 Peru .......................................6.5
3.14 Manageability of public debt .................................................33 .....■ ...............42.6 Chile ......................................5.2
3.15 Credit default swap spreads .................................................30 .....■ .............224.6 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................43 .....■ ...............44.0 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................34 .....■ .................0.6 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................51 .....■ ...............20.1 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................55 .....■ ...............22.3 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................40 .....■ ...............36.1 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................53 .....■ ...............20.1 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................22 .....■ .................4.2 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................47 .....■ .................5.3 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................17 .....■ .................4.1 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................53 .....■ .................7.2 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................38 .....■ .................4.0 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................23 .....■ ...............42.5 Australia.............................100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................31 .....■ .................0.5 China ...................................19.3
5.02 IPO proceeds amount ...........................................................16 .....■ .................0.5 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................47 .....■ .................0.1 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 95

2: Country/Economy Profiles
Colombia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................37 .....■ .................0.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................38 .....■ .................2.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................42 .....■ .................0.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................39 .....■ ..........4,103.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................41 .....■ ...............88.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................24 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................39 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................45 .....■ .................0.5 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................36 .....■ .................1.3 United States ......................16.3
5.13 Share of total number of securitization deals .......................24 .....■ .................0.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................37 .....■ .................0.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................31 .....■ .................0.1 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................40 .....■ .................0.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 95
agreements ...........................................................................30 .....■ .................0.0 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................38 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....35 .....■ .................0.0 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................38 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................48 .....■ ...............13.0 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................40 .....■ ...............46.1 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................49 .....■ .................6.0 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................42 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............30 .....■ .................0.4 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............28 .....■ ...............22.8 Japan .................................198.6
6.15 Private international bonds to GDP .......................................39 .....■ .................1.5 Ireland................................279.1
6.16 Public international bonds to GDP ........................................15 .....■ .................7.2 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................41 .....■ .................4.3 Switzerland............................6.6
7.02 Venture capital availability .....................................................44 .....■ .................2.6 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................20 .....■ .................3.9 Panama..................................5.2
7.04 Financing through local equity market ..................................46 .....■ .................3.6 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................35 .....■ .................3.1 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................28 .....■ .................4.3 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................18 .....■ ......115,135.3 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................29 .....■ ...............13.7 Italy......................................53.0
7.09 Total number of ATMs...........................................................37 .....■ ...............26.3 Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................11 .....■ .................6.5 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 96

2: Country/Economy Profiles

Czech Republic
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................10.3 16.0% US$ bn
25.8%
GDP (US$ billions), 2008 .........................................................217.1 ■ Public debt securities .........45.4
GDP (current prices) per capita, 2008 ............................21,027.5 9.0% ■ Private debt securities........25.5
GDP (PPP) as share (%) of world total, 2008 ........................0.38 ■ Banking deposits ...............139.8
Average rate of real GDP growth (%), 2004–08....................5.35 ■ Equity securities ..................73.4

Total 284.2
49.2%
Total/GDP: 163.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................33 3.5


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................29 4.3


Financial sector liberalization ....................................................27 5.0
Corporate governance.................................................................42 4.3
Legal and regulatory issues .......................................................32 3.7
Contract enforcement..................................................................37 4.2
2nd pillar: Business environment .............................................35 4.2
Human capital ...............................................................................18 4.8
96
Taxes...............................................................................................49 3.1
Infrastructure ................................................................................26 4.6
Cost of doing business ................................................................47 4.2
3rd pillar: Financial stability......................................................16 5.1
Currency stability..........................................................................22 4.5
Banking system stability..............................................................24 5.3
Risk of sovereign debt crisis ......................................................21 5.4
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................27 3.8


Size index .......................................................................................35 2.4
Efficiency index.............................................................................15 5.6
Financial information disclosure................................................22 3.2
5th pillar: Non-banking financial services .............................50 1.4
IPO activity.....................................................................................48 1.1
M&A activity..................................................................................43 1.3
Insurance .......................................................................................42 1.8
Securitization.................................................................................42 1.4
6th pillar: Financial markets......................................................33 2.1
Foreign exchange markets .........................................................31 1.1
Derivatives markets .....................................................................33 1.2
Equity market development ........................................................40 1.7
Bond market development..........................................................16 3.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................27 3.5


Commercial access......................................................................25 3.9
Retail access.................................................................................19 3.0
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 97

2: Country/Economy Profiles
Czech Republic
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................25 .....■ .................1.7 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......24 .....■ ...............53.4 Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................37 .....■ .................2.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................20 .....■ .................4.6 United States ........................5.4
1.05 Efficacy of corporate boards .................................................15 .....■ .................5.2 Sweden .................................5.9
1.06 Reliance on professional management .................................20 .....■ .................5.3 Sweden .................................6.5
1.07 Willingness to delegate.........................................................25 .....■ .................4.4 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................26 .....■ .................5.3 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................38 .....■ .................3.8 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................46 .....■ .................4.1 Sweden .................................6.0
1.11 Official supervisory power ....................................................24 .....■ ...............10.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................45 .....■ .................2.7 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................12 .....■ .................4.3 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................24 .....■ .................4.9 Sweden .................................5.9
1.16 Property rights.......................................................................32 .....■ .................4.7 Switzerland............................6.5
1.17 Intellectual property protection .............................................29 .....■ .................4.0 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................42 .....■ .................3.0 Denmark................................6.6
1.19 Public trust of politicians .......................................................48 .....■ .................1.8 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................25 .....■ .................5.2 Multiple (2) ............................9.3 97
1.21 Strength of legal rights index ................................................29 .....■ .................6.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................39 .....■ .................3.2 Singapore ..............................6.5
1.23 Judicial independence ...........................................................35 .....■ .................4.0 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................28 .....■ .................4.4 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................46 .....■ .............820.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .........................7 .....■ ...............27.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................38 .....■ .................5.0 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................46 .....■ ...............33.0 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................25 .....■ .................4.7 Switzerland............................6.1
2.02 Quality of math and science education...................................6 .....■ .................5.4 Singapore ..............................6.4
2.03 Extent of staff training...........................................................21 .....■ .................4.7 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................16 .....■ .................5.3 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................22 .....■ .................4.4 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................26 .....■ ...............49.8 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................31 .....■ .................4.4 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......36 .....■ .................4.1 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................45 .....■ ...............15.0 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................52 .....■ .............930.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................30 .....■ .................4.5 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................25 .....■ .................6.4 Finland ...................................6.9
2.13 Internet users ........................................................................26 .....■ ...............49.0 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................24 .....■ ...............12.9 Denmark..............................36.0
2.15 Telephone lines .....................................................................33 .....■ ...............23.6 Switzerland..........................65.9
2.16 Mobile telephone subscribers.................................................7 .....■ .............124.9 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 98

2: Country/Economy Profiles

Czech Republic
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................33 .....■ .................9.6 Denmark................................0.0
2.18 Cost of registering property ..................................................26 .....■ .................3.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................30 .....■ ...............15.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................23 .....■ ...............15.0 Australia.................................2.0
2.21 Time to register property.......................................................50 .....■ .............123.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................54 .....■ .................6.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................15 .....■ .................3.3 Brazil....................................11.7
3.02 External vulnerability indicator...............................................20 .....■ ...............82.3 Egypt ...................................13.9
3.03 Current account balance to GDP...........................................39 .....■ ...............–3.1 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .....................20 .....■ ...............42.6 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................21 .....■ ...............17.7 Nigeria ...................................0.3
98 3.10 Aggregate measure of real estate bubbles...........................27 .....■ .................4.9 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................24 .....■ ...............16.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................26 .....■ ...............15.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................14 .....■ .................5.4 Peru .......................................6.5
3.14 Manageability of public debt .................................................14 .....■ ...............26.7 Chile ......................................5.2
3.15 Credit default swap spreads .................................................23 .....■ .............128.0 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................36 .....■ ...............55.5 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................38 .....■ .................0.2 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................27 .....■ ...............60.3 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................25 .....■ ...............75.8 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................38 .....■ ...............42.4 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................27 .....■ ...............60.3 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................26 .....■ .................4.1 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................18 .....■ .................2.1 Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................25 .....■ .................2.3 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................33 .....■ .................3.1 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................17 .....■ ...............65.2 Australia.............................100.0
4.14 Public credit registry coverage ..............................................16 .....■ .................4.6 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................47 .....■ .................0.1 China ...................................19.3
5.02 IPO proceeds amount ...........................................................48 .....■ .................0.1 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................44 .....■ .................0.1 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 99

2: Country/Economy Profiles
Czech Republic
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................42 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................43 .....■ .................1.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................31 .....■ .................0.4 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................35 .....■ ..........6,548.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................25 .....■ .............643.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................26 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................26 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................50 .....■ .................0.2 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................41 .....■ .................1.0 United States ......................16.3
5.13 Share of total number of securitization deals .......................39 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................35 .....■ .................0.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................24 .....■ .................0.2 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................31 .....■ .................0.1 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 99
agreements ...........................................................................22 .....■ .................0.1 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................28 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................28 .....■ .................0.0 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....35 .....■ .................0.0 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................32 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................30 .....■ ...............68.4 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................46 .....■ ...............36.4 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................40 .....■ ...............24.9 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................36 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............21 .....■ ...............13.1 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ...............7 .....■ ...............53.2 Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................32 .....■ .................4.8 Switzerland............................6.6
7.02 Venture capital availability .....................................................39 .....■ .................2.9 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................7 .....■ .................4.4 Panama..................................5.2
7.04 Financing through local equity market ..................................26 .....■ .................4.4 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................25 .....■ .................3.5 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................23 .....■ .................5.2 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................13 .....■ ......167,955.3 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................16 .....■ ...............22.4 Italy......................................53.0
7.09 Total number of ATMs...........................................................32 .....■ ...............38.4 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................19 .....■ .............651.1 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 100

2: Country/Economy Profiles

Denmark
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................5.5 6.6% US$ bn
GDP (US$ billions), 2008 .........................................................342.9 22.6%
■ Public debt securities .........81.5
GDP (current prices) per capita, 2008 ............................62,625.6 ■ Private debt securities......613.2
GDP (PPP) as share (%) of world total, 2008 ........................0.30 ■ Banking deposits ...............257.8
Average rate of real GDP growth (%), 2004–08....................1.72 ■ Equity securities ................277.7

21.0% 49.8% Total 1,230.3

Total/GDP: 396.2%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................10 4.6


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................2 6.0


Financial sector liberalization ......................................................1 7.0
Corporate governance...................................................................6 5.5
Legal and regulatory issues .........................................................3 5.8
Contract enforcement....................................................................7 5.6
2nd pillar: Business environment ...............................................1 6.1
Human capital .................................................................................2 5.7
100
Taxes.................................................................................................6 5.9
Infrastructure ..................................................................................3 6.4
Cost of doing business ..................................................................5 6.5
3rd pillar: Financial stability......................................................19 5.0
Currency stability..........................................................................40 3.9
Banking system stability..............................................................30 5.0
Risk of sovereign debt crisis ........................................................5 6.1
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................17 4.3


Size index .......................................................................................11 4.1
Efficiency index...............................................................................5 6.2
Financial information disclosure................................................50 1.2
5th pillar: Non-banking financial services .............................21 2.8
IPO activity.....................................................................................46 1.2
M&A activity..................................................................................24 2.0
Insurance .......................................................................................11 3.8
Securitization.................................................................................10 4.1
6th pillar: Financial markets......................................................17 3.6
Foreign exchange markets .........................................................10 3.0
Derivatives markets .......................................................................9 5.4
Equity market development ........................................................26 2.9
Bond market development..........................................................17 3.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................6 4.6


Commercial access......................................................................24 4.0
Retail access...................................................................................3 5.2
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 101

2: Country/Economy Profiles
Denmark
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............73.5 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................16 .....■ .................4.6 United States ........................5.4
1.05 Efficacy of corporate boards ...................................................8 .....■ .................5.5 Sweden .................................5.9
1.06 Reliance on professional management ...................................4 .....■ .................6.1 Sweden .................................6.5
1.07 Willingness to delegate...........................................................2 .....■ .................5.9 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................11 .....■ .................5.9 South Africa...........................6.2
1.09 Ethical behavior of firms..........................................................3 .....■ .................6.6 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests........................4 .....■ .................5.7 Sweden .................................6.0
1.11 Official supervisory power ....................................................24 .....■ ...............10.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................13 .....■ .................3.8 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................15 .....■ .................3.9 Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................6 .....■ .................5.7 Sweden .................................5.9
1.16 Property rights.........................................................................2 .....■ .................6.5 Switzerland............................6.5
1.17 Intellectual property protection ...............................................6 .....■ .................6.0 Singapore ..............................6.2
1.18 Diversion of public funds.........................................................1 .....■ .................6.6 Denmark................................6.6
1.19 Public trust of politicians .........................................................2 .....■ .................6.1 Singapore ..............................6.4
1.20 Corruption perceptions index ..................................................1 .....■ .................9.3 Multiple (2) ............................9.3 101
1.21 Strength of legal rights index ..................................................4 .....■ .................9.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................2 .....■ .................6.0 Singapore ..............................6.5
1.23 Judicial independence .............................................................2 .....■ .................6.5 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ..................................4 .....■ .................6.4 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................14 .....■ .............380.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................25 .....■ ...............34.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................16 .....■ .................6.3 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................25 .....■ ...............23.3 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................8 .....■ .................5.6 Switzerland............................6.1
2.02 Quality of math and science education...................................9 .....■ .................5.2 Singapore ..............................6.4
2.03 Extent of staff training.............................................................4 .....■ .................5.6 Sweden .................................5.7
2.04 Local availability of specialized research
and training services ...............................................................6 .....■ .................5.9 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................13 .....■ .................4.8 United Arab Emirates ............6.0
2.06 Tertiary enrollment ..................................................................4 .....■ ...............79.9 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ........................................3 .....■ .................6.5 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......11 .....■ .................4.9 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................13 .....■ .................1.5 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................16 .....■ .............135.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure ...............................................8 .....■ .................6.3 Switzerland............................6.8
2.12 Quality of telephone infrastructure .........................................9 .....■ .................6.8 Finland ...................................6.9
2.13 Internet users ..........................................................................3 .....■ ...............81.0 Norway ................................85.0
2.14 Broadband Internet subscribers ..............................................1 .....■ ...............36.0 Denmark..............................36.0
2.15 Telephone lines .......................................................................9 .....■ ...............51.9 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................18 .....■ .............114.5 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 102

2: Country/Economy Profiles

Denmark
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................1 .....■ .................0.0 Denmark................................0.0
2.18 Cost of registering property ....................................................9 .....■ .................0.6 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................6 .....■ .................6.0 Australia.................................2.0
2.21 Time to register property.......................................................34 .....■ ...............42.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................11 .....■ .................1.1 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................33 .....■ .................0.3 Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................27 .....■ .................0.5 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................16 .....■ ...............–4.0 Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................43 .....■ .............249.9 Nigeria ...................................0.3
102 3.10 Aggregate measure of real estate bubbles...........................26 .....■ .................4.9 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................36 .....■ .................4.8 Peru .......................................6.5
3.14 Manageability of public debt .................................................19 .....■ ...............32.8 Chile ......................................5.2
3.15 Credit default swap spreads ...................................................9 .....■ ...............62.1 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................1 .....■ .............199.3 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................35 .....■ .................0.5 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................24 .....■ ...............62.3 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................27 .....■ ...............72.7 Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................2 .....■ .............190.9 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................24 .....■ ...............62.3 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................6 .....■ .................5.5 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................16 .....■ .................4.5 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................28 .....■ .................2.6 Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
4.11 Bank operating costs to assets...............................................5 .....■ .................1.0 Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................1 .....■ .................0.3 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................42 .....■ .................5.0 Australia.............................100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................45 .....■ .................0.1 China ...................................19.3
5.02 IPO proceeds amount ...........................................................49 .....■ .................0.1 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................30 .....■ .................0.4 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 103

2: Country/Economy Profiles
Denmark
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................26 .....■ .................0.4 United States ......................41.7
5.05 M&A transaction value to GDP .............................................20 .....■ .................4.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................23 .....■ .................0.8 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................21 .....■ ........28,435.0 United States ..........1,230,526.0
5.08 Insurance density ....................................................................5 .....■ ..........5,103.1 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................21 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................11 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................28 .....■ .................1.0 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................3 .....■ .................8.5 United States ......................16.3
5.13 Share of total number of securitization deals .......................35 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................12 .....■ .................1.2 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ..........................9 .....■ .................2.3 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................9 .....■ .................2.8 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 103
agreements .............................................................................9 .....■ .................1.1 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................16 .....■ .................0.3 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................11 .....■ .................0.5 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......9 .....■ .................1.9 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................15 .....■ .................0.6 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................21 .....■ ...............94.6 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................30 .....■ ...............83.1 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................25 .....■ ...............78.6 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people..................n/a .........................n/a Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............1 .....■ .............202.7 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............27 .....■ ...............24.6 Japan .................................198.6
6.15 Private international bonds to GDP .......................................16 .....■ ...............47.3 Ireland................................279.1
6.16 Public international bonds to GDP ........................................20 .....■ .................5.5 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................14 .....■ .................6.0 Switzerland............................6.6
7.02 Venture capital availability .....................................................15 .....■ .................3.8 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................43 .....■ .................2.9 Panama..................................5.2
7.04 Financing through local equity market ..................................37 .....■ .................4.1 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................9 .....■ .................4.3 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................35 .....■ .................3.6 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................3 .....■ ......270,610.0 Ukraine .......................375,499.3
7.08 Commercial bank branches.....................................................3 .....■ ...............46.7 Italy......................................53.0
7.09 Total number of ATMs...........................................................13 .....■ ...............70.4 Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................7 .....■ ..........2,022.8 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 104

2: Country/Economy Profiles

Egypt
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................75.0 US$ bn
GDP (US$ billions), 2008 .........................................................162.2 35.9% 33.8% ■ Public debt securities .......131.1
GDP (current prices) per capita, 2008 ..............................2,160.9 ■ Private debt securities..........3.1
GDP (PPP) as share (%) of world total, 2008 ........................0.64 ■ Banking deposits ...............114.5
Average rate of real GDP growth (%), 2004–08....................5.93 ■ Equity securities ................139.3
0.8%
Total 388.0
29.5%
Total/GDP: 297.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................36 3.3


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................38 3.9


Financial sector liberalization ....................................................30 4.4
Corporate governance.................................................................36 4.4
Legal and regulatory issues .......................................................43 3.2
Contract enforcement..................................................................46 3.5
2nd pillar: Business environment .............................................46 3.7
Human capital ...............................................................................53 3.3
104
Taxes...............................................................................................45 3.7
Infrastructure ................................................................................46 2.9
Cost of doing business ................................................................38 4.8
3rd pillar: Financial stability......................................................45 4.3
Currency stability..........................................................................31 4.3
Banking system stability..............................................................19 5.4
Risk of sovereign debt crisis ......................................................47 2.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................40 3.1


Size index .......................................................................................17 3.9
Efficiency index.............................................................................51 3.3
Financial information disclosure................................................48 1.3
5th pillar: Non-banking financial services .............................31 2.2
IPO activity.....................................................................................38 1.6
M&A activity..................................................................................25 2.0
Insurance .......................................................................................18 3.0
Securitization.................................................................................30 2.0
6th pillar: Financial markets......................................................34 2.0
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................37 2.0
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................11 4.2


Commercial access......................................................................16 4.2
Retail access ...............................................................................n/a n/a
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 105

2: Country/Economy Profiles
Egypt
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................23 .....■ .................2.5 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......35 .....■ ...............39.7 Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................43 .....■ .................2.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................48 .....■ .................3.8 United States ........................5.4
1.05 Efficacy of corporate boards .................................................36 .....■ .................4.6 Sweden .................................5.9
1.06 Reliance on professional management .................................54 .....■ .................3.7 Sweden .................................6.5
1.07 Willingness to delegate.........................................................24 .....■ .................4.4 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................30 .....■ .................5.1 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................30 .....■ .................4.4 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................32 .....■ .................4.6 Sweden .................................6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................25 .....■ .................3.2 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................50 .....■ .................2.3 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................39 .....■ .................4.3 Sweden .................................5.9
1.16 Property rights.......................................................................37 .....■ .................4.4 Switzerland............................6.5
1.17 Intellectual property protection .............................................35 .....■ .................3.7 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................40 .....■ .................3.1 Denmark................................6.6
1.19 Public trust of politicians .......................................................21 .....■ .................3.5 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................45 .....■ .................2.8 Multiple (2) ............................9.3 105
1.21 Strength of legal rights index ................................................49 .....■ .................3.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................33 .....■ .................3.5 Singapore ..............................6.5
1.23 Judicial independence ...........................................................37 .....■ .................3.9 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................44 .....■ .................3.4 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................51 .....■ ..........1,010.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................48 .....■ ...............42.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................34 .....■ .................5.3 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................34 .....■ ...............26.2 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................55 .....■ .................3.3 Switzerland............................6.1
2.02 Quality of math and science education.................................52 .....■ .................2.7 Singapore ..............................6.4
2.03 Extent of staff training...........................................................51 .....■ .................3.4 Sweden .................................5.7
2.04 Local availability of specialized research
and training services .............................................................47 .....■ .................3.9 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................49 .....■ .................3.4 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................36 .....■ ...............34.7 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................44 .....■ .................3.4 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......30 .....■ .................4.1 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................24 .....■ .................6.4 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................49 .....■ .............711.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure .............................................31 .....■ .................4.4 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................18 .....■ .................6.6 Finland ...................................6.9
2.13 Internet users ........................................................................47 .....■ ...............14.0 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................49 .....■ .................0.6 Denmark..............................36.0
2.15 Telephone lines .....................................................................44 .....■ ...............14.9 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................49 .....■ ...............39.8 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 106

2: Country/Economy Profiles

Egypt
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................45 .....■ ...............18.3 Denmark................................0.0
2.18 Cost of registering property ..................................................11 .....■ .................0.9 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................45 .....■ ...............22.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................9 .....■ .................7.0 Australia.................................2.0
2.21 Time to register property.......................................................45 .....■ ...............72.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................46 .....■ .................4.2 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................36 .....■ .................0.0 Brazil....................................11.7
3.02 External vulnerability indicator.................................................1 .....■ ...............13.9 Egypt ...................................13.9
3.03 Current account balance to GDP...........................................26 .....■ .................0.5 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ........................................37 .....■ ...............62.8 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) .......................5 .....■ ...............23.4 China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................17 .....■ .................0.8 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................42 .....■ .................3.0 Multiple (9) ............................9.0
3.09 Manageability of private debt..................................................5 .....■ .................1.9 Nigeria ...................................0.3
106 3.10 Aggregate measure of real estate bubbles.............................5 .....■ .................6.4 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................41 .....■ ...............11.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating.........................................41 .....■ ...............10.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................46 .....■ .................4.3 Peru .......................................6.5
3.14 Manageability of public debt .................................................51 .....■ ...............86.5 Chile ......................................5.2
3.15 Credit default swap spreads .................................................38 .....■ .............325.0 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................30 .....■ ...............68.9 Denmark............................199.3
4.02 Central bank assets to GDP ....................................................1 .....■ ...............27.9 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................19 .....■ ...............77.5 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................20 .....■ ...............90.3 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................34 .....■ ...............43.9 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................20 .....■ ...............77.5 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................35 .....■ .................3.8 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................19 .....■ .................2.1 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................54 .....■ ...............68.3 Belgium .................................0.0
4.11 Bank operating costs to assets.............................................30 .....■ .................3.1 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................50 .....■ ...............16.5 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................43 .....■ .................4.7 Australia.............................100.0
4.14 Public credit registry coverage ..............................................17 .....■ .................2.2 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................41 .....■ .................0.2 China ...................................19.3
5.02 IPO proceeds amount ...........................................................25 .....■ .................0.4 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................44 .....■ .................0.1 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 107

2: Country/Economy Profiles
Egypt
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................30 .....■ .................0.3 United States ......................41.7
5.05 M&A transaction value to GDP .............................................12 .....■ .................6.2 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................44 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................48 .....■ ..........1,090.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................49 .....■ ...............14.4 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................14 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................48 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................3 .....■ .................3.3 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................17 .....■ .................2.9 United States ......................16.3
5.13 Share of total number of securitization deals .......................48 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 107
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................42 .....■ ...............45.4 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................27 .....■ ...............91.2 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................35 .....■ ...............41.4 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................29 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................48 .....■ .................3.8 Switzerland............................6.6
7.02 Venture capital availability .....................................................26 .....■ .................3.4 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................4 .....■ .................4.6 Panama..................................5.2
7.04 Financing through local equity market ..................................15 .....■ .................4.6 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................29 .....■ .................3.4 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................11 .....■ .................8.9 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................10 .....■ .................7.2 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 108

2: Country/Economy Profiles

Finland
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................5.3 12.2% US$ bn
GDP (US$ billions), 2008 .........................................................274.0 ■ Public debt securities .........87.8
GDP (current prices) per capita, 2008 ............................51,989.4 ■ Private debt securities......121.7
17.0%
GDP (PPP) as share (%) of world total, 2008 ........................0.28 51.4% ■ Banking deposits ...............139.3
Average rate of real GDP growth (%), 2004–08....................3.30 ■ Equity securities ................369.2

Total 717.9
19.4%

Total/GDP: 291.5%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................19 4.2


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................8 5.7


Financial sector liberalization ....................................................21 6.0
Corporate governance.................................................................16 5.1
Legal and regulatory issues .........................................................4 5.6
Contract enforcement....................................................................3 6.0
2nd pillar: Business environment ...............................................6 5.9
Human capital .................................................................................1 5.8
108
Taxes...............................................................................................19 5.3
Infrastructure ..................................................................................7 6.1
Cost of doing business ..................................................................6 6.3
3rd pillar: Financial stability......................................................11 5.3
Currency stability..........................................................................30 4.3
Banking system stability..............................................................23 5.3
Risk of sovereign debt crisis ........................................................4 6.2
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................29 3.8


Size index .......................................................................................32 2.6
Efficiency index...............................................................................6 6.2
Financial information disclosure................................................42 1.4
5th pillar: Non-banking financial services .............................30 2.3
IPO activity.....................................................................................43 1.4
M&A activity..................................................................................26 1.9
Insurance .......................................................................................22 2.7
Securitization.................................................................................17 3.0
6th pillar: Financial markets......................................................19 3.4
Foreign exchange markets .........................................................29 1.1
Derivatives markets .....................................................................24 1.9
Equity market development ..........................................................8 5.0
Bond market development..........................................................10 4.2
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................28 3.4


Commercial access......................................................................13 4.3
Retail access.................................................................................33 2.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 109

2: Country/Economy Profiles
Finland
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................1.7 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.......31 .....■ ...............29.9 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................30 .....■ .................4.5 United States ........................5.4
1.05 Efficacy of corporate boards ...................................................5 .....■ .................5.6 Sweden .................................5.9
1.06 Reliance on professional management ...................................3 .....■ .................6.2 Sweden .................................6.5
1.07 Willingness to delegate...........................................................6 .....■ .................5.4 Sweden .................................6.2
1.08 Strength of auditing and reporting standards..........................2 .....■ .................6.2 South Africa...........................6.2
1.09 Ethical behavior of firms..........................................................2 .....■ .................6.6 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests........................2 .....■ .................5.9 Sweden .................................6.0
1.11 Official supervisory power ....................................................28 .....■ .................9.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................5 .....■ .................4.3 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................13 .....■ .................4.2 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................10 .....■ .................5.6 Sweden .................................5.9
1.16 Property rights.........................................................................3 .....■ .................6.5 Switzerland............................6.5
1.17 Intellectual property protection ...............................................3 .....■ .................6.1 Singapore ..............................6.2
1.18 Diversion of public funds.........................................................4 .....■ .................6.4 Denmark................................6.6
1.19 Public trust of politicians .........................................................7 .....■ .................5.5 Singapore ..............................6.4
1.20 Corruption perceptions index ..................................................4 .....■ .................9.0 Multiple (2) ............................9.3 109
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................6 .....■ .................5.4 Singapore ..............................6.5
1.23 Judicial independence .............................................................3 .....■ .................6.5 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ..................................3 .....■ .................6.4 Singapore ..............................6.6
1.25 Time to enforce a contract ......................................................5 .....■ .............235.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................20 .....■ ...............32.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
1.28 Cost of enforcing contracts.....................................................4 .....■ ...............10.4 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................10 .....■ .................5.4 Switzerland............................6.1
2.02 Quality of math and science education...................................2 .....■ .................6.4 Singapore ..............................6.4
2.03 Extent of staff training.............................................................8 .....■ .................5.3 Sweden .................................5.7
2.04 Local availability of specialized research
and training services ...............................................................5 .....■ .................5.9 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ............................9 .....■ .................5.0 United Arab Emirates ............6.0
2.06 Tertiary enrollment ..................................................................1 .....■ ...............93.2 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ........................................4 .....■ .................6.5 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......15 .....■ .................4.7 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................31 .....■ .................9.0 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................32 .....■ .............269.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure ...............................................7 .....■ .................6.5 Switzerland............................6.8
2.12 Quality of telephone infrastructure .........................................1 .....■ .................6.9 Finland ...................................6.9
2.13 Internet users ..........................................................................5 .....■ ...............79.0 Norway ................................85.0
2.14 Broadband Internet subscribers ..............................................6 .....■ ...............30.6 Denmark..............................36.0
2.15 Telephone lines .....................................................................22 .....■ ...............33.0 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................15 .....■ .............115.2 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 110

2: Country/Economy Profiles

Finland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................10 .....■ .................1.0 Denmark................................0.0
2.18 Cost of registering property ..................................................31 .....■ .................4.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................21 .....■ ...............14.0 Australia.................................2.0
2.21 Time to register property.......................................................12 .....■ ...............14.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................5 .....■ .................0.9 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................22 .....■ .................1.8 Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................20 .....■ .................2.5 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................7 .....■ ................-0.2 Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple (14) ..........................0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple (9) ............................9.0
3.09 Manageability of private debt................................................32 .....■ ...............70.9 Nigeria ...................................0.3
110 3.10 Aggregate measure of real estate bubbles...........................36 .....■ .................3.8 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ....................................23 .....■ .................5.1 Peru .......................................6.5
3.14 Manageability of public debt .................................................20 .....■ ...............33.4 Chile ......................................5.2
3.15 Credit default swap spreads ...................................................2 .....■ ...............37.5 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................26 .....■ ...............81.6 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................39 .....■ .................0.2 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................34 .....■ ...............49.7 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................31 .....■ ...............64.0 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................27 .....■ ...............77.8 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................34 .....■ ...............49.7 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................9 .....■ .................3.7 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................29 .....■ .................4.0 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................15 .....■ .................1.9 Singapore ..............................1.0
4.10 Public ownership of banks ....................................................12 .....■ .................0.6 Belgium .................................0.0
4.11 Bank operating costs to assets...............................................2 .....■ .................0.9 Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................2 .....■ .................0.4 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................34 .....■ ...............14.8 Australia.............................100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................39 .....■ .................0.3 China ...................................19.3
5.02 IPO proceeds amount ...........................................................36 .....■ .................0.2 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ..............................................................37 .....■ .................0.3 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 111

2: Country/Economy Profiles
Finland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................28 .....■ .................0.3 United States ......................41.7
5.05 M&A transaction value to GDP .............................................22 .....■ .................4.1 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................22 .....■ .................0.8 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................24 .....■ ........20,630.0 United States ..........1,230,526.0
5.08 Insurance density ....................................................................9 .....■ ..........3,923.8 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................48 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................13 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................46 .....■ .................0.5 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................9 .....■ .................5.3 United States ......................16.3
5.13 Share of total number of securitization deals .......................41 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................41 .....■ .................0.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................33 .....■ .................0.1 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................24 .....■ .................0.3 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 111
agreements ...........................................................................25 .....■ .................0.0 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................22 .....■ .................0.1 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................13 .....■ .................0.3 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....28 .....■ .................0.1 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................27 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................10 .....■ .............170.4 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................13 .....■ .............129.6 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................8 .....■ .............220.9 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people..................n/a .........................n/a Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............9 .....■ ...............38.4 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............12 .....■ ...............48.8 Japan .................................198.6
6.15 Private international bonds to GDP .......................................18 .....■ ...............32.5 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................4 .....■ ...............32.7 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................13 .....■ .................6.0 Switzerland............................6.6
7.02 Venture capital availability .......................................................5 .....■ .................4.3 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................22 .....■ .................3.7 Panama..................................5.2
7.04 Financing through local equity market ..................................25 .....■ .................4.4 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................1 .....■ .................4.7 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................36 .....■ .................3.4 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................21 .....■ ...............18.5 Italy......................................53.0
7.09 Total number of ATMs...........................................................31 .....■ ...............38.7 Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 112

2: Country/Economy Profiles

France
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................62.3 17.8% US$ bn
GDP (US$ billions), 2008 ......................................................2,865.7 29.8%
■ Public debt securities ....1,655.3
GDP (current prices) per capita, 2008 ............................46,015.9 ■ Private debt securities...2,907.9
GDP (PPP) as share (%) of world total, 2008 ........................3.08 ■ Banking deposits ............1,958.2
Average rate of real GDP growth (%), 2004–08....................1.86 ■ Equity securities .............2,771.2
31.3%
Total 9,292.6
21.1%

Total/GDP: 358.3%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................11 4.6


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................18 5.4


Financial sector liberalization ....................................................11 6.9
Corporate governance.................................................................28 4.7
Legal and regulatory issues .......................................................18 4.6
Contract enforcement..................................................................17 5.2
2nd pillar: Business environment .............................................20 5.1
Human capital ...............................................................................11 5.2
112
Taxes...............................................................................................35 4.3
Infrastructure ................................................................................15 5.7
Cost of doing business ................................................................29 5.1
3rd pillar: Financial stability......................................................12 5.3
Currency stability..........................................................................37 4.0
Banking system stability................................................................8 5.7
Risk of sovereign debt crisis ......................................................12 5.9
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................23 4.1


Size index .......................................................................................23 3.2
Efficiency index.............................................................................14 5.7
Financial information disclosure................................................28 2.4
5th pillar: Non-banking financial services ...............................8 4.0
IPO activity.....................................................................................18 2.8
M&A activity....................................................................................6 5.0
Insurance .......................................................................................10 4.0
Securitization.................................................................................11 4.1
6th pillar: Financial markets........................................................8 4.4
Foreign exchange markets ...........................................................9 3.5
Derivatives markets .......................................................................1 7.0
Equity market development ........................................................22 3.3
Bond market development............................................................7 4.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................19 3.9


Commercial access......................................................................18 4.1
Retail access.................................................................................10 3.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 113

2: Country/Economy Profiles
France
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................22 .....■ .................1.5 Multiple (18) ..........................2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............72.4 Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................8 .....■ .................5.0 United States ........................5.4
1.05 Efficacy of corporate boards .................................................22 .....■ .................5.1 Sweden .................................5.9
1.06 Reliance on professional management .................................23 .....■ .................5.2 Sweden .................................6.5
1.07 Willingness to delegate.........................................................32 .....■ .................4.2 Sweden .................................6.2
1.08 Strength of auditing and reporting standards........................17 .....■ .................5.6 South Africa...........................6.2
1.09 Ethical behavior of firms........................................................20 .....■ .................5.4 Sweden .................................6.7
1.10 Protection of minority shareholders’ interests......................26 .....■ .................4.9 Sweden .................................6.0
1.11 Official supervisory power ....................................................28 .....■ .................9.0 Multiple (3) ..........................14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................51 .....■ .................2.3 Singapore ..............................5.6
1.14 Centralization of economic policymaking ..............................36 .....■ .................2.9 Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................13 .....■ .................5.3 Sweden .................................5.9
1.16 Property rights.......................................................................16 .....■ .................5.8 Switzerland............................6.5
1.17 Intellectual property protection ...............................................8 .....■ .................5.8 Singapore ..............................6.2
1.18 Diversion of public funds.......................................................21 .....■ .................4.9 Denmark................................6.6
1.19 Public trust of politicians .......................................................16 .....■ .................3.9 Singapore ..............................6.4
1.20 Corruption perceptions index ................................................18 .....■ .................6.9 Multiple (2) ............................9.3 113
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................12 .....■ .................4.7 Singapore ..............................6.5
1.23 Judicial independence ...........................................................25 .....■ .................4.8 Sweden .................................6.6
1.24 Irregular payments in judicial decisions ................................23 .....■ .................5.1 Singapore ..............................6.6
1.25 Time to enforce a contract ....................................................11 .....■ .............331.0 Singapore ..........................150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland..................................20.0
1.27 Strength of investor protection .............................................34 .....■ .................5.3 Singapore ..............................9.3
1.28 Cost of enforcing contracts...................................................18 .....■ ...............17.4 United States ........................9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................3 .....■ .................5.9 Switzerland............................6.1
2.02 Quality of math and science education...................................5 .....■ .................5.5 Singapore ..............................6.4
2.03 Extent of staff training...........................................................15 .....■ .................4.9 Sweden .................................5.7
2.04 Local availability of specialized research
and training services ...............................................................8 .....■ .................5.8 Switzerland............................6.3
2.05 Brain drain and ease of hiring foreign labor ..........................34 .....■ .................4.1 United Arab Emirates ............6.0
2.06 Tertiary enrollment ................................................................23 .....■ ...............56.2 Finland .................................93.2

Taxes
2.07 Irregular payments in tax collection ......................................23 .....■ .................5.1 Singapore ..............................6.5
2.08 Distortive effect on competition of taxes and subsidies ......22 .....■ .................4.5 Hong Kong SAR ....................6.1
2.09 Marginal tax variation ............................................................51 .....■ ...............26.1 Germany ..............................–6.9
2.10 Time to pay taxes ..................................................................15 .....■ .............132.0 United Arab Emirates ..........12.0

Infrastructure
2.11 Quality of overall infrastructure ...............................................5 .....■ .................6.6 Switzerland............................6.8
2.12 Quality of telephone infrastructure .......................................12 .....■ .................6.7 Finland ...................................6.9
2.13 Internet users ........................................................................25 .....■ ...............51.2 Norway ................................85.0
2.14 Broadband Internet subscribers ............................................12 .....■ ...............25.2 Denmark..............................36.0
2.15 Telephone lines .......................................................................5 .....■ ...............56.5 Switzerland..........................65.9
2.16 Mobile telephone subscribers...............................................32 .....■ ...............89.8 United Arab Emirates ........176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 114

2: Country/Economy Profiles

France
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................10 .....■ .................1.0 Denmark................................0.0
2.18 Cost of registering property ..................................................43 .....■ .................6.3 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................20 .....■ .................9.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................9 .....■ .................7.0 Australia.................................2.0
2.21 Time to register property.......................................................49 .....■ .............113.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................22 .....■ .................1.9 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................25 .....■ .................1.5 Brazil....................................11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt ...................................13.9
3.03 Current account balance to GDP...........................................32 .....■ ...............–1.6 Kuwait .................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22) ..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China ...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................14 .....■ ...............–1.8 Hong Kong SAR ................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple (14) ..........................0.0
3.08 Financial strengths indicator..................................................10 .....■ .................8.0 Multiple (9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria ...................................0.3
114 3.10 Aggregate measure of real estate bubbles...........................34 .....■ .................4.2 Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple (13) ........................20.0
3.13 Aggregate macroprudential indicator ......................................9 .....■ .................5.5 Peru .......................................6.5
3.14 Manageability of public debt .................................................49 .....■ ...............68.1 Chile ......................................5.2
3.15 Credit default swap spreads ...................................................4 .....■ ...............40.0 Norway ................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................13 .....■ .............117.3 Denmark............................199.3
4.02 Central bank assets to GDP ..................................................33 .....■ .................0.6 Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................22 .....■ ...............68.5 Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................21 .....■ ...............80.2 Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................18 .....■ .............100.6 United States ....................202.4
4.06 Bank deposits to GDP ...........................................................22 .....■ ...............68.5 Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................12 .....■ .................2.8 Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................31 .....■ .................3.9 Saudi Arabia ..........................6.4
4.09 Bank overhead costs.............................................................34 .....■ .................3.0 Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
4.11 Bank operating costs to assets...............................................8 .....■ .................1.2 Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................28 .....■ .................2.7 Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
4.14 Public credit registry coverage ................................................6 .....■ ...............28.3 China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................14 .....■ .................1.9 China ...................................19.3
5.02 IPO proceeds amount ...........................................................45 .....■ .................0.2 Hong Kong SAR ....................2.8
5.03 Share of world IPOs ................................................................8 .....■ .................4.4 China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 115

2: Country/Economy Profiles
France
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................4 .....■ .................4.3 United States ......................41.7
5.05 M&A transaction value to GDP .............................................15 .....■ .................5.3 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................7 .....■ .................3.9 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................4 .....■ ......272,732.0 United States ..........1,230,526.0
5.08 Insurance density ....................................................................6 .....■ ..........4,169.7 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................47 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................7 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................30 .....■ .................0.9 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................18 .....■ .................2.8 United States ......................16.3
5.13 Share of total number of securitization deals .........................5 .....■ .................2.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................9 .....■ .................2.0 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................10 .....■ .................1.8 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................8 .....■ .................4.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 115
agreements .............................................................................4 .....■ .................5.6 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ...............................3 .....■ .................9.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................4 .....■ .................6.0 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......5 .....■ .................3.6 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................7 .....■ .................2.2 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................17 .....■ .............130.6 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................24 .....■ .............102.2 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................16 .....■ .............133.4 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................20 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ...............2 .....■ ...............82.6 Japan .................................198.6
6.15 Private international bonds to GDP .........................................9 .....■ .............102.1 Ireland................................279.1
6.16 Public international bonds to GDP ........................................26 .....■ .................2.8 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................9 .....■ .................6.2 Switzerland............................6.6
7.02 Venture capital availability .....................................................23 .....■ .................3.5 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................38 .....■ .................3.0 Panama..................................5.2
7.04 Financing through local equity market ....................................5 .....■ .................4.8 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................27 .....■ .................3.5 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................22 .....■ .................6.1 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................10 .....■ ......180,080.0 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................14 .....■ ...............23.0 Italy......................................53.0
7.09 Total number of ATMs.............................................................8 .....■ .............102.6 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................26 .....■ .............249.6 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 116

2: Country/Economy Profiles

Germany
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................82.1 17.7% 18.1% US$ bn
GDP (US$ billions), 2008 ......................................................3,667.5 ■ Public debt securities ....2,155.5
GDP (current prices) per capita, 2008 ............................44,660.4 ■ Private debt securities...3,910.5
GDP (PPP) as share (%) of world total, 2008 ........................4.23 ■ Banking deposits ............3,740.5
Average rate of real GDP growth (%), 2004–08....................1.74 ■ Equity securities .............2,105.5
31.4% 32.8%
Total 11,911.9

Total/GDP: 358.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................12 4.5


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................9 5.7


Financial sector liberalization ......................................................1 7.0
Corporate governance.................................................................17 5.0
Legal and regulatory issues .......................................................11 5.1
Contract enforcement..................................................................10 5.5
2nd pillar: Business environment .............................................13 5.6
Human capital ...............................................................................16 4.8
116
Taxes...............................................................................................12 5.6
Infrastructure ..................................................................................6 6.2
Cost of doing business ................................................................17 5.7
3rd pillar: Financial stability......................................................10 5.3
Currency stability..........................................................................32 4.2
Banking system stability................................................................7 5.8
Risk of sovereign debt crisis ......................................................13 5.9
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................19 4.2


Size index .......................................................................................15 4.0
Efficiency index.............................................................................36 4.6
Financial information disclosure................................................11 4.0
5th pillar: Non-banking financial services .............................10 3.5
IPO activity.....................................................................................17 2.8
M&A activity....................................................................................8 4.5
Insurance .......................................................................................16 3.1
Securitization.................................................................................13 3.7
6th pillar: Financial markets........................................................7 4.4
Foreign exchange markets ...........................................................8 4.1
Derivatives markets .......................................................................8 6.1
Equity market development ........................................................24 3.1
Bond market development............................................................4 4.9
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................41 3.0


Commercial access......................................................................43 3.4
Retail access.................................................................................35 2.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 117

2: Country/Economy Profiles
Germany
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................1.7 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............73.5 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................6 .....■ .................5.0 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................12 .....■ .................5.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................13 .....■ .................5.7 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate...........................................................8 .....■ .................5.2 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................12 .....■ .................5.8 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................11 .....■ .................5.9 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests........................8 .....■ .................5.4 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................28 .....■ .................9.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................29 .....■ .................3.0 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ................................5 .....■ .................4.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................14 .....■ .................5.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.........................................................................8 .....■ .................6.3 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................10 .....■ .................5.7 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................10 .....■ .................5.7 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................14 .....■ .................4.1 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................11 .....■ .................7.9 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 117
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................15 .....■ .................4.6 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence .............................................................5 .....■ .................6.4 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................16 .....■ .................5.6 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................15 .....■ .............394.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................38 .....■ .................5.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................11 .....■ ...............14.4 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................21 .....■ .................5.0 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................26 .....■ .................4.5 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................10 .....■ .................5.2 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services ...............................................................2 .....■ .................6.0 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................26 .....■ .................4.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................30 .....■ ...............46.3 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................18 .....■ .................5.6 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......47 .....■ .................3.8 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ..............................................................1 .....■ ...............–6.9 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................23 .....■ .............196.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure ...............................................6 .....■ .................6.5 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................16 .....■ .................6.6 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................10 .....■ ...............72.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................14 .....■ ...............23.7 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .......................................................................2 .....■ ...............65.1 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................12 .....■ .............117.6 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 118

2: Country/Economy Profiles

Germany
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................24 .....■ .................5.6 Denmark................................0.0
2.18 Cost of registering property ..................................................40 .....■ .................5.2 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................17 .....■ .................8.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................28 .....■ ...............18.0 Australia.................................2.0
2.21 Time to register property.......................................................32 .....■ ...............40.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................15 .....■ .................1.2 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................43 .....■ ...............–0.4 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................13 .....■ .................6.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................15 .....■ ...............–2.3 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................17 .....■ .................7.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria
Nigeria ...................................0.3
...................................0.3
118 3.10 Aggregate measure of real estate bubbles...........................22 .....■ .................5.1 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................16 .....■ .................5.3 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................47 .....■ ...............66.0 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads ...................................................3 .....■ ...............37.8 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................10 .....■ .............126.7 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................40 .....■ .................0.2 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................11 .....■ .............100.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................11 .....■ .............118.8 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................14 .....■ .............104.9 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................12 .....■ .............100.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................10 .....■ .................3.4 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................48 .....■ .................3.2 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................48 .....■ .................5.5 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................41 .....■ ...............27.6 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets...............................................4 .....■ .................1.0 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................28 .....■ .................2.7 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................9 .....■ ...............98.4 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................22 .....■ .................0.7 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................7 .....■ .................3.2 China ...................................19.3
5.02 IPO proceeds amount ...........................................................37 .....■ .................0.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................12 .....■ .................2.6 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 119

2: Country/Economy Profiles
Germany
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................5 .....■ .................3.5 United States ......................41.7
5.05 M&A transaction value to GDP .............................................30 .....■ .................3.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................6 .....■ .................4.3 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................5 .....■ ......223,429.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................17 .....■ ..........2,666.6 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................46 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................18 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................36 .....■ .................0.7 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................20 .....■ .................2.7 United States ......................16.3
5.13 Share of total number of securitization deals .........................7 .....■ .................1.7 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................10 .....■ .................1.9 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ..........................5 .....■ .................5.3 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................10 .....■ .................2.3 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 119
agreements .............................................................................3 .....■ .................7.3 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ...............................4 .....■ .................4.1 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................8 .....■ .................0.7 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....19 .....■ .................0.5 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................11 .....■ .................1.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................8 .....■ .............178.7 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................36 .....■ ...............57.1 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................22 .....■ .............102.0 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................23 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ...............4 .....■ ...............60.4 Japan .................................198.6
6.15 Private international bonds to GDP .........................................8 .....■ .............118.1 Ireland................................279.1
6.16 Public international bonds to GDP ........................................10 .....■ ...............12.7 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................16 .....■ .................6.0 Switzerland............................6.6
7.02 Venture capital availability .....................................................37 .....■ .................3.0 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................52 .....■ .................2.6 Panama..................................5.2
7.04 Financing through local equity market ..................................38 .....■ .................4.0 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................39 .....■ .................3.0 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................49 .....■ .................1.5 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................24 .....■ ...............16.3 Italy......................................53.0
7.09 Total number of ATMs...........................................................12 .....■ ...............79.7 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................31 .....■ ...............65.8 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
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2: Country/Economy Profiles

Hong Kong SAR


Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................7.0 1.4% 5.2% US$ bn
GDP (US$ billions), 2008 .........................................................215.6 ■ Public debt securities .........25.9
GDP (current prices) per capita, 2008 ............................30,755.1 ■ Private debt securities........99.3
GDP (PPP) as share (%) of world total, 2008 ........................0.45 32.1% ■ Banking deposits ...............609.0
61.3%
Average rate of real GDP growth (%), 2004–08....................6.28 ■ Equity securities .............1,162.6

Total 1,896.7

Total/GDP: 916.2%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................5 5.0


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................10 5.6


Financial sector liberalization ....................................................23 5.9
Corporate governance.................................................................12 5.1
Legal and regulatory issues .........................................................6 5.5
Contract enforcement....................................................................2 6.1
2nd pillar: Business environment ...............................................9 5.8
Human capital ...............................................................................20 4.7
120
Taxes.................................................................................................1 6.4
Infrastructure ..................................................................................4 6.4
Cost of doing business ................................................................16 5.8
3rd pillar: Financial stability........................................................3 5.6
Currency stability..........................................................................11 5.3
Banking system stability..............................................................21 5.3
Risk of sovereign debt crisis ........................................................3 6.3
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................1 5.4


Size index .........................................................................................2 5.6
Efficiency index...............................................................................4 6.3
Financial information disclosure................................................24 3.1
5th pillar: Non-banking financial services ...............................9 3.7
IPO activity.......................................................................................6 4.4
M&A activity..................................................................................10 4.0
Insurance .........................................................................................3 5.3
Securitization.................................................................................48 1.2
6th pillar: Financial markets........................................................9 4.4
Foreign exchange markets ...........................................................6 4.8
Derivatives markets .....................................................................12 5.1
Equity market development ..........................................................1 6.1
Bond market development..........................................................34 1.9
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................13 4.2


Commercial access........................................................................1 5.2
Retail access.................................................................................15 3.2
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 121

2: Country/Economy Profiles
Hong Kong SAR
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......33 .....■ ...............35.3 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................5 .....■ .................5.1 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................29 .....■ .................4.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................27 .....■ .................5.0 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................30 .....■ .................4.2 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards..........................7 .....■ .................6.0 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................13 .....■ .................5.8 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................22 .....■ .................5.0 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................2 .....■ .................5.2 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................23 .....■ .................3.5 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................12 .....■ .................5.4 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.........................................................................7 .....■ .................6.3 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................19 .....■ .................5.3 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.........................................................9 .....■ .................5.8 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................11 .....■ .................4.8 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ..................................................9 .....■ .................8.1 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 121
1.21 Strength of legal rights index ..................................................1 .....■ ...............10.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................25 .....■ .................4.1 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................12 .....■ .................6.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................11 .....■ .................6.0 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................2 .....■ .............211.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .........................3 .....■ ...............24.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................2 .....■ .................9.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................12 .....■ ...............14.5 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................22 .....■ .................4.9 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education...................................7 .....■ .................5.4 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................19 .....■ .................4.8 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................18 .....■ .................5.1 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ............................6 .....■ .................5.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................38 .....■ ...............33.0 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................11 .....■ .................6.0 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ........1 .....■ .................6.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ..............................................................5 .....■ ...............–2.1 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................6 .....■ ...............80.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure ...............................................3 .....■ .................6.7 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .........................................5 .....■ .................6.9 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................20 .....■ ...............55.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ..............................................9 .....■ ...............26.4 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .......................................................................4 .....■ ...............57.2 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers.................................................3 .....■ .............149.2 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 122

2: Country/Economy Profiles

Hong Kong SAR


Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................13 .....■ .................2.0 Denmark................................0.0
2.18 Cost of registering property ..................................................37 .....■ .................5.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................20 .....■ .................9.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................15 .....■ ...............11.0 Australia.................................2.0
2.21 Time to register property.......................................................42 .....■ ...............54.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................11 .....■ .................1.1 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................50 .....■ ...............–4.5 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................7 .....■ ...............14.2 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................1 .....■ .............251.9 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................33 .....■ ...............72.7 Nigeria
Nigeria ...................................0.3
...................................0.3
122 3.10 Aggregate measure of real estate bubbles...........................40 .....■ .................2.8 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................16 .....■ ...............19.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................16 .....■ ...............19.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................19 .....■ .................5.2 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt ...................................................7 .....■ ...............13.9 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................12 .....■ ...............75.3 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................8 .....■ .............147.7 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................1 .....■ .............267.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................1 .....■ .............312.7 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................10 .....■ .............132.4 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP .............................................................1 .....■ .............267.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................14 .....■ .................1.5 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................20 .....■ .................4.4 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................5 .....■ .................1.3 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................13 .....■ .................1.4 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................7 .....■ .................1.0 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................16 .....■ ...............69.9 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................10 .....■ .................2.6 China ...................................19.3
5.02 IPO proceeds amount .............................................................1 .....■ .................2.8 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................10 .....■ .................2.9 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
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2: Country/Economy Profiles
Hong Kong SAR
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................17 .....■ .................1.1 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................1 .....■ ...............16.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................18 .....■ .................1.5 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................22 .....■ ........24,657.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................12 .....■ ..........3,421.8 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................2 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................4 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................1 .....■ .................3.9 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ...........................................................n/a .........................n/a United States ......................16.3
5.13 Share of total number of securitization deals .......................37 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................7 .....■ .................3.0 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ..........................7 .....■ .................3.5 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................3 .....■ .................5.5 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 123
agreements ...........................................................................18 .....■ .................0.2 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................11 .....■ .................1.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................17 .....■ .................0.2 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....10 .....■ .................1.6 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................6 .....■ .................2.3 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................23 .....■ ...............88.6 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.........................................1 .....■ .............500.5 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................1 .....■ .............443.6 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people.....................1 .....■ .................1.5 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............15 .....■ ...............22.9 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............35 .....■ ...............12.0 Japan .................................198.6
6.15 Private international bonds to GDP .......................................15 .....■ ...............50.4 Ireland................................279.1
6.16 Public international bonds to GDP ........................................33 .....■ .................1.3 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................4 .....■ .................6.4 Switzerland............................6.6
7.02 Venture capital availability .......................................................1 .....■ .................4.6 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................31 .....■ .................3.5 Panama..................................5.2
7.04 Financing through local equity market ....................................1 .....■ .................5.3 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................6 .....■ .................4.4 Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................1 .....■ ...............28.9 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................12 .....■ ...............24.4 Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................17 .....■ .............880.3 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 124

2: Country/Economy Profiles

Hungary
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................10.1 20.3% US$ bn
GDP (US$ billions), 2008 .........................................................156.3 ■ Public debt securities .........93.2
39.7%
GDP (current prices) per capita, 2008 ............................15,542.3 ■ Private debt securities........21.7
GDP (PPP) as share (%) of world total, 2008 ........................0.29 ■ Banking deposits .................72.3
Average rate of real GDP growth (%), 2004–08....................2.91 ■ Equity securities ..................47.7
30.8% Total 234.8
9.2%
Total/GDP: 169.6%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................41 3.1


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................28 4.4


Financial sector liberalization ....................................................26 5.0
Corporate governance.................................................................34 4.5
Legal and regulatory issues .......................................................36 3.5
Contract enforcement..................................................................26 4.6
2nd pillar: Business environment .............................................26 4.7
Human capital ...............................................................................24 4.5
124
Taxes...............................................................................................34 4.4
Infrastructure ................................................................................24 4.7
Cost of doing business ................................................................30 5.1
3rd pillar: Financial stability......................................................52 3.7
Currency stability..........................................................................53 1.9
Banking system stability..............................................................14 5.7
Risk of sovereign debt crisis ......................................................46 2.9
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................53 2.4


Size index .......................................................................................39 2.0
Efficiency index.............................................................................50 3.3
Financial information disclosure................................................45 1.3
5th pillar: Non-banking financial services .............................49 1.5
IPO activity.....................................................................................50 1.1
M&A activity..................................................................................36 1.6
Insurance .......................................................................................39 1.9
Securitization.................................................................................43 1.4
6th pillar: Financial markets......................................................35 2.0
Foreign exchange markets .........................................................33 1.1
Derivatives markets .....................................................................30 1.3
Equity market development ........................................................38 2.0
Bond market development..........................................................22 2.9
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................42 3.0


Commercial access......................................................................50 3.1
Retail access.................................................................................22 2.8
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 125

2: Country/Economy Profiles
Hungary
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................30 .....■ .................1.7 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......16 .....■ ...............81.3 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................41 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................34 .....■ .................4.4 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................43 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................46 .....■ .................4.1 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................54 .....■ .................3.0 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................23 .....■ .................5.3 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................46 .....■ .................3.6 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................42 .....■ .................4.3 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................1 .....■ ...............14.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................53 .....■ .................2.1 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................37 .....■ .................2.9 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................31 .....■ .................4.6 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................33 .....■ .................4.6 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................32 .....■ .................3.9 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................44 .....■ .................3.0 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................47 .....■ .................1.9 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................26 .....■ .................5.1 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 125
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................48 .....■ .................2.5 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................31 .....■ .................4.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................33 .....■ .................4.3 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................12 .....■ .............335.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................23 .....■ ...............33.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................47 .....■ .................4.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts.....................................................7 .....■ ...............13.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................41 .....■ .................4.1 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................17 .....■ .................4.9 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................47 .....■ .................3.6 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................35 .....■ .................4.3 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................36 .....■ .................3.9 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................10 .....■ ...............68.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................32 .....■ .................4.3 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......52 .....■ .................3.3 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................25 .....■ .................6.9 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................38 .....■ .............330.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................32 .....■ .................4.3 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................24 .....■ .................6.4 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................23 .....■ ...............52.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................23 .....■ ...............14.2 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................24 .....■ ...............32.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................22 .....■ .............110.0 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 126

2: Country/Economy Profiles

Hungary
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................30 .....■ .................8.4 Denmark................................0.0
2.18 Cost of registering property ..................................................53 .....■ ...............11.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................30 .....■ ...............15.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................4 .....■ .................5.0 Australia.................................2.0
2.21 Time to register property.......................................................15 .....■ ...............17.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................23 .....■ .................2.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................27 .....■ .................1.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................32 .....■ .............286.0 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................50 .....■ ...............–7.8 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................31 .....■ .............104.4 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................22 .....■ ...............18.9 Nigeria
Nigeria ...................................0.3
...................................0.3
126 3.10 Aggregate measure of real estate bubbles...........................13 .....■ .................5.9 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................42 .....■ ...............11.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................38 .....■ ...............11.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................45 .....■ .................4.4 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................48 .....■ ...............67.7 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................42 .....■ .............375.0 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................29 .....■ ...............70.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................30 .....■ .................0.8 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................39 .....■ ...............44.7 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................38 .....■ ...............57.0 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................32 .....■ ...............57.2 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................40 .....■ ...............44.7 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................50 .....■ .................2.8 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................54 .....■ ...............10.9 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................18 .....■ .................4.2 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................50 .....■ .................6.6 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................30 .....■ .................2.9 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................37 .....■ ...............10.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................50 .....■ .................0.0 China ...................................19.3
5.02 IPO proceeds amount ...........................................................50 .....■ .................0.0 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................50 .....■ .................0.0 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 127

2: Country/Economy Profiles
Hungary
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................38 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................28 .....■ .................3.5 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................38 .....■ .................0.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................38 .....■ ..........4,924.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................26 .....■ .............489.8 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................28 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................29 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................32 .....■ .................0.8 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................39 .....■ .................1.1 United States ......................16.3
5.13 Share of total number of securitization deals .......................46 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................30 .....■ .................0.2 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................38 .....■ .................0.0 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................28 .....■ .................0.2 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 127
agreements ...........................................................................19 .....■ .................0.2 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................27 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....37 .....■ .................0.0 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................25 .....■ .................0.1 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................20 .....■ .............105.3 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................49 .....■ ...............32.6 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................36 .....■ ...............34.4 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................34 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............22 .....■ .................7.9 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............10 .....■ ...............50.3 Japan .................................198.6
6.15 Private international bonds to GDP .......................................25 .....■ ...............10.9 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................7 .....■ ...............17.9 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................40 .....■ .................4.3 Switzerland............................6.6
7.02 Venture capital availability .....................................................48 .....■ .................2.4 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................40 .....■ .................2.9 Panama..................................5.2
7.04 Financing through local equity market ..................................52 .....■ .................3.0 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................43 .....■ .................2.8 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................31 .....■ .................4.0 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................15 .....■ ......157,082.2 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................23 .....■ ...............17.1 Italy......................................53.0
7.09 Total number of ATMs...........................................................21 .....■ ...............54.2 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................21 .....■ .............485.8 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 128

2: Country/Economy Profiles

India
Key indicators Financial assets by major type, 2007
Population (millions), 2008 ..................................................1,190.5 US$ bn
20.8%
GDP (US$ billions), 2008 ......................................................1,209.7 ■ Public debt securities .......696.7
GDP (current prices) per capita, 2008 ..............................1,016.2 2.4% ■ Private debt securities........79.5
GDP (PPP) as share (%) of world total, 2008 ........................4.77 54.2% ■ Banking deposits ...............761.5
Average rate of real GDP growth (%), 2004–08....................8.70 ■ Equity securities .............1,819.1
22.7% Total 3,356.9

Total/GDP: 304.5%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................38 3.3


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................48 3.4


Financial sector liberalization ....................................................51 1.9
Corporate governance.................................................................30 4.6
Legal and regulatory issues .......................................................31 3.8
Contract enforcement..................................................................50 3.2
2nd pillar: Business environment .............................................48 3.5
Human capital ...............................................................................33 4.1
128
Taxes...............................................................................................38 4.2
Infrastructure ................................................................................51 2.3
Cost of doing business ................................................................50 3.4
3rd pillar: Financial stability......................................................46 4.2
Currency stability..........................................................................10 5.4
Banking system stability..............................................................49 4.0
Risk of sovereign debt crisis ......................................................43 3.4
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................39 3.1


Size index .......................................................................................36 2.3
Efficiency index.............................................................................32 4.8
Financial information disclosure................................................44 1.3
5th pillar: Non-banking financial services .............................17 3.1
IPO activity.......................................................................................9 3.8
M&A activity..................................................................................20 2.6
Insurance .......................................................................................17 3.0
Securitization.................................................................................16 3.0
6th pillar: Financial markets......................................................22 3.0
Foreign exchange markets .........................................................13 2.0
Derivatives markets .....................................................................13 4.9
Equity market development ........................................................28 2.7
Bond market development..........................................................27 2.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................48 2.8


Commercial access......................................................................27 3.9
Retail access.................................................................................47 1.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 129

2: Country/Economy Profiles
India
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......47 .....■ .................6.2 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................42 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................28 .....■ .................4.5 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................35 .....■ .................4.6 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................22 .....■ .................5.3 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................28 .....■ .................4.3 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................18 .....■ .................5.5 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................33 .....■ .................4.1 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................24 .....■ .................4.9 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................24 .....■ ...............10.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................35 .....■ .................2.9 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................21 .....■ .................3.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................9 .....■ .................5.6 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................31 .....■ .................4.8 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................36 .....■ .................3.6 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................31 .....■ .................3.6 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................36 .....■ .................2.4 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................42 .....■ .................3.4 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 129
1.21 Strength of legal rights index ................................................11 .....■ .................8.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................14 .....■ .................4.6 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................23 .....■ .................5.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................45 .....■ .................3.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................54 .....■ ..........1,420.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................51 .....■ ...............46.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................21 .....■ .................6.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................49 .....■ ...............39.6 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................12 .....■ .................5.4 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................13 .....■ .................5.0 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................25 .....■ .................4.5 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................26 .....■ .................4.7 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................31 .....■ .................4.1 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................51 .....■ ...............11.8 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................45 .....■ .................3.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......38 .....■ .................4.0 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................36 .....■ ...............11.1 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................33 .....■ .............271.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................46 .....■ .................3.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................26 .....■ .................6.3 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................51 .....■ .................6.9 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................51 .....■ .................0.3 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................52 .....■ .................3.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................55 .....■ ...............20.0 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 130

2: Country/Economy Profiles

India
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................53 .....■ ...............70.1 Denmark................................0.0
2.18 Cost of registering property ..................................................45 .....■ .................7.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................20 .....■ .................9.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................39 .....■ ...............30.0 Australia.................................2.0
2.21 Time to register property.......................................................37 .....■ ...............45.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................55 .....■ ...............10.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................24 .....■ .................1.6 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator.................................................6 .....■ ...............29.5 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................37 .....■ ...............–2.8 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................26 .....■ .................4.7 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .......................2 .....■ ...............17.7 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................37 .....■ .................4.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................19 .....■ .................7.8 Nigeria
Nigeria ...................................0.3
...................................0.3
130 3.10 Aggregate measure of real estate bubbles...........................43 .....■ .................1.4 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................43 .....■ ...............10.8 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................40 .....■ ...............10.8 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................37 .....■ .................4.7 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................41 .....■ ...............56.4 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................34 .....■ ...............61.1 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................18 .....■ .................2.1 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................29 .....■ ...............57.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................22 .....■ ...............78.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................36 .....■ ...............43.4 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................30 .....■ ...............57.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................27 .....■ .................4.1 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................14 .....■ .................1.8 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................46 .....■ ...............40.7 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................33 .....■ .................3.2 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................19 .....■ .................2.3 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................36 .....■ ...............10.5 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................9 .....■ .................2.7 China ...................................19.3
5.02 IPO proceeds amount ...........................................................13 .....■ .................0.6 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ................................................................6 .....■ .................5.7 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 131

2: Country/Economy Profiles
India
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................18 .....■ .................0.9 United States ......................41.7
5.05 M&A transaction value to GDP .............................................35 .....■ .................2.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................10 .....■ .................2.4 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................14 .....■ ........58,725.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................45 .....■ ...............50.3 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................6 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................23 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................27 .....■ .................1.0 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................38 .....■ .................1.2 United States ......................16.3
5.13 Share of total number of securitization deals .........................8 .....■ .................1.6 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................14 .....■ .................1.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................12 .....■ .................1.5 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................18 .....■ .................0.6 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 131
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................19 .....■ .................0.2 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....12 .....■ .................1.3 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................9 .....■ .................1.5 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................27 .....■ ...............83.9 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................20 .....■ .............112.7 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................23 .....■ ...............94.6 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................32 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............26 .....■ .................4.0 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ...............6 .....■ ...............54.9 Japan .................................198.6
6.15 Private international bonds to GDP .......................................33 .....■ .................3.8 Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................27 .....■ .................5.3 Switzerland............................6.6
7.02 Venture capital availability .....................................................17 .....■ .................3.6 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................14 .....■ .................4.0 Panama..................................5.2
7.04 Financing through local equity market ....................................2 .....■ .................5.0 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................23 .....■ .................3.6 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................43 .....■ .................2.1 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................28 .....■ ........68,047.1 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................38 .....■ .................9.3 Italy......................................53.0
7.09 Total number of ATMs...........................................................41 .....■ .................3.6 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................30 .....■ ...............77.8 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................12 .....■ .................4.8 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 132

2: Country/Economy Profiles

Indonesia
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................227.8 US$ bn
GDP (US$ billions), 2008 .........................................................511.8 27.3%
■ Public debt securities .......146.5
GDP (current prices) per capita, 2008 ..............................2,246.3 39.4% ■ Private debt securities........22.2
GDP (PPP) as share (%) of world total, 2008 ........................1.31 ■ Banking deposits ...............156.3
Average rate of real GDP growth (%), 2004–08....................5.71 4.1% ■ Equity securities ................211.7

Total 536.7
29.1%
Total/GDP: 124.2%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................48 2.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................45 3.5


Financial sector liberalization ....................................................47 2.6
Corporate governance.................................................................33 4.5
Legal and regulatory issues .......................................................35 3.6
Contract enforcement..................................................................47 3.4
2nd pillar: Business environment .............................................52 3.3
Human capital ...............................................................................38 4.0
132
Taxes...............................................................................................32 4.6
Infrastructure ................................................................................53 2.1
Cost of doing business ................................................................55 2.3
3rd pillar: Financial stability......................................................43 4.4
Currency stability..........................................................................14 4.9
Banking system stability..............................................................31 4.9
Risk of sovereign debt crisis ......................................................44 3.3
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................44 2.6


Size index .......................................................................................43 1.8
Efficiency index.............................................................................48 3.6
Financial information disclosure................................................30 2.3
5th pillar: Non-banking financial services .............................36 2.0
IPO activity.....................................................................................31 1.9
M&A activity..................................................................................44 1.3
Insurance .......................................................................................33 2.4
Securitization.................................................................................25 2.2
6th pillar: Financial markets......................................................52 1.4
Foreign exchange markets .........................................................38 1.1
Derivatives markets .....................................................................32 1.3
Equity market development ........................................................41 1.7
Bond market development..........................................................42 1.3
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................36 3.1


Commercial access......................................................................30 3.9
Retail access.................................................................................39 2.4
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 133

2: Country/Economy Profiles
Indonesia
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................35 .....■ .................1.2 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......43 .....■ ...............29.8 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................50 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................24 .....■ .................4.5 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................23 .....■ .................5.0 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................35 .....■ .................4.7 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................21 .....■ .................4.5 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................43 .....■ .................4.6 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................48 .....■ .................3.5 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................29 .....■ .................4.7 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................12 .....■ .................3.9 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ................................4 .....■ .................4.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................27 .....■ .................4.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................42 .....■ .................4.1 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................39 .....■ .................3.5 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................32 .....■ .................3.6 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................30 .....■ .................3.2 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................48 .....■ .................2.6 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 133
1.21 Strength of legal rights index ................................................49 .....■ .................3.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................32 .....■ .................3.5 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................38 .....■ .................3.8 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................47 .....■ .................3.1 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................35 .....■ .............570.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................41 .....■ ...............39.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................55 .....■ .............122.7 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................32 .....■ .................4.3 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................28 .....■ .................4.5 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................24 .....■ .................4.5 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................34 .....■ .................4.3 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................18 .....■ .................4.6 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................49 .....■ ...............17.0 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................47 .....■ .................3.1 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......24 .....■ .................4.3 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................18 .....■ .................3.4 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................31 .....■ .............266.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................48 .....■ .................3.1 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................52 .....■ .................4.8 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................54 .....■ .................5.6 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................52 .....■ .................0.1 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................50 .....■ .................7.7 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................51 .....■ ...............35.3 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 134

2: Country/Economy Profiles

Indonesia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................54 .....■ ...............77.9 Denmark................................0.0
2.18 Cost of registering property ..................................................52 .....■ ...............10.7 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................37 .....■ ...............18.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................53 .....■ ...............76.0 Australia.................................2.0
2.21 Time to register property.......................................................31 .....■ ...............39.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................52 .....■ .................5.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................6 .....■ .................5.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................16 .....■ ...............59.1 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................28 .....■ .................0.1 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................32 .....■ ...............28.8 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................13 .....■ ...............31.5 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................42 .....■ .................3.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................12 .....■ .................5.6 Nigeria
Nigeria ...................................0.3
...................................0.3
134 3.10 Aggregate measure of real estate bubbles...........................16 .....■ .................5.5 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................44 .....■ ...............10.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................46 .....■ .................8.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................38 .....■ .................4.7 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................16 .....■ ...............29.3 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................40 .....■ .............340.3 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................47 .....■ ...............31.5 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ....................................................5 .....■ .................7.7 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................44 .....■ ...............34.1 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................49 .....■ ...............38.2 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................47 .....■ ...............22.7 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................45 .....■ ...............34.1 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................39 .....■ .................3.6 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................31 .....■ .................2.9 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................52 .....■ ...............61.3 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................41 .....■ .................4.9 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................37 .....■ .................3.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ................................................8 .....■ ...............26.1 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................25 .....■ .................0.7 China ...................................19.3
5.02 IPO proceeds amount ...........................................................27 .....■ .................0.4 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................20 .....■ .................0.9 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 135

2: Country/Economy Profiles
Indonesia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................31 .....■ .................0.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................46 .....■ .................1.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................34 .....■ .................0.3 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................34 .....■ ..........6,938.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................47 .....■ ...............30.0 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................5 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................42 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................35 .....■ .................0.7 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................35 .....■ .................1.5 United States ......................16.3
5.13 Share of total number of securitization deals .......................19 .....■ .................0.7 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................32 .....■ .................0.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................30 .....■ .................0.1 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................38 .....■ .................0.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 135
agreements ...........................................................................31 .....■ .................0.0 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................33 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................29 .....■ .................0.0 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....22 .....■ .................0.3 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................28 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................32 .....■ ...............64.1 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................44 .....■ ...............40.7 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................39 .....■ ...............26.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................44 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............27 .....■ .................2.2 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............33 .....■ ...............16.5 Japan .................................198.6
6.15 Private international bonds to GDP .......................................35 .....■ .................3.4 Ireland................................279.1
6.16 Public international bonds to GDP ........................................27 .....■ .................2.5 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................38 .....■ .................4.5 Switzerland............................6.6
7.02 Venture capital availability .....................................................13 .....■ .................3.8 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................8 .....■ .................4.4 Panama..................................5.2
7.04 Financing through local equity market ....................................9 .....■ .................4.7 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................14 .....■ .................4.0 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................48 .....■ .................1.6 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................32 .....■ ........48,425.5 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................42 .....■ .................6.7 Italy......................................53.0
7.09 Total number of ATMs...........................................................39 .....■ ...............13.4 Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................4 .....■ ...............19.7 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 136

2: Country/Economy Profiles

Ireland
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................4.4 6.7% US$ bn
15.3%
GDP (US$ billions), 2008 .........................................................273.3 ■ Public debt securities .........62.8
GDP (current prices) per capita, 2008 ............................61,809.6 ■ Private debt securities......466.6
GDP (PPP) as share (%) of world total, 2008 ........................0.27 ■ Banking deposits ...............267.3
Average rate of real GDP growth (%), 2004–08....................4.11 ■ Equity securities ................144.0
28.4%
49.6%
Total 940.8

Total/GDP: 360.1%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................16 4.4


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................13 5.6


Financial sector liberalization ......................................................1 7.0
Corporate governance.................................................................15 5.1
Legal and regulatory issues .......................................................17 4.6
Contract enforcement....................................................................6 5.7
2nd pillar: Business environment .............................................14 5.5
Human capital ...............................................................................13 5.1
136
Taxes.................................................................................................3 6.2
Infrastructure ................................................................................19 5.2
Cost of doing business ................................................................21 5.5
3rd pillar: Financial stability......................................................41 4.5
Currency stability..........................................................................34 4.1
Banking system stability..............................................................46 4.3
Risk of sovereign debt crisis ......................................................23 5.2
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................6 5.0


Size index .........................................................................................7 5.1
Efficiency index.............................................................................21 5.4
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services .............................14 3.2
IPO activity.....................................................................................23 2.2
M&A activity..................................................................................29 1.7
Insurance .........................................................................................2 5.5
Securitization.................................................................................14 3.5
6th pillar: Financial markets......................................................24 2.9
Foreign exchange markets .........................................................24 1.2
Derivatives markets .....................................................................19 2.6
Equity market development ........................................................31 2.5
Bond market development............................................................5 4.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................15 4.0


Commercial access......................................................................20 4.0
Retail access ...............................................................................n/a n/a
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 137

2: Country/Economy Profiles
Ireland
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............71.3 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................19 .....■ .................4.6 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................24 .....■ .................4.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................11 .....■ .................5.8 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................18 .....■ .................4.6 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................22 .....■ .................5.3 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................14 .....■ .................5.6 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................21 .....■ .................5.0 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................5 .....■ ...............13.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................26 .....■ .................3.1 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................52 .....■ .................1.8 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................35 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................13 .....■ .................6.1 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................13 .....■ .................5.6 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................11 .....■ .................5.7 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................28 .....■ .................3.3 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................13 .....■ .................7.7 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 137
1.21 Strength of legal rights index ................................................11 .....■ .................8.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................16 .....■ .................4.4 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence .............................................................8 .....■ .................6.3 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ..................................6 .....■ .................6.1 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................31 .....■ .............515.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .........................1 .....■ ...............20.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................4 .....■ .................8.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................36 .....■ ...............26.9 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................16 .....■ .................5.3 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................15 .....■ .................4.9 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................13 .....■ .................4.9 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................20 .....■ .................4.9 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ............................4 .....■ .................5.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................19 .....■ ...............58.8 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ........................................6 .....■ .................6.2 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ........9 .....■ .................5.0 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ..............................................................6 .....■ ...............–1.7 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................4 .....■ ...............76.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................35 .....■ .................4.1 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................32 .....■ .................6.1 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................17 .....■ ...............57.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................20 .....■ ...............18.7 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................10 .....■ ...............49.1 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................14 .....■ .............115.9 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 138

2: Country/Economy Profiles

Ireland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................2 .....■ .................0.3 Denmark................................0.0
2.18 Cost of registering property ..................................................49 .....■ .................9.6 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................20 .....■ .................9.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................17 .....■ ...............13.0 Australia.................................2.0
2.21 Time to register property.......................................................30 .....■ ...............38.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................1 .....■ .................0.4 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................13 .....■ .................3.7 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................43 .....■ ...............–4.5 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................8 .....■ ...............–0.2 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................41 .....■ .................2.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................44 .....■ .............296.2 Nigeria
Nigeria ...................................0.3
...................................0.3
138 3.10 Aggregate measure of real estate bubbles.............................1 .....■ .................6.7 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................18 .....■ ...............18.4 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................18 .....■ ...............18.4 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................43 .....■ .................4.5 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................21 .....■ ...............34.8 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................34 .....■ .............230.3 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................3 .....■ .............185.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................43 .....■ .................0.0 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................13 .....■ ...............93.1 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................15 .....■ .............101.0 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................3 .....■ .............184.3 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................14 .....■ ...............93.1 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................1 .....■ ...............45.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................40 .....■ .................3.6 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................16 .....■ .................2.0 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................37 .....■ ...............16.7 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets...............................................6 .....■ .................1.0 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ............................n/a .........................n/a Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................24 .....■ .................0.7 China ...................................19.3
5.02 IPO proceeds amount ...........................................................12 .....■ .................0.6 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................30 .....■ .................0.4 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 139

2: Country/Economy Profiles
Ireland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................29 .....■ .................0.3 United States ......................41.7
5.05 M&A transaction value to GDP .............................................29 .....■ .................3.5 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................27 .....■ .................0.5 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................12 .....■ ........63,064.0 United States ..........1,230,526.0
5.08 Insurance density ....................................................................2 .....■ ..........7,262.0 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................10 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................5 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................5 .....■ .................3.0 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................7 .....■ .................6.4 United States ......................16.3
5.13 Share of total number of securitization deals .......................30 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................23 .....■ .................0.3 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................25 .....■ .................0.2 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................26 .....■ .................0.3 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 139
agreements ...........................................................................26 .....■ .................0.0 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................15 .....■ .................0.4 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................23 .....■ .................0.1 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....14 .....■ .................1.0 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................20 .....■ .................0.2 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................24 .....■ ...............88.1 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................34 .....■ ...............60.8 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................31 .....■ ...............53.6 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people..................n/a .........................n/a Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............10 .....■ ...............35.9 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............26 .....■ ...............28.5 Japan .................................198.6
6.15 Private international bonds to GDP .........................................1 .....■ .............279.1 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................5 .....■ ...............27.9 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................24 .....■ .................5.5 Switzerland............................6.6
7.02 Venture capital availability .....................................................29 .....■ .................3.2 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................54 .....■ .................2.3 Panama..................................5.2
7.04 Financing through local equity market ..................................47 .....■ .................3.4 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................38 .....■ .................3.0 Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................4 .....■ ...............11.7 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches.....................................................7 .....■ ...............34.1 Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 140

2: Country/Economy Profiles

Israel
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................7.1 US$ bn
24.3%
GDP (US$ billions), 2008 .........................................................201.8 ■ Public debt securities .......130.3
GDP (current prices) per capita, 2008 ............................28,365.4 44.1% ■ Private debt securities........10.2
GDP (PPP) as share (%) of world total, 2008 ........................0.29 1.9% ■ Banking deposits ...............158.7
Average rate of real GDP growth (%), 2004–08....................4.93 ■ Equity securities ................236.4

Total 535.6
29.6%

Total/GDP: 326.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................28 3.7


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................24 4.7


Financial sector liberalization ....................................................29 4.6
Corporate governance.................................................................21 4.9
Legal and regulatory issues .......................................................21 4.4
Contract enforcement..................................................................22 4.8
2nd pillar: Business environment .............................................27 4.6
Human capital ...............................................................................31 4.2
140
Taxes...............................................................................................14 5.6
Infrastructure ................................................................................23 5.1
Cost of doing business ................................................................49 3.5
3rd pillar: Financial stability......................................................27 4.8
Currency stability..........................................................................47 3.4
Banking system stability..............................................................11 5.7
Risk of sovereign debt crisis ......................................................30 4.8
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................26 4.0


Size index .......................................................................................31 2.8
Efficiency index.............................................................................25 5.2
Financial information disclosure................................................15 3.7
5th pillar: Non-banking financial services .............................37 1.9
IPO activity.....................................................................................29 1.9
M&A activity..................................................................................33 1.6
Insurance .......................................................................................19 3.0
Securitization.................................................................................54 1.0
6th pillar: Financial markets......................................................32 2.3
Foreign exchange markets .........................................................25 1.2
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................15 3.8
Bond market development..........................................................39 1.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................24 3.7


Commercial access......................................................................19 4.1
Retail access.................................................................................14 3.3
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 141

2: Country/Economy Profiles
Israel
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................26 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......41 .....■ ...............28.6 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................26 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................17 .....■ .................4.6 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................30 .....■ .................4.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................19 .....■ .................5.4 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................33 .....■ .................4.1 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................27 .....■ .................5.2 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................22 .....■ .................5.2 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................20 .....■ .................5.0 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................28 .....■ .................3.1 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................17 .....■ .................3.8 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................33 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................35 .....■ .................4.5 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................27 .....■ .................4.0 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................16 .....■ .................5.3 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................22 .....■ .................3.5 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................21 .....■ .................6.0 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 141
1.21 Strength of legal rights index ..................................................4 .....■ .................9.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................22 .....■ .................4.2 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................13 .....■ .................6.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................17 .....■ .................5.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................49 .....■ .............890.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................29 .....■ ...............35.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................4 .....■ .................8.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................30 .....■ ...............25.3 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................39 .....■ .................4.1 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................46 .....■ .................3.2 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................26 .....■ .................4.5 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................23 .....■ .................4.8 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................45 .....■ .................3.6 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................21 .....■ ...............57.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................17 .....■ .................5.7 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......19 .....■ .................4.6 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................12 .....■ .................0.8 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................26 .....■ .............230.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................29 .....■ .................4.5 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................10 .....■ .................6.8 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................32 .....■ ...............28.9 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................17 .....■ ...............22.1 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................16 .....■ ...............43.9 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers.................................................6 .....■ .............128.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 142

2: Country/Economy Profiles

Israel
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................18 .....■ .................4.4 Denmark................................0.0
2.18 Cost of registering property ..................................................45 .....■ .................7.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................50 .....■ ...............23.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................44 .....■ ...............34.0 Australia.................................2.0
2.21 Time to register property.......................................................52 .....■ .............144.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................41 .....■ .................4.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................41 .....■ ...............–0.3 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................29 .....■ .............141.2 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................23 .....■ .................1.2 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................25 .....■ ...............55.5 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................15 .....■ .................0.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................13 .....■ .................6.2 Nigeria
Nigeria ...................................0.3
...................................0.3
142 3.10 Aggregate measure of real estate bubbles...........................23 .....■ .................5.0 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................21 .....■ ...............17.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................26 .....■ ...............15.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ......................................5 .....■ .................5.8 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................50 .....■ ...............78.0 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................25 .....■ .............175.0 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................21 .....■ ...............95.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................27 .....■ .................1.0 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................15 .....■ ...............86.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................45 .....■ ...............49.0 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................23 .....■ ...............86.6 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................16 .....■ ...............86.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................30 .....■ .................3.9 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................22 .....■ .................2.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................39 .....■ ...............18.3 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................29 .....■ .................3.0 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................15 .....■ .................1.7 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................10 .....■ ...............91.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................32 .....■ .................0.4 China ...................................19.3
5.02 IPO proceeds amount ...........................................................14 .....■ .................0.5 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................29 .....■ .................0.5 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 143

2: Country/Economy Profiles
Israel
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................33 .....■ .................0.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................27 .....■ .................3.5 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................36 .....■ .................0.3 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................29 .....■ ..........8,857.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................22 .....■ ..........1,278.5 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................30 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................21 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................7 .....■ .................2.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................49 .....■ .................0.3 United States ......................16.3
5.13 Share of total number of securitization deals .......................55 .....■ .................0.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................24 .....■ .................0.3 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................27 .....■ .................0.2 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 143
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................21 .....■ .................0.2 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................37 .....■ ...............55.1 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................15 .....■ .............127.2 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................26 .....■ ...............70.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people.....................4 .....■ .................0.9 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP .......................................29 .....■ .................6.2 Ireland................................279.1
6.16 Public international bonds to GDP ........................................21 .....■ .................4.9 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................20 .....■ .................5.7 Switzerland............................6.6
7.02 Venture capital availability .....................................................12 .....■ .................3.9 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................33 .....■ .................3.4 Panama..................................5.2
7.04 Financing through local equity market ..................................28 .....■ .................4.3 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................34 .....■ .................3.1 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................21 .....■ .................6.1 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................6 .....■ ......225,362.1 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................18 .....■ ...............19.8 Italy......................................53.0
7.09 Total number of ATMs...........................................................26 .....■ ...............47.4 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................20 .....■ .............584.7 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 144

2: Country/Economy Profiles

Italy
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................59.3 15.4%
US$ bn
GDP (US$ billions), 2008 ......................................................2,313.9 31.5%
■ Public debt securities ....2,188.5
GDP (current prices) per capita, 2008 ............................38,996.2 ■ Private debt securities...2,180.9
GDP (PPP) as share (%) of world total, 2008 ........................2.64 ■ Banking deposits ............1,509.2
21.7%
Average rate of real GDP growth (%), 2004–08....................0.95 ■ Equity securities .............1,072.7

Total 6,951.3
31.4%
Total/GDP: 328.3%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................21 4.0


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................32 4.2


Financial sector liberalization ......................................................1 7.0
Corporate governance.................................................................54 3.4
Legal and regulatory issues .......................................................40 3.3
Contract enforcement..................................................................52 3.2
2nd pillar: Business environment .............................................22 4.9
Human capital ...............................................................................30 4.2
144
Taxes...............................................................................................29 4.8
Infrastructure ................................................................................22 5.1
Cost of doing business ................................................................18 5.6
3rd pillar: Financial stability......................................................44 4.4
Currency stability..........................................................................26 4.3
Banking system stability..............................................................38 4.7
Risk of sovereign debt crisis ......................................................37 4.3
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................25 4.0


Size index .......................................................................................25 3.1
Efficiency index.............................................................................28 5.0
Financial information disclosure................................................14 3.8
5th pillar: Non-banking financial services .............................19 2.8
IPO activity.....................................................................................22 2.2
M&A activity..................................................................................13 3.7
Insurance .......................................................................................23 2.7
Securitization.................................................................................19 2.7
6th pillar: Financial markets......................................................15 3.7
Foreign exchange markets .........................................................17 1.7
Derivatives markets .....................................................................10 5.3
Equity market development ........................................................21 3.3
Bond market development............................................................9 4.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................21 3.7


Commercial access......................................................................52 2.9
Retail access...................................................................................7 4.5
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 145

2: Country/Economy Profiles
Italy
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............72.8 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................44 .....■ .................4.1 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................53 .....■ .................3.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................55 .....■ .................3.5 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................53 .....■ .................3.0 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................48 .....■ .................4.0 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................42 .....■ .................3.6 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................53 .....■ .................3.4 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................33 .....■ .................7.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................52 .....■ .................2.2 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................20 .....■ .................3.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................43 .....■ .................4.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................38 .....■ .................4.4 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................31 .....■ .................3.9 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................39 .....■ .................3.1 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................46 .....■ .................1.9 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................31 .....■ .................4.8 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 145
1.21 Strength of legal rights index ................................................49 .....■ .................3.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................46 .....■ .................2.6 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................46 .....■ .................3.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................37 .....■ .................3.9 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................52 .....■ ..........1,210.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................45 .....■ ...............41.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................40 .....■ ...............29.9 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................30 .....■ .................4.4 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................38 .....■ .................3.7 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................54 .....■ .................3.1 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................31 .....■ .................4.5 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................39 .....■ .................3.9 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................12 .....■ ...............67.0 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................37 .....■ .................3.9 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......50 .....■ .................3.7 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ..............................................................8 .....■ ...............–0.5 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................39 .....■ .............334.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................40 .....■ .................3.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................49 .....■ .................5.3 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................21 .....■ ...............54.4 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................21 .....■ ...............18.4 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................16 .....■ ...............43.9 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers.................................................2 .....■ .............153.1 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 146

2: Country/Economy Profiles

Italy
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................44 .....■ ...............17.8 Denmark................................0.0
2.18 Cost of registering property ....................................................9 .....■ .................0.6 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................45 .....■ ...............22.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................12 .....■ ...............10.0 Australia.................................2.0
2.21 Time to register property.......................................................23 .....■ ...............27.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................20 .....■ .................1.8 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................9 .....■ .................4.6 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................40 .....■ ...............–3.2 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................13 .....■ ...............–1.5 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................17 .....■ .................7.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................38 .....■ .............146.3 Nigeria
Nigeria ...................................0.3
...................................0.3
146 3.10 Aggregate measure of real estate bubbles...........................38 .....■ .................3.7 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................24 .....■ ...............16.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................22 .....■ ...............16.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................42 .....■ .................4.5 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................54 .....■ .............105.8 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................18 .....■ .............110.4 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................15 .....■ .............116.2 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................11 .....■ .................4.8 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................26 .....■ ...............60.7 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................23 .....■ ...............78.1 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................20 .....■ ...............96.5 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................26 .....■ ...............60.7 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................26 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................44 .....■ .................3.4 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................29 .....■ .................2.7 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................26 .....■ .................8.1 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................23 .....■ .................2.2 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................41 .....■ .................4.6 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................14 .....■ ...............74.9 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................13 .....■ ...............11.8 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................13 .....■ .................2.0 China ...................................19.3
5.02 IPO proceeds amount ...........................................................39 .....■ .................0.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................16 .....■ .................1.8 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 147

2: Country/Economy Profiles
Italy
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................9 .....■ .................3.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................19 .....■ .................4.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................13 .....■ .................2.0 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................6 .....■ ......142,328.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................20 .....■ ..........2,322.0 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................50 .....■ ...............–0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................19 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................38 .....■ .................0.7 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................28 .....■ .................2.0 United States ......................16.3
5.13 Share of total number of securitization deals .......................14 .....■ .................1.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................16 .....■ .................0.9 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................16 .....■ .................0.6 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................15 .....■ .................1.0 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 147
agreements ...........................................................................12 .....■ .................0.7 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ...............................9 .....■ .................1.6 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................7 .....■ .................1.0 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....21 .....■ .................0.3 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................12 .....■ .................0.7 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................2 .....■ .............218.7 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................39 .....■ ...............50.2 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................21 .....■ .............109.8 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................30 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............3 .....■ ...............85.7 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP .......................................13 .....■ ...............60.5 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................9 .....■ ...............15.0 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................42 .....■ .................4.3 Switzerland............................6.6
7.02 Venture capital availability .....................................................51 .....■ .................2.3 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................35 .....■ .................3.3 Panama..................................5.2
7.04 Financing through local equity market ..................................45 .....■ .................3.7 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................53 .....■ .................2.2 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................46 .....■ .................1.9 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................23 .....■ ........76,320.5 Ukraine .......................375,499.3
7.08 Commercial bank branches.....................................................1 .....■ ...............53.0 Italy......................................53.0
7.09 Total number of ATMs.............................................................9 .....■ ...............93.9 Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 148

2: Country/Economy Profiles

Japan
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................127.7 US$ bn
19.8%
GDP (US$ billions), 2008 ......................................................4,923.8 33.3% ■ Public debt securities ....7,471.5
GDP (current prices) per capita, 2008 ............................38,559.1 ■ Private debt securities...2,069.6
GDP (PPP) as share (%) of world total, 2008 ........................6.37 ■ Banking deposits ............8,463.4
Average rate of real GDP growth (%), 2004–08....................1.69 ■ Equity securities .............4,453.5

37.7%
Total 22,457.9
9.2%

Total/GDP: 512.2%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................9 4.6


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................17 5.4


Financial sector liberalization ....................................................17 6.5
Corporate governance.................................................................11 5.1
Legal and regulatory issues .......................................................19 4.6
Contract enforcement..................................................................12 5.5
2nd pillar: Business environment .............................................15 5.4
Human capital ...............................................................................17 4.8
148
Taxes...............................................................................................15 5.5
Infrastructure ................................................................................18 5.4
Cost of doing business ................................................................13 6.0
3rd pillar: Financial stability......................................................34 4.6
Currency stability..........................................................................36 4.0
Banking system stability..............................................................40 4.6
Risk of sovereign debt crisis ......................................................25 5.1
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................3 5.1


Size index .........................................................................................4 5.5
Efficiency index.............................................................................13 5.7
Financial information disclosure................................................20 3.3
5th pillar: Non-banking financial services ...............................6 4.0
IPO activity.......................................................................................7 4.3
M&A activity....................................................................................7 4.7
Insurance .........................................................................................8 4.5
Securitization.................................................................................20 2.7
6th pillar: Financial markets........................................................5 4.8
Foreign exchange markets ...........................................................3 6.7
Derivatives markets .......................................................................4 6.9
Equity market development ........................................................17 3.7
Bond market development..........................................................19 3.3
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................37 3.0


Commercial access......................................................................41 3.4
Retail access.................................................................................31 2.7
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 149

2: Country/Economy Profiles
Japan
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................24 .....■ .................1.7 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......14 .....■ ...............62.5 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................32 .....■ .................4.4 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................18 .....■ .................5.1 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................15 .....■ .................5.6 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................13 .....■ .................4.8 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................24 .....■ .................5.3 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................19 .....■ .................5.4 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................23 .....■ .................4.9 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................13 .....■ ...............12.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................11 .....■ .................3.9 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................46 .....■ .................2.5 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................26 .....■ .................4.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................14 .....■ .................5.9 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................16 .....■ .................5.4 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................20 .....■ .................4.9 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................32 .....■ .................3.1 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................15 .....■ .................7.3 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 149
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................20 .....■ .................4.3 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................16 .....■ .................5.5 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................13 .....■ .................6.0 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................10 .....■ .............316.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................11 .....■ .................7.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................24 .....■ ...............22.7 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................44 .....■ .................3.9 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................16 .....■ .................4.9 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training.............................................................5 .....■ .................5.4 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................13 .....■ .................5.5 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................29 .....■ .................4.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................22 .....■ ...............57.3 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................13 .....■ .................6.0 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......32 .....■ .................4.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ..............................................................3 .....■ ...............–4.0 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................40 .....■ .............355.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................14 .....■ .................5.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .........................................8 .....■ .................6.8 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................13 .....■ ...............68.9 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................16 .....■ ...............22.1 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................21 .....■ ...............40.0 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................36 .....■ ...............83.9 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 150

2: Country/Economy Profiles

Japan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................27 .....■ .................7.5 Denmark................................0.0
2.18 Cost of registering property ..................................................37 .....■ .................5.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................32 .....■ ...............23.0 Australia.................................2.0
2.21 Time to register property.......................................................12 .....■ ...............14.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................2 .....■ .................0.6 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................48 .....■ ...............–4.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................18 .....■ .................3.2 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................5 .....■ ...............53.3 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria
Nigeria ...................................0.3
...................................0.3
150 3.10 Aggregate measure of real estate bubbles...........................31 .....■ .................4.3 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................19 .....■ ...............18.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................19 .....■ ...............18.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................15 .....■ .................5.4 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................55 .....■ .............172.1 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads ...................................................6 .....■ ...............49.5 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................7 .....■ .............153.3 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ....................................................2 .....■ ...............14.8 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................2 .....■ .............186.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................5 .....■ .............144.7 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................19 .....■ ...............96.8 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP .............................................................2 .....■ .............186.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................22 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................49 .....■ .................3.0 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................8 .....■ .................1.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................20 .....■ .................5.9 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets...............................................1 .....■ .................0.8 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................13 .....■ .................1.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................13 .....■ ...............76.2 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................6 .....■ .................3.9 China ...................................19.3
5.02 IPO proceeds amount ...........................................................43 .....■ .................0.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ................................................................3 .....■ ...............10.6 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 151

2: Country/Economy Profiles
Japan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................8 .....■ .................3.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................40 .....■ .................2.2 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................3 .....■ .................6.8 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................3 .....■ ......424,755.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................13 .....■ ..........3,319.3 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................49 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................9 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................11 .....■ .................2.0 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................42 .....■ .................1.0 United States ......................16.3
5.13 Share of total number of securitization deals .......................11 .....■ .................1.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................4 .....■ .................7.9 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ..........................3 .....■ .................6.0 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................6 .....■ .................5.1 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 151
agreements ...........................................................................11 .....■ .................1.0 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ...............................7 .....■ .................3.2 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................3 .....■ .................8.8 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......8 .....■ .................2.7 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................4 .....■ .................4.3 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................15 .....■ .............140.3 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................23 .....■ .............105.8 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................15 .....■ .............148.4 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................14 .....■ .................0.3 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ...............1 .....■ .............198.6 Japan .................................198.6
6.15 Private international bonds to GDP .......................................22 .....■ ...............21.3 Ireland................................279.1
6.16 Public international bonds to GDP ........................................39 .....■ .................0.1 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................31 .....■ .................4.9 Switzerland............................6.6
7.02 Venture capital availability .....................................................38 .....■ .................3.0 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................25 .....■ .................3.6 Panama..................................5.2
7.04 Financing through local equity market ..................................20 .....■ .................4.5 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................33 .....■ .................3.2 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................51 .....■ .................0.5 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................32 .....■ ...............12.5 Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................12 .....■ ..........1,353.1 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 152

2: Country/Economy Profiles

Jordan
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................5.9 16.1% US$ bn
GDP (US$ billions), 2008 ...........................................................20.0 ■ Public debt securities .........11.5
GDP (current prices) per capita, 2008 ..............................3,421.4 ■ Private debt securities.........n/a
GDP (PPP) as share (%) of world total, 2008 ........................0.05 ■ Banking deposits .................18.7
57.7%
Average rate of real GDP growth (%), 2004–08....................7.45 26.2%
■ Equity securities ..................41.2

Total 71.4

Total/GDP: 432.1%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................25 3.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................23 4.7


Financial sector liberalization ....................................................20 6.3
Corporate governance.................................................................41 4.3
Legal and regulatory issues .......................................................25 4.2
Contract enforcement..................................................................38 4.1
2nd pillar: Business environment .............................................37 4.1
Human capital ...............................................................................35 4.1
152
Taxes...............................................................................................23 5.1
Infrastructure ................................................................................40 3.4
Cost of doing business ................................................................48 3.9
3rd pillar: Financial stability......................................................50 3.8
Currency stability..........................................................................51 2.6
Banking system stability..............................................................16 5.6
Risk of sovereign debt crisis ......................................................50 2.6
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................15 4.4


Size index .........................................................................................9 4.7
Efficiency index.............................................................................11 5.8
Financial information disclosure................................................52 1.1
5th pillar: Non-banking financial services .............................23 2.6
IPO activity.....................................................................................16 2.8
M&A activity..................................................................................31 1.6
Insurance .....................................................................................n/a n/a
Securitization.................................................................................15 3.3
6th pillar: Financial markets......................................................13 3.8
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................14 3.8
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................20 3.7


Commercial access........................................................................9 4.5
Retail access.................................................................................20 3.0
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 153

2: Country/Economy Profiles
Jordan
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......21 .....■ ...............49.4 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ................................n/a .........................n/a Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................52 .....■ .................3.5 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................33 .....■ .................4.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................41 .....■ .................4.2 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................37 .....■ .................4.0 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................19 .....■ .................5.4 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................23 .....■ .................5.0 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests........................9 .....■ .................5.3 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................7 .....■ .................4.0 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................38 .....■ .................2.8 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................18 .....■ .................5.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................18 .....■ .................5.8 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................22 .....■ .................4.7 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................23 .....■ .................4.7 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................17 .....■ .................3.9 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................26 .....■ .................5.1 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 153
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................30 .....■ .................3.7 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................21 .....■ .................5.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................22 .....■ .................5.1 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................45 .....■ .............689.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................41 .....■ ...............39.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................47 .....■ .................4.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................42 .....■ ...............31.2 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................33 .....■ .................4.3 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................22 .....■ .................4.7 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................38 .....■ .................4.0 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................32 .....■ .................4.5 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................48 .....■ .................3.4 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................34 .....■ ...............39.0 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................22 .....■ .................5.2 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......21 .....■ .................4.5 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................33 .....■ .................9.9 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................9 .....■ .............101.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................21 .....■ .................5.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................17 .....■ .................6.6 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................44 .....■ ...............19.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................45 .....■ .................1.5 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................47 .....■ .................9.9 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................40 .....■ ...............80.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 154

2: Country/Economy Profiles

Jordan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................52 .....■ ...............60.4 Denmark................................0.0
2.18 Cost of registering property ..................................................50 .....■ ...............10.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................20 .....■ .................9.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................21 .....■ ...............14.0 Australia.................................2.0
2.21 Time to register property.......................................................20 .....■ ...............22.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................48 .....■ .................4.3 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................36 .....■ .................0.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................25 .....■ .............112.9 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................55 .....■ .............–12.7 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................29 .....■ ...............90.0 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................20 .....■ .................1.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria
Nigeria ...................................0.3
...................................0.3
154 3.10 Aggregate measure of real estate bubbles.............................8 .....■ .................6.1 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................39 .....■ ...............12.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................44 .....■ .................9.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................50 .....■ .................3.5 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................44 .....■ ...............62.2 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................14 .....■ .............116.3 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ....................................................9 .....■ .................5.7 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................8 .....■ .............111.7 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................9 .....■ .............126.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................21 .....■ ...............92.5 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP .............................................................9 .....■ .............111.7 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................12 .....■ .................4.7 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................17 .....■ .................2.0 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................21 .....■ .................2.0 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................38 .....■ .................4.0 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................20 .....■ .................1.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................46 .....■ .................0.1 China ...................................19.3
5.02 IPO proceeds amount .............................................................7 .....■ .................1.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................34 .....■ .................0.3 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 155

2: Country/Economy Profiles
Jordan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................50 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................18 .....■ .................4.7 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................50 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct..................................................n/a .........................n/a United States ..........1,230,526.0
5.08 Insurance density .................................................................n/a .........................n/a United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums ..........................n/a .........................n/a United Arab Emirates ............0.3
5.10 Insurance penetration...........................................................n/a .........................n/a United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................12 .....■ .................1.9 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................6 .....■ .................6.5 United States ......................16.3
5.13 Share of total number of securitization deals .......................54 .....■ .................0.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 155
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................40 .....■ ...............48.9 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.........................................4 .....■ .............225.2 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................20 .....■ .............110.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people.....................9 .....■ .................0.4 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................33 .....■ .................4.8 Switzerland............................6.6
7.02 Venture capital availability .....................................................32 .....■ .................3.1 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................11 .....■ .................4.2 Panama..................................5.2
7.04 Financing through local equity market ....................................4 .....■ .................4.9 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................30 .....■ .................3.4 Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................5 .....■ ...............11.1 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................21 .....■ ........81,423.0 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................25 .....■ ...............16.2 Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................7 .....■ ...............12.4 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 156

2: Country/Economy Profiles

Kazakhstan
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................15.6 7.3% US$ bn
GDP (US$ billions), 2008 .........................................................132.2 ■ Public debt securities ...........8.1
GDP (current prices) per capita, 2008 ..............................8,502.1 37.4% ■ Private debt securities........29.5
26.6%
GDP (PPP) as share (%) of world total, 2008 ........................0.26 ■ Banking deposits .................31.8
Average rate of real GDP growth (%), 2004–08....................8.42 ■ Equity securities ..................41.4

Total 110.8

Total/GDP: 105.6%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................47 2.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................47 3.4


Financial sector liberalization ....................................................49 2.2
Corporate governance.................................................................49 3.9
Legal and regulatory issues .......................................................48 3.1
Contract enforcement..................................................................29 4.3
2nd pillar: Business environment .............................................41 4.1
Human capital ...............................................................................40 3.8
156
Taxes...............................................................................................43 4.0
Infrastructure ................................................................................44 3.0
Cost of doing business ................................................................25 5.4
3rd pillar: Financial stability......................................................54 3.5
Currency stability..........................................................................49 3.0
Banking system stability..............................................................50 3.9
Risk of sovereign debt crisis ......................................................42 3.5
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................48 2.5


Size index .......................................................................................46 1.5
Efficiency index.............................................................................45 3.9
Financial information disclosure................................................38 1.8
5th pillar: Non-banking financial services .............................20 2.8
IPO activity.....................................................................................13 3.1
M&A activity..................................................................................41 1.4
Insurance .......................................................................................41 1.8
Securitization...................................................................................4 4.9
6th pillar: Financial markets......................................................51 1.4
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................49 1.4
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................46 2.9


Commercial access......................................................................37 3.5
Retail access.................................................................................40 2.3
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 157

2: Country/Economy Profiles
Kazakhstan
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services......n/a .........................n/a Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................47 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................45 .....■ .................4.0 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................47 .....■ .................4.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................53 .....■ .................3.9 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................48 .....■ .................3.4 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................47 .....■ .................4.1 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................43 .....■ .................3.6 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................49 .....■ .................3.7 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................30 .....■ .................3.0 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................24 .....■ .................3.4 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................54 .....■ .................3.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................50 .....■ .................3.6 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................41 .....■ .................3.2 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................37 .....■ .................3.2 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................31 .....■ .................3.1 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................52 .....■ .................2.2 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 157
1.21 Strength of legal rights index ................................................36 .....■ .................5.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................28 .....■ .................3.7 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................49 .....■ .................3.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................42 .....■ .................3.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................3 .....■ .............230.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................38 .....■ ...............38.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................22 .....■ ...............22.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................49 .....■ .................3.6 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................35 .....■ .................3.9 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................44 .....■ .................3.7 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................41 .....■ .................4.0 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................46 .....■ .................3.6 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................28 .....■ ...............47.0 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................42 .....■ .................3.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......51 .....■ .................3.6 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................44 .....■ ...............14.4 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................33 .....■ .............271.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................38 .....■ .................3.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................51 .....■ .................5.0 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................48 .....■ ...............12.3 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................42 .....■ .................1.8 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................35 .....■ ...............21.0 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................41 .....■ ...............79.9 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 158

2: Country/Economy Profiles

Kazakhstan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................21 .....■ .................5.2 Denmark................................0.0
2.18 Cost of registering property ....................................................2 .....■ .................0.1 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................37 .....■ ...............18.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................30 .....■ ...............21.0 Australia.................................2.0
2.21 Time to register property.......................................................32 .....■ ...............40.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................38 .....■ .................3.3 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................36 .....■ .................0.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................31 .....■ .............201.8 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................15 .....■ .................5.3 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................31 .....■ ...............26.7 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................30 .....■ ...............93.5 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................41 .....■ .................2.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................47 .....■ .................2.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................29 .....■ ...............32.7 Nigeria
Nigeria ...................................0.3
...................................0.3
158 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................40 .....■ ...............11.9 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................39 .....■ ...............10.9 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................47 .....■ .................4.2 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt ...................................................4 .....■ .................8.6 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................43 .....■ .............508.9 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................39 .....■ ...............49.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................41 .....■ .................0.2 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................46 .....■ ...............26.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................48 .....■ ...............40.0 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................33 .....■ ...............48.2 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................48 .....■ ...............26.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................19 .....■ .................4.4 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................35 .....■ .................3.1 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................44 .....■ ...............36.4 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................44 .....■ .................5.4 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................45 .....■ .................6.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................32 .....■ ...............25.6 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................27 .....■ .................0.7 China ...................................19.3
5.02 IPO proceeds amount .............................................................5 .....■ .................1.4 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................40 .....■ .................0.2 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 159

2: Country/Economy Profiles
Kazakhstan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................43 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................33 .....■ .................2.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................49 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................45 .....■ ..........1,202.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................42 .....■ ...............78.0 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................19 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................45 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP ...........................n/a .........................n/a Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................4 .....■ .................8.4 United States ......................16.3
5.13 Share of total number of securitization deals .......................16 .....■ .................0.9 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 159
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................47 .....■ ...............20.7 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................43 .....■ ...............41.3 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................46 .....■ .................8.6 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................28 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................51 .....■ .................3.5 Switzerland............................6.6
7.02 Venture capital availability .....................................................40 .....■ .................2.9 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................46 .....■ .................2.9 Panama..................................5.2
7.04 Financing through local equity market ..................................51 .....■ .................3.1 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................46 .....■ .................2.7 Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................6 .....■ .................9.8 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................17 .....■ ...............21.6 Italy......................................53.0
7.09 Total number of ATMs...........................................................22 .....■ ...............52.8 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................28 .....■ .............173.2 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................14 .....■ .................3.4 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 160

2: Country/Economy Profiles

Korea, Rep.
Key indicators Financial assets by major type, 2007
11.2%
Population (millions), 2008 .......................................................48.6 US$ bn
GDP (US$ billions), 2008 .........................................................947.0 ■ Public debt securities .......308.4
GDP (current prices) per capita, 2008 ............................19,504.5 40.8%
25.9% ■ Private debt securities......713.5
GDP (PPP) as share (%) of world total, 2008 ........................1.85 ■ Banking deposits ...............608.0
Average rate of real GDP growth (%), 2004–08....................4.22 ■ Equity securities .............1,123.6

Total 2,753.5
22.1%
Total/GDP: 262.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................23 3.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................31 4.3


Financial sector liberalization ....................................................37 3.6
Corporate governance.................................................................31 4.6
Legal and regulatory issues .......................................................27 4.0
Contract enforcement..................................................................21 4.8
2nd pillar: Business environment .............................................16 5.3
Human capital ...............................................................................15 5.0
160
Taxes...............................................................................................31 4.7
Infrastructure ................................................................................11 5.8
Cost of doing business ................................................................15 5.8
3rd pillar: Financial stability......................................................28 4.7
Currency stability..........................................................................19 4.6
Banking system stability..............................................................43 4.5
Risk of sovereign debt crisis ......................................................22 5.2
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................22 4.2


Size index .......................................................................................26 3.1
Efficiency index.............................................................................19 5.4
Financial information disclosure................................................16 3.7
5th pillar: Non-banking financial services .............................18 3.0
IPO activity.....................................................................................14 3.1
M&A activity..................................................................................18 2.7
Insurance .........................................................................................6 4.5
Securitization.................................................................................36 1.7
6th pillar: Financial markets......................................................20 3.3
Foreign exchange markets .........................................................15 1.9
Derivatives markets .....................................................................18 3.3
Equity market development ........................................................11 4.5
Bond market development..........................................................18 3.3
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................52 2.5


Commercial access......................................................................47 3.2
Retail access.................................................................................45 1.8
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 161

2: Country/Economy Profiles
Korea, Rep.
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................36 .....■ .................0.2 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services......n/a .........................n/a Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................38 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................38 .....■ .................4.3 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................31 .....■ .................4.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................29 .....■ .................4.9 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................43 .....■ .................3.7 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................34 .....■ .................4.9 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................28 .....■ .................4.6 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................41 .....■ .................4.3 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................11 .....■ ...............12.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................36 .....■ .................2.8 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................27 .....■ .................3.3 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................32 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................29 .....■ .................5.0 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................26 .....■ .................4.2 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................25 .....■ .................4.1 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................34 .....■ .................2.8 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................23 .....■ .................5.6 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 161
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................47 .....■ .................2.6 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................32 .....■ .................4.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................27 .....■ .................4.8 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................3 .....■ .............230.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................29 .....■ ...............35.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................34 .....■ .................5.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts.....................................................3 .....■ ...............10.3 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................28 .....■ .................4.5 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................11 .....■ .................5.2 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................22 .....■ .................4.7 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................27 .....■ .................4.6 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................33 .....■ .................4.1 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ..................................................................2 .....■ ...............92.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................26 .....■ .................4.8 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......34 .....■ .................4.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................30 .....■ .................8.9 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................28 .....■ .............250.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................16 .....■ .................5.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................29 .....■ .................6.1 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ..........................................................................7 .....■ ...............76.3 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ..............................................7 .....■ ...............30.5 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................12 .....■ ...............46.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................30 .....■ ...............90.2 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 162

2: Country/Economy Profiles

Korea, Rep.
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................43 .....■ ...............16.9 Denmark................................0.0
2.18 Cost of registering property ..................................................39 .....■ .................5.1 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................26 .....■ ...............17.0 Australia.................................2.0
2.21 Time to register property.......................................................10 .....■ ...............11.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................16 .....■ .................1.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................11 .....■ .................3.8 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................18 .....■ ...............74.7 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................30 .....■ ...............–0.7 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................19 .....■ ...............40.9 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................32 .....■ .................5.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................35 .....■ ...............86.3 Nigeria
Nigeria ...................................0.3
...................................0.3
162 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................24 .....■ ...............16.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................26 .....■ ...............15.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................20 .....■ .................5.2 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................13 .....■ ...............24.4 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................29 .....■ .............196.9 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................19 .....■ .............107.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................25 .....■ .................1.3 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................23 .....■ ...............63.4 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................30 .....■ ...............66.8 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................16 .....■ .............100.9 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................23 .....■ ...............63.4 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................32 .....■ .................3.8 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................12 .....■ .................1.7 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................31 .....■ .................9.3 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................36 .....■ .................3.6 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................9 .....■ .................1.1 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................11 .....■ ...............90.4 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................16 .....■ .................1.4 China ...................................19.3
5.02 IPO proceeds amount ...........................................................29 .....■ .................0.3 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ................................................................7 .....■ .................5.6 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 163

2: Country/Economy Profiles
Korea, Rep.
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................14 .....■ .................1.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................24 .....■ .................4.0 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................15 .....■ .................1.9 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................7 .....■ ......116,384.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................19 .....■ ..........2,372.6 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................20 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................6 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................6 .....■ .................2.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ...........................................................n/a .........................n/a United States ......................16.3
5.13 Share of total number of securitization deals .......................20 .....■ .................0.4 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................11 .....■ .................1.4 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................14 .....■ .................1.2 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................19 .....■ .................0.5 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 163
agreements ...........................................................................23 .....■ .................0.1 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................17 .....■ .................0.3 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................18 .....■ .................0.2 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......6 .....■ .................3.2 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................19 .....■ .................0.3 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................5 .....■ .............200.5 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................25 .....■ .............101.5 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................11 .....■ .............203.5 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................12 .....■ .................0.4 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............6 .....■ ...............73.2 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............14 .....■ ...............47.7 Japan .................................198.6
6.15 Private international bonds to GDP .......................................23 .....■ ...............13.3 Ireland................................279.1
6.16 Public international bonds to GDP ........................................34 .....■ .................0.7 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................39 .....■ .................4.5 Switzerland............................6.6
7.02 Venture capital availability .....................................................41 .....■ .................2.8 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................16 .....■ .................4.0 Panama..................................5.2
7.04 Financing through local equity market ..................................27 .....■ .................4.3 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................44 .....■ .................2.8 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................55 .....■ .................0.0 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................31 .....■ ...............12.6 Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................18 .....■ .............673.7 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................25 .....■ .................0.1 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 164

2: Country/Economy Profiles

Kuwait
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................3.4 3.9% 1.3% US$ bn
GDP (US$ billions), 2008 .........................................................158.1 ■ Public debt securities .........10.9
GDP (current prices) per capita, 2008 ............................45,920.3
26.9% ■ Private debt securities..........3.6
GDP (PPP) as share (%) of world total, 2008 ........................0.20 ■ Banking deposits .................74.4
Average rate of real GDP growth (%), 2004–08....................6.97 ■ Equity securities ................188.0
67.9%
Total 276.9

Total/GDP: 247.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................30 3.6


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................36 3.9


Financial sector liberalization ....................................................35 3.8
Corporate governance.................................................................38 4.3
Legal and regulatory issues .......................................................37 3.5
Contract enforcement..................................................................36 4.2
2nd pillar: Business environment .............................................29 4.5
Human capital ...............................................................................48 3.5
164
Taxes...............................................................................................16 5.5
Infrastructure ................................................................................36 3.6
Cost of doing business ................................................................24 5.4
3rd pillar: Financial stability........................................................8 5.5
Currency stability..........................................................................18 4.6
Banking system stability................................................................6 5.8
Risk of sovereign debt crisis ......................................................11 5.9
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................28 3.8


Size index .......................................................................................33 2.5
Efficiency index...............................................................................8 6.0
Financial information disclosure................................................37 1.9
5th pillar: Non-banking financial services .............................54 1.1
IPO activity.....................................................................................51 1.0
M&A activity..................................................................................50 1.1
Insurance .......................................................................................52 1.1
Securitization.................................................................................47 1.3
6th pillar: Financial markets......................................................18 3.5
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................20 3.5
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................39 3.0


Commercial access......................................................................42 3.4
Retail access.................................................................................34 2.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 165

2: Country/Economy Profiles
Kuwait
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................32 .....■ .................1.2 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......38 .....■ ...............27.7 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................39 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................27 .....■ .................4.5 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................50 .....■ .................4.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................52 .....■ .................3.9 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................22 .....■ .................4.5 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................38 .....■ .................4.8 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................32 .....■ .................4.2 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................44 .....■ .................4.2 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................46 .....■ .................2.6 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................49 .....■ .................2.3 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................51 .....■ .................4.0 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................28 .....■ .................5.1 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................30 .....■ .................4.0 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................34 .....■ .................3.5 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................23 .....■ .................3.5 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................34 .....■ .................4.3 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 165
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................37 .....■ .................3.2 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................27 .....■ .................4.6 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................35 .....■ .................4.1 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................34 .....■ .............566.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................54 .....■ ...............50.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................16 .....■ .................6.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts.....................................................8 .....■ ...............13.3 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................50 .....■ .................3.6 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................40 .....■ .................3.5 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................39 .....■ .................3.9 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................48 .....■ .................3.8 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................16 .....■ .................4.7 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................48 .....■ ...............17.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................35 .....■ .................4.0 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......23 .....■ .................4.3 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ..............................................................4 .....■ ...............–3.7 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................12 .....■ .............118.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................28 .....■ .................4.7 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................48 .....■ .................5.4 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................30 .....■ ...............31.6 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................47 .....■ .................0.9 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................38 .....■ ...............18.7 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................29 .....■ ...............97.3 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 166

2: Country/Economy Profiles

Kuwait
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................12 .....■ .................1.3 Denmark................................0.0
2.18 Cost of registering property ....................................................6 .....■ .................0.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................1 .....■ .................1.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................45 .....■ ...............35.0 Australia.................................2.0
2.21 Time to register property.......................................................43 .....■ ...............55.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................46 .....■ .................4.2 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................36 .....■ .................0.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................30 .....■ .............148.0 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................1 .....■ ...............44.7 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................14 .....■ ...............31.6 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................17 .....■ .................0.8 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt..................................................9 .....■ .................2.6 Nigeria
Nigeria ...................................0.3
...................................0.3
166 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................21 .....■ ...............17.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................20 .....■ ...............17.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................18 .....■ .................5.3 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt ...................................................3 .....■ .................7.5 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................33 .....■ ...............61.1 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................31 .....■ ...............52.4 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................40 .....■ ...............54.9 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................31 .....■ ...............61.5 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................32 .....■ ...............52.4 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................4 .....■ .................6.0 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................10 .....■ .................1.6 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................33 .....■ ...............14.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................26 .....■ .................2.6 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................33 .....■ .................3.1 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................30 .....■ ...............31.2 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................51 .....■ .................0.0 China ...................................19.3
5.02 IPO proceeds amount ...........................................................51 .....■ .................0.0 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................50 .....■ .................0.0 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 167

2: Country/Economy Profiles
Kuwait
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................47 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................48 .....■ .................1.5 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................47 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................51 .....■ .............701.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................32 .....■ .............245.8 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums ..........................n/a .........................n/a United Arab Emirates ............0.3
5.10 Insurance penetration............................................................53 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................49 .....■ .................0.2 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................43 .....■ .................0.9 United States ......................16.3
5.13 Share of total number of securitization deals .......................49 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 167
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................29 .....■ ...............75.8 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................14 .....■ .............128.3 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................30 .....■ ...............54.7 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people.....................7 .....■ .................0.7 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................37 .....■ .................4.5 Switzerland............................6.6
7.02 Venture capital availability .....................................................24 .....■ .................3.4 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................29 .....■ .................3.5 Panama..................................5.2
7.04 Financing through local equity market ..................................36 .....■ .................4.1 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................19 .....■ .................3.8 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................54 .....■ .................0.1 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................26 .....■ ...............15.1 Italy......................................53.0
7.09 Total number of ATMs...........................................................24 .....■ ...............50.1 Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 168

2: Country/Economy Profiles

Malaysia
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................27.3 10.0% US$ bn
GDP (US$ billions), 2008 .........................................................222.2 ■ Public debt securities .........77.6
GDP (current prices) per capita, 2008 ..............................8,140.7 18.6% ■ Private debt securities......144.0
42.2%
GDP (PPP) as share (%) of world total, 2008 ........................0.56 ■ Banking deposits ...............225.1
Average rate of real GDP growth (%), 2004–08....................5.78 ■ Equity securities ................325.7

Total 772.4
29.1%
Total/GDP: 413.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................22 4.0


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................22 4.9


Financial sector liberalization ....................................................28 5.0
Corporate governance.................................................................18 5.0
Legal and regulatory issues .......................................................20 4.6
Contract enforcement..................................................................19 4.9
2nd pillar: Business environment .............................................30 4.5
Human capital ...............................................................................26 4.4
168
Taxes...............................................................................................28 4.8
Infrastructure ................................................................................29 4.1
Cost of doing business ................................................................39 4.7
3rd pillar: Financial stability......................................................13 5.1
Currency stability............................................................................8 5.6
Banking system stability..............................................................33 4.8
Risk of sovereign debt crisis ......................................................27 5.1
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................12 4.7


Size index .......................................................................................18 3.8
Efficiency index.............................................................................35 4.6
Financial information disclosure..................................................1 6.4
5th pillar: Non-banking financial services .............................25 2.4
IPO activity.....................................................................................25 2.0
M&A activity..................................................................................14 3.7
Insurance .......................................................................................40 1.9
Securitization.................................................................................26 2.2
6th pillar: Financial markets......................................................29 2.5
Foreign exchange markets .........................................................37 1.1
Derivatives markets .....................................................................34 1.1
Equity market development ........................................................23 3.2
Bond market development..........................................................15 3.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................22 3.7


Commercial access......................................................................14 4.3
Retail access.................................................................................18 3.1
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 169

2: Country/Economy Profiles
Malaysia
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................38 .....■ ...............–0.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......25 .....■ ...............44.6 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................13 .....■ .................4.7 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................19 .....■ .................5.1 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................21 .....■ .................5.3 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................17 .....■ .................4.6 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................28 .....■ .................5.2 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................27 .....■ .................4.7 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................14 .....■ .................5.1 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................5 .....■ ...............13.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................6 .....■ .................4.1 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................16 .....■ .................3.8 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................21 .....■ .................5.0 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................26 .....■ .................5.2 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................24 .....■ .................4.5 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................26 .....■ .................4.1 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................19 .....■ .................3.8 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................26 .....■ .................5.1 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 169
1.21 Strength of legal rights index ..................................................1 .....■ ...............10.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................10 .....■ .................4.7 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................28 .....■ .................4.2 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................34 .....■ .................4.2 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................38 .....■ .............600.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................3 .....■ .................8.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................37 .....■ ...............27.5 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................24 .....■ .................4.8 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................19 .....■ .................4.8 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................14 .....■ .................4.9 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................21 .....■ .................4.9 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................23 .....■ .................4.4 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................42 .....■ ...............28.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................34 .....■ .................4.2 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......27 .....■ .................4.2 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................32 .....■ .................9.2 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................17 .....■ .............145.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................19 .....■ .................5.4 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................36 .....■ .................5.9 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................19 .....■ ...............55.7 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................35 .....■ .................3.8 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................42 .....■ ...............16.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................33 .....■ ...............87.9 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 170

2: Country/Economy Profiles

Malaysia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................38 .....■ ...............14.7 Denmark................................0.0
2.18 Cost of registering property ..................................................21 .....■ .................2.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................30 .....■ ...............15.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................17 .....■ ...............13.0 Australia.................................2.0
2.21 Time to register property.......................................................52 .....■ .............144.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................27 .....■ .................2.3 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................46 .....■ ...............–2.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator.................................................3 .....■ ...............21.1 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................4 .....■ ...............17.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................12 .....■ ...............30.2 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................32 .....■ .................5.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................36 .....■ .............122.4 Nigeria
Nigeria ...................................0.3
...................................0.3
170 3.10 Aggregate measure of real estate bubbles.............................4 .....■ .................6.4 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................24 .....■ ...............16.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................30 .....■ ...............14.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................21 .....■ .................5.2 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................28 .....■ ...............40.0 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................19 .....■ .............117.8 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................20 .....■ .............106.8 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................28 .....■ .................0.9 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................10 .....■ .............109.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................10 .....■ .............120.7 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................17 .....■ .............100.7 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................10 .....■ .............109.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................21 .....■ .................4.2 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................13 .....■ .................1.7 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................49 .....■ ...............50.3 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................18 .....■ .................1.8 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................42 .....■ .................5.1 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage.............................................n/a .........................n/a Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ................................................3 .....■ ...............52.9 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................40 .....■ .................0.2 China ...................................19.3
5.02 IPO proceeds amount ...........................................................32 .....■ .................0.3 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................13 .....■ .................2.5 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 171

2: Country/Economy Profiles
Malaysia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................22 .....■ .................0.6 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................7 .....■ ...............10.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................12 .....■ .................2.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................30 .....■ ..........8,512.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................30 .....■ .............320.3 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................43 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................25 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................24 .....■ .................1.1 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................16 .....■ .................2.9 United States ......................16.3
5.13 Share of total number of securitization deals .......................29 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................33 .....■ .................0.1 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................34 .....■ .................0.1 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................33 .....■ .................0.1 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 171
agreements ...........................................................................28 .....■ .................0.0 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................31 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................29 .....■ .................0.0 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....30 .....■ .................0.1 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................36 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................39 .....■ ...............53.2 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.........................................6 .....■ .............156.0 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................24 .....■ ...............83.0 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................11 .....■ .................0.4 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............2 .....■ ...............98.0 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............21 .....■ ...............39.6 Japan .................................198.6
6.15 Private international bonds to GDP .......................................21 .....■ ...............24.2 Ireland................................279.1
6.16 Public international bonds to GDP ........................................25 .....■ .................3.1 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................26 .....■ .................5.4 Switzerland............................6.6
7.02 Venture capital availability .....................................................10 .....■ .................3.9 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................9 .....■ .................4.2 Panama..................................5.2
7.04 Financing through local equity market ..................................11 .....■ .................4.7 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................10 .....■ .................4.3 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................26 .....■ .................4.5 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................7 .....■ ......222,673.9 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................34 .....■ ...............11.6 Italy......................................53.0
7.09 Total number of ATMs...........................................................27 .....■ ...............43.3 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................10 .....■ ..........1,412.9 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................9 .....■ .................7.8 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 172

2: Country/Economy Profiles

Mexico
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................106.3 19.5% US$ bn
GDP (US$ billions), 2008 ......................................................1,088.1 ■ Public debt securities .......204.2
37.9%
GDP (current prices) per capita, 2008 ............................10,234.8 ■ Private debt securities......214.7
GDP (PPP) as share (%) of world total, 2008 ........................2.24 ■ Banking deposits ...............232.4
Average rate of real GDP growth (%), 2004–08....................3.40 20.5% ■ Equity securities ................397.7

Total 1,049.0
22.2%
Total/GDP: 102.3%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................43 3.1


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................44 3.6


Financial sector liberalization ....................................................44 3.0
Corporate governance.................................................................39 4.3
Legal and regulatory issues .......................................................46 3.1
Contract enforcement..................................................................41 3.9
2nd pillar: Business environment .............................................43 3.9
Human capital ...............................................................................49 3.5
172
Taxes...............................................................................................42 4.1
Infrastructure ................................................................................42 3.2
Cost of doing business ................................................................37 4.8
3rd pillar: Financial stability......................................................14 5.1
Currency stability..........................................................................13 5.2
Banking system stability..............................................................22 5.3
Risk of sovereign debt crisis ......................................................31 4.8
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................54 2.4


Size index .......................................................................................51 1.1
Efficiency index.............................................................................49 3.3
Financial information disclosure................................................23 3.1
5th pillar: Non-banking financial services .............................35 2.0
IPO activity.....................................................................................39 1.6
M&A activity..................................................................................27 1.8
Insurance .......................................................................................37 2.2
Securitization.................................................................................24 2.5
6th pillar: Financial markets......................................................48 1.5
Foreign exchange markets .........................................................23 1.3
Derivatives markets .....................................................................29 1.5
Equity market development ........................................................48 1.4
Bond market development..........................................................36 1.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................43 2.9


Commercial access......................................................................49 3.1
Retail access.................................................................................23 2.8
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 173

2: Country/Economy Profiles
Mexico
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................37 .....■ .................1.2 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......46 .....■ ...............16.7 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................33 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................46 .....■ .................4.0 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................49 .....■ .................4.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................47 .....■ .................4.1 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................45 .....■ .................3.6 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................40 .....■ .................4.7 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................45 .....■ .................3.6 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................40 .....■ .................4.3 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................18 .....■ ...............11.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................47 .....■ .................2.6 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................30 .....■ .................3.1 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................36 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................44 .....■ .................4.0 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................42 .....■ .................3.2 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................47 .....■ .................2.9 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................42 .....■ .................2.1 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................36 .....■ .................3.6 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 173
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................45 .....■ .................2.6 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................45 .....■ .................3.2 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................40 .....■ .................3.6 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................20 .....■ .............415.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................38 .....■ ...............38.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................21 .....■ .................6.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................44 .....■ ...............32.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................31 .....■ .................4.4 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................53 .....■ .................2.6 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................41 .....■ .................3.8 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................37 .....■ .................4.2 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................42 .....■ .................3.7 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................44 .....■ ...............26.1 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................40 .....■ .................3.6 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......44 .....■ .................3.8 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................22 .....■ .................4.8 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................47 .....■ .............549.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................39 .....■ .................3.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................37 .....■ .................5.9 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................37 .....■ ...............22.4 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................34 .....■ .................4.3 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................39 .....■ ...............18.5 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................44 .....■ ...............62.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 174

2: Country/Economy Profiles

Mexico
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................34 .....■ ...............12.5 Denmark................................0.0
2.18 Cost of registering property ..................................................35 .....■ .................4.8 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................37 .....■ ...............18.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................36 .....■ ...............28.0 Australia.................................2.0
2.21 Time to register property.......................................................46 .....■ ...............74.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................20 .....■ .................1.8 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................35 .....■ .................0.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................13 .....■ ...............45.0 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................31 .....■ ...............–1.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................25 .....■ .................3.2 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .......................4 .....■ ...............21.6 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................41 .....■ .................2.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................24 .....■ ...............20.5 Nigeria
Nigeria ...................................0.3
...................................0.3
174 3.10 Aggregate measure of real estate bubbles...........................14 .....■ .................5.6 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................30 .....■ ...............15.8 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................32 .....■ ...............12.8 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................11 .....■ .................5.4 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................22 .....■ ...............35.8 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................32 .....■ .............228.2 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................48 .....■ ...............29.7 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................31 .....■ .................0.7 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................49 .....■ ...............21.1 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................54 .....■ ...............26.9 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................48 .....■ ...............20.0 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................51 .....■ ...............21.1 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................25 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................55 .....■ .................1.0 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................55 .....■ ...............12.1 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................22 .....■ .................6.5 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................49 .....■ .................6.1 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................22 .....■ .................2.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................15 .....■ ...............70.8 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................19 .....■ .................0.9 China ...................................19.3
5.02 IPO proceeds amount ...........................................................41 .....■ .................0.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................34 .....■ .................0.3 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 175

2: Country/Economy Profiles
Mexico
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................20 .....■ .................0.8 United States ......................41.7
5.05 M&A transaction value to GDP .............................................37 .....■ .................2.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................30 .....■ .................0.4 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................26 .....■ ........17,856.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................36 .....■ .............167.6 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................17 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................41 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................31 .....■ .................0.8 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................40 .....■ .................1.0 United States ......................16.3
5.13 Share of total number of securitization deals .......................13 .....■ .................1.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................22 .....■ .................0.4 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................32 .....■ .................0.1 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................21 .....■ .................0.5 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 175
agreements ...........................................................................24 .....■ .................0.1 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................20 .....■ .................0.2 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................21 .....■ .................0.1 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....34 .....■ .................0.0 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................26 .....■ .................0.1 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................44 .....■ ...............30.8 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................42 .....■ ...............42.0 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................44 .....■ ...............12.9 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................47 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............20 .....■ ...............15.4 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............30 .....■ ...............19.6 Japan .................................198.6
6.15 Private international bonds to GDP .......................................31 .....■ .................5.1 Ireland................................279.1
6.16 Public international bonds to GDP ........................................22 .....■ .................4.0 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................36 .....■ .................4.6 Switzerland............................6.6
7.02 Venture capital availability .....................................................50 .....■ .................2.4 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................32 .....■ .................3.4 Panama..................................5.2
7.04 Financing through local equity market ..................................48 .....■ .................3.3 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................45 .....■ .................2.7 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................41 .....■ .................2.4 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................19 .....■ ......101,362.8 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................28 .....■ ...............14.0 Italy......................................53.0
7.09 Total number of ATMs...........................................................30 .....■ ...............40.1 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................35 .....■ .................1.8 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................3 .....■ ...............21.0 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 176

2: Country/Economy Profiles

Netherlands
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................16.7 8.6% US$ bn
GDP (US$ billions), 2008 .........................................................868.9 23.6%
■ Public debt securities .......348.4
GDP (current prices) per capita, 2008 ............................52,019.0 ■ Private debt securities...1,694.7
GDP (PPP) as share (%) of world total, 2008 ........................0.98 ■ Banking deposits ............1,048.3
Average rate of real GDP growth (%), 2004–08....................2.63 ■ Equity securities ................956.5
41.9%
Total 4,047.9
25.9%

Total/GDP: 520.8%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................8 4.8


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................5 5.8


Financial sector liberalization ......................................................1 7.0
Corporate governance...................................................................4 5.6
Legal and regulatory issues .........................................................9 5.2
Contract enforcement..................................................................13 5.4
2nd pillar: Business environment ...............................................8 5.8
Human capital .................................................................................8 5.3
176
Taxes...............................................................................................13 5.6
Infrastructure ..................................................................................5 6.2
Cost of doing business ..................................................................9 6.1
3rd pillar: Financial stability......................................................21 4.9
Currency stability..........................................................................25 4.3
Banking system stability..............................................................41 4.5
Risk of sovereign debt crisis ........................................................7 6.0
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................7 4.9


Size index .........................................................................................3 5.6
Efficiency index.............................................................................31 4.9
Financial information disclosure................................................19 3.4
5th pillar: Non-banking financial services ...............................5 4.1
IPO activity.....................................................................................24 2.1
M&A activity....................................................................................5 5.1
Insurance .........................................................................................7 4.5
Securitization...................................................................................5 4.7
6th pillar: Financial markets......................................................10 4.2
Foreign exchange markets .........................................................18 1.7
Derivatives markets .....................................................................16 4.0
Equity market development ..........................................................5 5.3
Bond market development............................................................3 5.0
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................14 4.2


Commercial access........................................................................4 4.8
Retail access.................................................................................11 3.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 177

2: Country/Economy Profiles
Netherlands
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............74.6 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................23 .....■ .................4.6 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards ...................................................9 .....■ .................5.4 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management ...................................5 .....■ .................6.1 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate...........................................................3 .....■ .................5.8 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................10 .....■ .................5.9 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms..........................................................6 .....■ .................6.4 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................13 .....■ .................5.2 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................33 .....■ .................2.9 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................14 .....■ .................3.9 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................11 .....■ .................5.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................12 .....■ .................6.1 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection ...............................................7 .....■ .................5.8 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.........................................................8 .....■ .................5.9 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .........................................................8 .....■ .................5.3 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ..................................................6 .....■ .................8.9 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 177
1.21 Strength of legal rights index ................................................29 .....■ .................6.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................13 .....■ .................4.7 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence .............................................................7 .....■ .................6.4 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ..................................7 .....■ .................6.1 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................30 .....■ .............514.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .........................4 .....■ ...............25.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................43 .....■ .................4.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................29 .....■ ...............24.4 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................9 .....■ .................5.5 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................10 .....■ .................5.2 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training.............................................................9 .....■ .................5.2 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services ...............................................................4 .....■ .................6.0 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................10 .....■ .................4.9 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................17 .....■ ...............59.8 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ........................................7 .....■ .................6.0 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......12 .....■ .................4.8 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................21 .....■ .................3.7 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................20 .....■ .............180.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................15 .....■ .................5.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................14 .....■ .................6.7 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ..........................................................................2 .....■ ...............84.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ..............................................3 .....■ ...............33.5 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................14 .....■ ...............44.7 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................13 .....■ .............117.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 178

2: Country/Economy Profiles

Netherlands
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................25 .....■ .................5.9 Denmark................................0.0
2.18 Cost of registering property ..................................................42 .....■ .................6.1 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................12 .....■ ...............10.0 Australia.................................2.0
2.21 Time to register property.........................................................5 .....■ .................5.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................11 .....■ .................1.1 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................23 .....■ .................1.7 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................17 .....■ .................4.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................11 .....■ ...............–0.5 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................41 .....■ .................2.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................10 .....■ .................8.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................42 .....■ .............230.4 Nigeria
Nigeria ...................................0.3
...................................0.3
178 3.10 Aggregate measure of real estate bubbles...........................11 .....■ .................6.0 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................10 .....■ .................5.5 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................43 .....■ ...............58.1 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads ...................................................8 .....■ ...............57.8 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................2 .....■ .............188.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................42 .....■ .................0.1 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................7 .....■ .............115.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................7 .....■ .............132.6 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................4 .....■ .............179.1 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP .............................................................8 .....■ .............115.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................3 .....■ ...............10.6 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................5 .....■ .................5.7 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................50 .....■ .................5.7 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................45 .....■ ...............38.6 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................10 .....■ .................1.2 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ............................n/a .........................n/a Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................12 .....■ ...............81.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................17 .....■ .................1.4 China ...................................19.3
5.02 IPO proceeds amount ...........................................................24 .....■ .................0.4 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................23 .....■ .................0.7 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 179

2: Country/Economy Profiles
Netherlands
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................6 .....■ .................3.5 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................3 .....■ ...............14.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................16 .....■ .................1.7 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................8 .....■ ......102,831.0 United States ..........1,230,526.0
5.08 Insurance density ....................................................................3 .....■ ..........6,262.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................41 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................3 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................13 .....■ .................1.8 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................5 .....■ .................8.2 United States ......................16.3
5.13 Share of total number of securitization deals .......................18 .....■ .................0.7 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................27 .....■ .................0.2 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................13 .....■ .................1.3 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................17 .....■ .................0.7 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 179
agreements ...........................................................................17 .....■ .................0.3 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ...............................8 .....■ .................1.6 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................16 .....■ .................0.2 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....13 .....■ .................1.0 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................18 .....■ .................0.3 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................4 .....■ .............206.5 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................19 .....■ .............115.8 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................5 .....■ .............239.1 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people..................n/a .........................n/a Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............5 .....■ ...............80.2 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ...............8 .....■ ...............52.3 Japan .................................198.6
6.15 Private international bonds to GDP .........................................3 .....■ .............151.1 Ireland................................279.1
6.16 Public international bonds to GDP ........................................28 .....■ .................2.4 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................8 .....■ .................6.2 Switzerland............................6.6
7.02 Venture capital availability .......................................................7 .....■ .................4.1 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................50 .....■ .................2.7 Panama..................................5.2
7.04 Financing through local equity market ..................................32 .....■ .................4.2 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................12 .....■ .................4.2 Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................3 .....■ ...............12.8 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................11 .....■ ......177,209.4 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................10 .....■ ...............26.1 Italy......................................53.0
7.09 Total number of ATMs...........................................................17 .....■ ...............63.8 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................15 .....■ ..........1,030.4 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 180

2: Country/Economy Profiles

Nigeria
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................147.8 13.6% US$ bn
GDP (US$ billions), 2008 .........................................................214.4 0.3%
■ Public debt securities .........20.5
GDP (current prices) per capita, 2008 ..............................1,450.5 ■ Private debt securities..........0.5
GDP (PPP) as share (%) of world total, 2008 ........................0.46 ■ Banking deposits .................44.1
Average rate of real GDP growth (%), 2004–08....................6.78
57.0% ■ Equity securities ..................86.3
29.1%
Total 151.5

Total/GDP: 90.5%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................52 2.7


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................39 3.8


Financial sector liberalization ....................................................31 4.2
Corporate governance.................................................................47 4.0
Legal and regulatory issues .......................................................42 3.2
Contract enforcement..................................................................40 3.9
2nd pillar: Business environment .............................................53 2.9
Human capital ...............................................................................52 3.4
180
Taxes...............................................................................................48 3.2
Infrastructure ................................................................................54 2.0
Cost of doing business ................................................................53 3.2
3rd pillar: Financial stability......................................................29 4.7
Currency stability........................................................................n/a n/a
Banking system stability................................................................4 6.3
Risk of sovereign debt crisis ......................................................48 2.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................50 2.5


Size index .......................................................................................50 1.2
Efficiency index.............................................................................39 4.4
Financial information disclosure................................................54 1.0
5th pillar: Non-banking financial services .............................52 1.3
IPO activity.....................................................................................41 1.6
M&A activity..................................................................................48 1.2
Insurance .......................................................................................53 1.0
Securitization.................................................................................45 1.3
6th pillar: Financial markets......................................................53 1.3
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................50 1.3
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................53 2.5


Commercial access......................................................................35 3.6
Retail access.................................................................................48 1.3
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 181

2: Country/Economy Profiles
Nigeria
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................41 .....■ ...............–0.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......30 .....■ ...............51.1 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................23 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................51 .....■ .................3.6 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................42 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................37 .....■ .................4.5 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................36 .....■ .................4.0 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................49 .....■ .................3.9 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................49 .....■ .................3.5 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................38 .....■ .................4.4 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................27 .....■ .................3.1 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................34 .....■ .................2.9 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................30 .....■ .................4.6 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................47 .....■ .................3.9 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................43 .....■ .................3.1 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................51 .....■ .................2.3 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................53 .....■ .................1.6 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................46 .....■ .................2.7 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 181
1.21 Strength of legal rights index ................................................11 .....■ .................8.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................34 .....■ .................3.4 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................33 .....■ .................4.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................49 .....■ .................2.8 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................23 .....■ .............457.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................41 .....■ ...............39.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................44 .....■ ...............32.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................38 .....■ .................4.1 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................43 .....■ .................3.4 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................46 .....■ .................3.6 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................43 .....■ .................3.9 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................32 .....■ .................4.1 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................52 .....■ ...............10.2 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................50 .....■ .................2.8 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......20 .....■ .................4.5 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................29 .....■ .................8.2 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................53 .....■ .............938.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................55 .....■ .................2.4 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................42 .....■ .................5.6 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................52 .....■ .................6.8 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................54 .....■ .................0.0 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................54 .....■ .................1.1 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................52 .....■ ...............27.3 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 182

2: Country/Economy Profiles

Nigeria
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................55 .....■ ...............90.1 Denmark................................0.0
2.18 Cost of registering property ..................................................55 .....■ ...............21.9 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................45 .....■ ...............22.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................40 .....■ ...............31.0 Australia.................................2.0
2.21 Time to register property.......................................................47 .....■ ...............82.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................23 .....■ .................2.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate................................n/a .........................n/a Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................16 .....■ .................4.5 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator.................................................n/a .........................n/a Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt..................................................1 .....■ .................0.3 Nigeria
Nigeria ...................................0.3
...................................0.3
182 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................49 .....■ .................8.2 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................50 .....■ .................7.5 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................54 .....■ .................2.9 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt ...................................................8 .....■ ...............14.7 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................49 .....■ ...............23.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................20 .....■ .................1.9 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................52 .....■ ...............16.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................50 .....■ ...............37.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................51 .....■ ...............17.3 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................54 .....■ ...............16.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................15 .....■ .................4.5 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................44 .....■ .................4.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................46 .....■ .................5.6 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................44 .....■ .................6.1 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................23 .....■ .................0.1 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................37 .....■ .................0.3 China ...................................19.3
5.02 IPO proceeds amount ...........................................................28 .....■ .................0.3 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................41 .....■ .................0.2 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 183

2: Country/Economy Profiles
Nigeria
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................44 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................45 .....■ .................1.7 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................46 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................50 .....■ .............814.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................52 .....■ .................5.5 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums ..........................n/a .........................n/a United Arab Emirates ............0.3
5.10 Insurance penetration............................................................51 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP ...........................n/a .........................n/a Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................45 .....■ .................0.9 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................43 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 183
agreements ..........................................................................n/a .........................n/a United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................45 .....■ ...............28.2 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................47 .....■ ...............35.9 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................45 .....■ ...............10.1 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................45 .....■ .................0.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................45 .....■ .................4.1 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................49 .....■ .................2.4 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................24 .....■ .................3.6 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................16 .....■ .................4.6 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................54 .....■ .................2.1 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................17 .....■ .................7.4 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................35 .....■ ........18,500.0 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................15 .....■ .................3.0 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 184

2: Country/Economy Profiles

Norway
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................4.8 US$ bn
22.6%
GDP (US$ billions), 2008 .........................................................456.2 35.9% ■ Public debt securities .......225.0
GDP (current prices) per capita, 2008 ............................95,061.8 ■ Private debt securities......242.8
GDP (PPP) as share (%) of world total, 2008 ........................0.38 ■ Banking deposits ...............170.6
Average rate of real GDP growth (%), 2004–08....................2.81 ■ Equity securities ................357.4
24.4%
Total 995.9
17.1%
Total/GDP: 255.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................17 4.4


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................3 5.9


Financial sector liberalization ....................................................14 6.7
Corporate governance...................................................................2 5.7
Legal and regulatory issues .........................................................8 5.2
Contract enforcement....................................................................4 5.9
2nd pillar: Business environment ...............................................3 6.0
Human capital ...............................................................................10 5.3
184
Taxes.................................................................................................7 5.9
Infrastructure ..................................................................................8 6.0
Cost of doing business ..................................................................3 6.7
3rd pillar: Financial stability........................................................1 5.7
Currency stability............................................................................5 5.9
Banking system stability..............................................................18 5.5
Risk of sovereign debt crisis ........................................................9 6.0
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................16 4.3


Size index .......................................................................................30 2.9
Efficiency index...............................................................................9 6.0
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services .............................29 2.3
IPO activity.....................................................................................28 2.0
M&A activity..................................................................................17 2.8
Insurance .......................................................................................27 2.6
Securitization.................................................................................38 1.7
6th pillar: Financial markets......................................................27 2.7
Foreign exchange markets .........................................................19 1.7
Derivatives markets .....................................................................21 2.5
Equity market development ........................................................16 3.7
Bond market development..........................................................26 2.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................23 3.7


Commercial access......................................................................26 3.9
Retail access.................................................................................12 3.5
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 185

2: Country/Economy Profiles
Norway
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......17 .....■ ...............60.1 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................39 .....■ .................4.3 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards ...................................................6 .....■ .................5.6 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management ...................................2 .....■ .................6.2 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate...........................................................4 .....■ .................5.7 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards..........................4 .....■ .................6.1 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms..........................................................7 .....■ .................6.3 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests........................3 .....■ .................5.8 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................19 .....■ .................3.5 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................31 .....■ .................3.1 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................7 .....■ .................5.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.........................................................................9 .....■ .................6.3 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................11 .....■ .................5.7 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.........................................................6 .....■ .................6.0 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .........................................................5 .....■ .................5.7 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................11 .....■ .................7.9 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 185
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................5 .....■ .................5.4 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................10 .....■ .................6.2 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ..................................5 .....■ .................6.2 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................9 .....■ .............310.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................23 .....■ ...............33.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................13 .....■ .................6.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts.....................................................2 .....■ .................9.9 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................17 .....■ .................5.2 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................33 .....■ .................4.2 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training.............................................................6 .....■ .................5.4 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................15 .....■ .................5.4 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ............................8 .....■ .................5.0 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ..................................................................6 .....■ ...............77.5 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ........................................5 .....■ .................6.2 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ........8 .....■ .................5.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................20 .....■ .................3.6 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................8 .....■ ...............87.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................22 .....■ .................5.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .........................................2 .....■ .................6.9 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ..........................................................................1 .....■ ...............85.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ..............................................5 .....■ ...............30.6 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................18 .....■ ...............42.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................21 .....■ .............110.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 186

2: Country/Economy Profiles

Norway
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................14 .....■ .................2.1 Denmark................................0.0
2.18 Cost of registering property ..................................................21 .....■ .................2.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................1 .....■ .................1.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................12 .....■ ...............10.0 Australia.................................2.0
2.21 Time to register property.........................................................4 .....■ .................3.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................5 .....■ .................0.9 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................18 .....■ .................3.1 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................3 .....■ ...............18.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................4 .....■ ...............64.8 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................10 .....■ .................8.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................34 .....■ ...............85.1 Nigeria
Nigeria ...................................0.3
...................................0.3
186 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................22 .....■ .................5.2 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................40 .....■ ...............55.7 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads ...................................................1 .....■ ...............32.5 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................25 .....■ ...............83.3 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................33 .....■ ...............50.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................35 .....■ ...............58.9 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................15 .....■ .............102.0 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................33 .....■ ...............50.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................11 .....■ .................3.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................38 .....■ .................3.7 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................4 .....■ .................1.2 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................27 .....■ .................8.2 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets...............................................7 .....■ .................1.1 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................4 .....■ .................0.8 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................26 .....■ .................0.7 China ...................................19.3
5.02 IPO proceeds amount ...........................................................23 .....■ .................0.4 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................19 .....■ .................1.1 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 187

2: Country/Economy Profiles
Norway
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................19 .....■ .................0.9 United States ......................41.7
5.05 M&A transaction value to GDP .............................................11 .....■ .................7.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................21 .....■ .................0.9 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................25 .....■ ........19,451.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................10 .....■ ..........3,768.5 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................26 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................24 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................47 .....■ .................0.4 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................31 .....■ .................1.8 United States ......................16.3
5.13 Share of total number of securitization deals .......................36 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................25 .....■ .................0.3 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................17 .....■ .................0.6 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................14 .....■ .................1.2 United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 187
agreements .............................................................................8 .....■ .................1.6 United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................25 .....■ .................0.1 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................25 .....■ .................0.0 United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....26 .....■ .................0.1 United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................29 .....■ .................0.0 United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................13 .....■ .............147.0 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................29 .....■ ...............84.1 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................18 .....■ .............123.5 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people..................n/a .........................n/a Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............11 .....■ ...............31.0 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............31 .....■ ...............18.7 Japan .................................198.6
6.15 Private international bonds to GDP .......................................14 .....■ ...............54.0 Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................15 .....■ .................6.0 Switzerland............................6.6
7.02 Venture capital availability .......................................................2 .....■ .................4.4 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................39 .....■ .................3.0 Panama..................................5.2
7.04 Financing through local equity market ..................................19 .....■ .................4.6 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................4 .....■ .................4.6 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................53 .....■ .................0.2 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................14 .....■ ......161,080.0 Ukraine .......................375,499.3
7.08 Commercial bank branches.....................................................6 .....■ ...............35.0 Italy......................................53.0
7.09 Total number of ATMs...........................................................18 .....■ ...............59.7 Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................27 .....■ .............216.6 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 188

2: Country/Economy Profiles

Pakistan
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................160.5 US$ bn
GDP (US$ billions), 2008 .........................................................167.6 35.3% 37.0% ■ Public debt securities .........73.7
GDP (current prices) per capita, 2008 ..............................1,044.5 ■ Private debt securities..........0.6
GDP (PPP) as share (%) of world total, 2008 ........................0.64 ■ Banking deposits .................54.6
Average rate of real GDP growth (%), 2004–08....................6.64 ■ Equity securities ..................70.3
0.3% Total 199.2
27.4%
Total/GDP: 138.3%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................49 2.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................52 3.0


Financial sector liberalization ....................................................52 1.9
Corporate governance.................................................................48 3.9
Legal and regulatory issues .......................................................44 3.2
Contract enforcement..................................................................51 3.2
2nd pillar: Business environment .............................................50 3.4
Human capital ...............................................................................54 3.1
188
Taxes...............................................................................................51 3.1
Infrastructure ................................................................................52 2.3
Cost of doing business ................................................................28 5.2
3rd pillar: Financial stability......................................................48 4.1
Currency stability..........................................................................21 4.6
Banking system stability..............................................................29 5.0
Risk of sovereign debt crisis ......................................................54 2.4
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................46 2.6


Size index .......................................................................................38 2.1
Efficiency index.............................................................................46 3.8
Financial information disclosure................................................47 1.3
5th pillar: Non-banking financial services .............................51 1.4
IPO activity.....................................................................................37 1.6
M&A activity..................................................................................49 1.1
Insurance .......................................................................................47 1.7
Securitization.................................................................................51 1.2
6th pillar: Financial markets......................................................25 2.7
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................27 2.7
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................50 2.7


Commercial access......................................................................40 3.4
Retail access.................................................................................42 1.9
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 189

2: Country/Economy Profiles
Pakistan
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......47 .....■ .................6.6 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................46 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................50 .....■ .................3.6 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................51 .....■ .................3.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................49 .....■ .................4.0 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................47 .....■ .................3.5 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................44 .....■ .................4.4 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................47 .....■ .................3.6 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................47 .....■ .................4.1 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................22 .....■ .................3.3 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................33 .....■ .................3.1 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................42 .....■ .................4.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................49 .....■ .................3.8 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................47 .....■ .................3.0 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................41 .....■ .................3.1 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................38 .....■ .................2.3 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................49 .....■ .................2.5 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 189
1.21 Strength of legal rights index ................................................29 .....■ .................6.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................43 .....■ .................2.9 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................48 .....■ .................3.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................48 .....■ .................3.0 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................50 .....■ .............976.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................52 .....■ ...............47.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................16 .....■ .................6.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................27 .....■ ...............23.8 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................43 .....■ .................3.9 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................41 .....■ .................3.4 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................53 .....■ .................3.3 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................52 .....■ .................3.4 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................44 .....■ .................3.6 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................55 .....■ .................5.1 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................48 .....■ .................3.1 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......41 .....■ .................4.0 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................49 .....■ ...............21.1 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................48 .....■ .............560.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................45 .....■ .................3.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................46 .....■ .................5.4 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................49 .....■ ...............10.7 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................53 .....■ .................0.0 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................53 .....■ .................2.9 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................50 .....■ ...............38.4 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 190

2: Country/Economy Profiles

Pakistan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................35 .....■ ...............12.6 Denmark................................0.0
2.18 Cost of registering property ..................................................41 .....■ .................5.3 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................33 .....■ ...............24.0 Australia.................................2.0
2.21 Time to register property.......................................................39 .....■ ...............50.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................31 .....■ .................2.8 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................29 .....■ .................0.8 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator.................................................5 .....■ ...............28.1 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................51 .....■ ...............–8.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................30 .....■ ...............18.7 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................10 .....■ ...............27.9 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................47 .....■ .................2.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt..................................................3 .....■ .................0.4 Nigeria
Nigeria ...................................0.3
...................................0.3
190 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................52 .....■ .................5.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................51 .....■ .................5.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................44 .....■ .................4.5 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................38 .....■ ...............51.2 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................44 .....■ ...............38.3 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ....................................................7 .....■ .................6.7 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................43 .....■ ...............35.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................44 .....■ ...............50.0 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................45 .....■ ...............27.2 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................44 .....■ ...............34.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................41 .....■ .................3.6 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................26 .....■ .................2.5 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................42 .....■ ...............30.8 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................40 .....■ .................4.0 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................47 .....■ .................8.4 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................45 .....■ .................1.5 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................15 .....■ .................4.9 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................38 .....■ .................0.3 China ...................................19.3
5.02 IPO proceeds amount ...........................................................26 .....■ .................0.4 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................42 .....■ .................0.1 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 191

2: Country/Economy Profiles
Pakistan
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................45 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................47 .....■ .................1.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................51 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................47 .....■ ..........1,094.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................51 .....■ .................6.7 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................22 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................49 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................40 .....■ .................0.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................48 .....■ .................0.3 United States ......................16.3
5.13 Share of total number of securitization deals .......................34 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 191
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................9 .....■ .............172.8 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................45 .....■ ...............40.5 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................27 .....■ ...............70.0 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................35 .....■ .................0.0 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............25 .....■ ...............29.1 Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................47 .....■ .................4.0 Switzerland............................6.6
7.02 Venture capital availability .....................................................42 .....■ .................2.8 Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................28 .....■ .................3.5 Panama..................................5.2
7.04 Financing through local equity market ..................................31 .....■ .................4.2 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................32 .....■ .................3.2 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................34 .....■ .................3.7 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................34 .....■ ........22,607.0 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................40 .....■ .................7.5 Italy......................................53.0
7.09 Total number of ATMs...........................................................42 .....■ .................3.4 Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................4 .....■ ..........2,285.6 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................16 .....■ .................2.6 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 192

2: Country/Economy Profiles

Panama
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................3.4 18.2% US$ bn
GDP (US$ billions), 2008 ...........................................................23.1 30.6%
■ Public debt securities .........10.5
GDP (current prices) per capita, 2008 ..............................6,784.1 ■ Private debt securities..........1.3
GDP (PPP) as share (%) of world total, 2008 ........................0.06 ■ Banking deposits .................16.3
Average rate of real GDP growth (%), 2004–08....................8.79 3.7%
■ Equity securities ....................6.2

Total 34.2
47.6%
Total/GDP: 175.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................29 3.6


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................26 4.5


Financial sector liberalization ....................................................18 6.5
Corporate governance.................................................................32 4.6
Legal and regulatory issues .......................................................34 3.6
Contract enforcement..................................................................48 3.4
2nd pillar: Business environment .............................................39 4.1
Human capital ...............................................................................41 3.8
192
Taxes...............................................................................................44 3.9
Infrastructure ................................................................................39 3.4
Cost of doing business ................................................................27 5.2
3rd pillar: Financial stability......................................................35 4.6
Currency stability..........................................................................45 3.6
Banking system stability................................................................9 5.7
Risk of sovereign debt crisis ......................................................39 4.0
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................24 4.0


Size index .......................................................................................19 3.7
Efficiency index.............................................................................23 5.3
Financial information disclosure................................................31 2.3
5th pillar: Non-banking financial services .............................46 1.6
IPO activity.....................................................................................53 1.0
M&A activity..................................................................................37 1.6
Insurance .......................................................................................34 2.3
Securitization.................................................................................41 1.5
6th pillar: Financial markets......................................................28 2.6
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................53 1.2
Bond market development..........................................................11 4.1
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................17 4.0


Commercial access........................................................................3 4.8
Retail access.................................................................................17 3.1
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 193

2: Country/Economy Profiles
Panama
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......22 .....■ ...............53.0 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................21 .....■ .................4.6 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................27 .....■ .................4.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................38 .....■ .................4.4 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................27 .....■ .................4.3 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................29 .....■ .................5.1 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................34 .....■ .................4.0 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................34 .....■ .................4.5 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................13 .....■ ...............12.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................15 .....■ .................3.7 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................44 .....■ .................2.6 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................16 .....■ .................5.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................30 .....■ .................4.9 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................33 .....■ .................3.8 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................36 .....■ .................3.4 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................39 .....■ .................2.2 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................42 .....■ .................3.4 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 193
1.21 Strength of legal rights index ................................................29 .....■ .................6.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................50 .....■ .................2.5 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................50 .....■ .................3.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................36 .....■ .................4.0 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................44 .....■ .............686.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................19 .....■ ...............31.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................43 .....■ .................4.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................52 .....■ ...............50.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................53 .....■ .................3.6 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................47 .....■ .................3.0 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................35 .....■ .................4.1 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................46 .....■ .................3.9 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................25 .....■ .................4.3 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................32 .....■ ...............45.5 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................36 .....■ .................3.9 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......33 .....■ .................4.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................42 .....■ ...............13.1 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................45 .....■ .............482.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................37 .....■ .................4.0 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................33 .....■ .................6.1 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................38 .....■ ...............22.3 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................33 .....■ .................4.3 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................45 .....■ ...............14.8 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................31 .....■ ...............90.0 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 194

2: Country/Economy Profiles

Panama
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................47 .....■ ...............19.6 Denmark................................0.0
2.18 Cost of registering property ..................................................19 .....■ .................2.4 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................37 .....■ ...............18.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................17 .....■ ...............13.0 Australia.................................2.0
2.21 Time to register property.......................................................36 .....■ ...............44.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................28 .....■ .................2.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................47 .....■ ...............–2.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................10 .....■ ...............38.9 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................54 .....■ .............–12.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................24 .....■ ...............51.2 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................20 .....■ .................1.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................32 .....■ .................5.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................18 .....■ .................7.3 Nigeria
Nigeria ...................................0.3
...................................0.3
194 3.10 Aggregate measure of real estate bubbles.............................6 .....■ .................6.3 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................44 .....■ ...............10.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................41 .....■ ...............10.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ......................................7 .....■ .................5.7 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................34 .....■ ...............45.0 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................33 .....■ .............229.4 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................27 .....■ ...............80.7 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ....................................................4 .....■ ...............12.8 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................18 .....■ ...............77.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................19 .....■ ...............91.5 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................28 .....■ ...............77.5 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................19 .....■ ...............77.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................14 .....■ .................4.6 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................37 .....■ .................3.3 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................42 .....■ .................5.0 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................11 .....■ .................1.4 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................22 .....■ ...............43.7 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................53 .....■ .................0.0 China ...................................19.3
5.02 IPO proceeds amount ...........................................................53 .....■ .................0.0 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................53 .....■ .................0.0 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 195

2: Country/Economy Profiles
Panama
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................49 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................21 .....■ .................4.2 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................53 .....■ .................0.0 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................52 .....■ .............607.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................35 .....■ .............181.5 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................9 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................32 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................39 .....■ .................0.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................34 .....■ .................1.5 United States ......................16.3
5.13 Share of total number of securitization deals .......................53 .....■ .................0.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 195
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................54 .....■ .................2.0 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................51 .....■ ...............30.4 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................53 .....■ .................0.6 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................26 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
6.15 Private international bonds to GDP .......................................27 .....■ .................7.2 Ireland................................279.1
6.16 Public international bonds to GDP ..........................................1 .....■ ...............46.9 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................22 .....■ .................5.6 Switzerland............................6.6
7.02 Venture capital availability .....................................................14 .....■ .................3.8 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................1 .....■ .................5.2 Panama..................................5.2
7.04 Financing through local equity market ..................................21 .....■ .................4.5 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................11 .....■ .................4.3 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................10 .....■ .................9.4 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................24 .....■ ........75,717.0 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................19 .....■ ...............18.9 Italy......................................53.0
7.09 Total number of ATMs...........................................................34 .....■ ...............36.9 Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................3 .....■ ..........3,915.9 Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................18 .....■ .................1.6 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 196

2: Country/Economy Profiles

Peru
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................28.7 18.4% US$ bn
GDP (US$ billions), 2008 .........................................................127.6 ■ Public debt securities .........31.9
GDP (current prices) per capita, 2008 ..............................4,452.5 4.2% ■ Private debt securities..........7.2
61.1%
GDP (PPP) as share (%) of world total, 2008 ........................0.35 ■ Banking deposits .................28.5
Average rate of real GDP growth (%), 2004–08....................7.65 ■ Equity securities ................106.0
16.4%
Total 173.5

Total/GDP: 161.5%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................42 3.1


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................40 3.7


Financial sector liberalization ....................................................34 3.8
Corporate governance.................................................................44 4.1
Legal and regulatory issues .......................................................41 3.3
Contract enforcement..................................................................44 3.7
2nd pillar: Business environment .............................................42 4.0
Human capital ...............................................................................47 3.6
196
Taxes...............................................................................................25 4.8
Infrastructure ................................................................................49 2.9
Cost of doing business ................................................................42 4.6
3rd pillar: Financial stability......................................................22 4.9
Currency stability..........................................................................38 3.9
Banking system stability..............................................................15 5.6
Risk of sovereign debt crisis ......................................................29 4.9
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................43 2.8


Size index .......................................................................................53 1.1
Efficiency index.............................................................................42 4.3
Financial information disclosure................................................21 3.2
5th pillar: Non-banking financial services .............................45 1.6
IPO activity.....................................................................................47 1.2
M&A activity..................................................................................47 1.2
Insurance .......................................................................................50 1.5
Securitization.................................................................................23 2.5
6th pillar: Financial markets......................................................50 1.4
Foreign exchange markets .........................................................42 1.0
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................46 1.5
Bond market development..........................................................38 1.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................35 3.1


Commercial access......................................................................32 3.8
Retail access.................................................................................37 2.4
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 197

2: Country/Economy Profiles
Peru
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................31 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......44 .....■ ...............26.5 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................32 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................47 .....■ .................3.8 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................26 .....■ .................4.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................34 .....■ .................4.7 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................38 .....■ .................3.9 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................39 .....■ .................4.8 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................41 .....■ .................3.7 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................30 .....■ .................4.6 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................13 .....■ ...............12.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................30 .....■ .................5.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................48 .....■ .................2.5 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................29 .....■ .................3.2 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................45 .....■ .................4.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................45 .....■ .................4.0 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................52 .....■ .................2.5 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................35 .....■ .................3.4 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................44 .....■ .................2.1 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................36 .....■ .................3.6 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 197
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................53 .....■ .................2.2 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................51 .....■ .................2.9 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................31 .....■ .................4.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................24 .....■ .............468.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................45 .....■ ...............41.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................13 .....■ .................6.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................48 .....■ ...............35.7 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................34 .....■ .................4.3 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................54 .....■ .................2.2 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................42 .....■ .................3.7 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................50 .....■ .................3.8 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................27 .....■ .................4.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................35 .....■ ...............35.1 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................29 .....■ .................4.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......16 .....■ .................4.7 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................16 .....■ .................2.9 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................42 .....■ .............424.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................50 .....■ .................3.0 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................31 .....■ .................6.1 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................33 .....■ ...............27.4 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................41 .....■ .................2.0 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................48 .....■ .................9.6 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................47 .....■ ...............55.3 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 198

2: Country/Economy Profiles

Peru
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................48 .....■ ...............25.7 Denmark................................0.0
2.18 Cost of registering property ..................................................30 .....■ .................3.3 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................15 .....■ .................7.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................51 .....■ ...............65.0 Australia.................................2.0
2.21 Time to register property.......................................................28 .....■ ...............33.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................37 .....■ .................3.1 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................45 .....■ ...............–0.8 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator.................................................7 .....■ ...............31.6 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................41 .....■ ...............–3.3 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................34 .....■ ...............46.2 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................11 .....■ ...............28.7 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................17 .....■ .................0.8 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................37 .....■ .................4.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................15 .....■ .................6.6 Nigeria
Nigeria ...................................0.3
...................................0.3
198 3.10 Aggregate measure of real estate bubbles.............................7 .....■ .................6.3 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................35 .....■ ...............13.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................36 .....■ ...............11.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ......................................1 .....■ .................6.5 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................12 .....■ ...............24.0 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................28 .....■ .............195.5 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................52 .....■ ...............19.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................46 .....■ .................0.0 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................48 .....■ ...............22.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................51 .....■ ...............34.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................50 .....■ ...............18.2 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................50 .....■ ...............22.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................42 .....■ .................3.5 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................49 .....■ .................5.7 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................23 .....■ .................6.5 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................43 .....■ .................5.1 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................18 .....■ .................2.2 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................28 .....■ ...............33.2 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ................................................9 .....■ ...............23.7 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................49 .....■ .................0.1 China ...................................19.3
5.02 IPO proceeds amount ...........................................................46 .....■ .................0.1 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................47 .....■ .................0.1 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 199

2: Country/Economy Profiles
Peru
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................46 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................42 .....■ .................1.9 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................43 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................46 .....■ ..........1,187.0 United States ..........1,230,526.0
5.08 Insurance density ..................................................................46 .....■ ...............42.5 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................37 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................47 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................29 .....■ .................1.0 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................30 .....■ .................1.8 United States ......................16.3
5.13 Share of total number of securitization deals .......................17 .....■ .................0.9 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................42 .....■ .................0.0 United Kingdom ..................26.3
6.02 Outright forward foreign exchange turnover ........................36 .....■ .................0.1 United Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 199
agreements ..........................................................................n/a .........................n/a United Kingdom ..................45.1
6.05 Interest rate derivatives turnover: Swaps .............................35 .....■ .................0.0 United Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................51 .....■ .................8.7 United Kingdom ................267.7
6.10 Stock market capitalization to GDP.......................................32 .....■ ...............76.1 Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................48 .....■ .................6.7 Hong Kong SAR ................443.6
6.12 Number of listed companies per 10,000 people...................25 .....■ .................0.1 Hong Kong SAR ....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............24 .....■ .................4.2 Denmark............................202.7
6.14 Public domestic bond market capitalization to GDP .............32 .....■ ...............17.7 Japan .................................198.6
6.15 Private international bonds to GDP .......................................36 .....■ .................2.4 Ireland................................279.1
6.16 Public international bonds to GDP ........................................13 .....■ .................8.6 Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................34 .....■ .................4.7 Switzerland............................6.6
7.02 Venture capital availability .....................................................36 .....■ .................3.0 Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................5 .....■ .................4.6 Panama..................................5.2
7.04 Financing through local equity market ..................................43 .....■ .................3.9 Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................28 .....■ .................3.4 Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................24 .....■ .................5.0 Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................27 .....■ ........71,642.7 Ukraine .......................375,499.3
7.08 Commercial bank branches...................................................41 .....■ .................7.5 Italy......................................53.0
7.09 Total number of ATMs...........................................................38 .....■ ...............17.7 Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................5 .....■ ...............17.6 Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 200

2: Country/Economy Profiles

Philippines
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................90.3 US$ bn
29.8%
GDP (US$ billions), 2008 .........................................................168.6 ■ Public debt securities .........80.4
38.2%
GDP (current prices) per capita, 2008 ..............................1,866.0 ■ Private debt securities........11.2
GDP (PPP) as share (%) of world total, 2008 ........................0.46 ■ Banking deposits .................75.3
Average rate of real GDP growth (%), 2004–08....................5.71 4.1% ■ Equity securities ................103.2

Total 270.1
27.9%
Total/GDP: 187.5%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................50 2.8


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................43 3.6


Financial sector liberalization ....................................................32 4.1
Corporate governance.................................................................40 4.3
Legal and regulatory issues .......................................................52 2.7
Contract enforcement..................................................................49 3.3
2nd pillar: Business environment .............................................51 3.4
Human capital ...............................................................................44 3.7
200
Taxes...............................................................................................39 4.1
Infrastructure ................................................................................50 2.4
Cost of doing business ................................................................52 3.2
3rd pillar: Financial stability......................................................47 4.1
Currency stability..........................................................................16 4.7
Banking system stability..............................................................47 4.2
Risk of sovereign debt crisis ......................................................45 3.3
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................45 2.6


Size index .......................................................................................40 2.0
Efficiency index.............................................................................44 4.0
Financial information disclosure................................................49 1.2
5th pillar: Non-banking financial services .............................41 1.8
IPO activity.....................................................................................32 1.9
M&A activity..................................................................................30 1.7
Insurance .......................................................................................45 1.7
Securitization.................................................................................31 2.0
6th pillar: Financial markets......................................................40 1.8
Foreign exchange markets .........................................................41 1.0
Derivatives markets .....................................................................36 1.0
Equity market development ........................................................45 1.6
Bond market development..........................................................23 2.9
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................51 2.5


Commercial access......................................................................46 3.2
Retail access.................................................................................44 1.8
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 201

2: Country/Economy Profiles
Philippines
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................40 .....■ .................0.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......28 .....■ ...............61.5 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................28 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................43 .....■ .................4.1 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................34 .....■ .................4.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................32 .....■ .................4.8 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................29 .....■ .................4.2 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................36 .....■ .................4.9 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................51 .....■ .................3.3 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................43 .....■ .................4.3 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................44 .....■ .................2.7 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................35 .....■ .................2.9 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................44 .....■ .................4.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................48 .....■ .................3.8 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................48 .....■ .................2.9 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................53 .....■ .................2.3 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................54 .....■ .................1.6 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................51 .....■ .................2.3 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 201
1.21 Strength of legal rights index ................................................49 .....■ .................3.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................49 .....■ .................2.5 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................47 .....■ .................3.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................53 .....■ .................2.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................48 .....■ .............842.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................36 .....■ ...............37.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................50 .....■ .................4.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................33 .....■ ...............26.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................26 .....■ .................4.7 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................42 .....■ .................3.4 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................28 .....■ .................4.4 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................49 .....■ .................3.8 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................52 .....■ .................3.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................43 .....■ ...............28.5 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................53 .....■ .................2.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......43 .....■ .................3.9 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ...........................................................n/a .........................n/a Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................22 .....■ .............195.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................49 .....■ .................3.1 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................43 .....■ .................5.6 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................53 .....■ .................6.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................50 .....■ .................0.6 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................51 .....■ .................4.5 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................46 .....■ ...............58.9 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 202

2: Country/Economy Profiles

Philippines
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................51 .....■ ...............29.8 Denmark................................0.0
2.18 Cost of registering property ..................................................33 .....■ .................4.3 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................53 .....■ ...............38.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................50 .....■ ...............52.0 Australia.................................2.0
2.21 Time to register property.......................................................28 .....■ ...............33.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................53 .....■ .................5.7 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................7 .....■ .................4.8 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................14 .....■ ...............47.1 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................21 .....■ .................2.5 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................33 .....■ ...............34.3 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................21 .....■ ...............45.5 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................48 .....■ .................2.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................42 .....■ .................3.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................20 .....■ ...............11.7 Nigeria
Nigeria ...................................0.3
...................................0.3
202 3.10 Aggregate measure of real estate bubbles...........................32 .....■ .................4.2 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................44 .....■ ...............10.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................46 .....■ .................8.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................29 .....■ .................4.9 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................42 .....■ ...............56.9 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................35 .....■ .............240.0 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................45 .....■ ...............36.3 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................12 .....■ .................4.6 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................32 .....■ ...............51.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................39 .....■ ...............55.1 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................44 .....■ ...............28.0 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................39 .....■ ...............46.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................21 .....■ .................0.1 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................53 .....■ .................2.5 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................39 .....■ .................3.7 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................38 .....■ ...............17.6 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................35 .....■ .................3.5 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................43 .....■ .................5.2 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................41 .....■ .................5.4 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................35 .....■ .................0.3 China ...................................19.3
5.02 IPO proceeds amount ...........................................................17 .....■ .................0.5 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................27 .....■ .................0.5 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 203

2: Country/Economy Profiles
Philippines
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................35 .....■ .................0.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................23 .....■ .................4.1 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................37 .....■ .................0.3 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................44 .....■ ..........2,105.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................48 .....■ ...............23.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................29 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................44 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................25 .....■ .................1.1 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................26 .....■ .................2.2 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................25 .....■ .................0.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................39 .....■ .................0.1 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................37 .....■ .................0.0 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................35 .....■ .................0.0 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 203
agreements ...........................................................................31 .....■ .................0.0 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................37 .....■ .................0.0 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....33 .....■ .................0.0 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................39 .....■ .................0.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................43 .....■ ...............34.0 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................35 .....■ ...............59.8 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................41 .....■ ...............20.3 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................37 .....■ .................0.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............28 .....■ .................1.6 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............18 .....■ ...............44.1 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................26 .....■ ...............10.0 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ..........................................6 .....■ ...............24.1 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................44 .....■ .................4.2 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................46 .....■ .................2.5 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................15 .....■ .................4.0 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................35 .....■ .................4.1 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................48 .....■ .................2.7 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................44 .....■ .................2.0 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................31 .....■ ........51,694.4 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................37 .....■ ...............10.5 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................40 .....■ ...............13.3 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................32 .....■ ...............47.1 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................8 .....■ ...............11.0 Bangladesh..........................41.2
Bangladesh..........................41.2
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2: Country/Economy Profiles

Poland
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................38.1 US$ bn
30.7%
GDP (US$ billions), 2008 .........................................................525.7 ■ Public debt securities .......181.7
35.1%
GDP (current prices) per capita, 2008 ............................13,798.9 ■ Private debt securities..........3.5
GDP (PPP) as share (%) of world total, 2008 ........................0.97 ■ Banking deposits ...............198.6
Average rate of real GDP growth (%), 2004–08....................5.33 0.6% ■ Equity securities ................207.3

Total 591.1
33.6%
Total/GDP: 139.2%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................39 3.3


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................37 3.9


Financial sector liberalization ....................................................42 3.1
Corporate governance.................................................................37 4.4
Legal and regulatory issues .......................................................30 3.9
Contract enforcement..................................................................32 4.3
2nd pillar: Business environment .............................................33 4.3
Human capital ...............................................................................23 4.6
204
Taxes...............................................................................................33 4.5
Infrastructure ................................................................................30 3.9
Cost of doing business ................................................................45 4.3
3rd pillar: Financial stability......................................................26 4.8
Currency stability..........................................................................42 3.7
Banking system stability..............................................................20 5.4
Risk of sovereign debt crisis ......................................................26 5.1
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................38 3.2


Size index .......................................................................................45 1.6
Efficiency index.............................................................................27 5.0
Financial information disclosure................................................26 2.5
5th pillar: Non-banking financial services .............................43 1.7
IPO activity.....................................................................................27 2.0
M&A activity..................................................................................42 1.3
Insurance .......................................................................................29 2.6
Securitization.................................................................................53 1.0
6th pillar: Financial markets......................................................38 1.8
Foreign exchange markets .........................................................26 1.2
Derivatives markets .....................................................................25 1.8
Equity market development ........................................................43 1.7
Bond market development..........................................................28 2.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................34 3.1


Commercial access......................................................................36 3.5
Retail access.................................................................................25 2.8
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 205

2: Country/Economy Profiles
Poland
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................39 .....■ .................0.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......37 .....■ ...............32.2 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................44 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................25 .....■ .................4.5 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................44 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................30 .....■ .................4.9 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................40 .....■ .................3.9 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................35 .....■ .................4.9 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................29 .....■ .................4.5 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................33 .....■ .................4.5 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................27 .....■ .................9.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................42 .....■ .................2.7 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ................................6 .....■ .................4.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................25 .....■ .................4.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................41 .....■ .................4.3 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................37 .....■ .................3.6 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................27 .....■ .................4.0 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................43 .....■ .................2.1 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................32 .....■ .................4.6 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 205
1.21 Strength of legal rights index ................................................11 .....■ .................8.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................44 .....■ .................2.8 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................30 .....■ .................4.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................26 .....■ .................4.8 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................47 .....■ .............830.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................38 .....■ ...............38.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................21 .....■ .................6.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts.....................................................6 .....■ ...............12.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................29 .....■ .................4.5 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................14 .....■ .................4.9 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................37 .....■ .................4.1 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................25 .....■ .................4.8 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................47 .....■ .................3.5 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................13 .....■ ...............65.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................27 .....■ .................4.8 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......42 .....■ .................3.9 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................23 .....■ .................6.0 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................41 .....■ .............418.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................53 .....■ .................2.6 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................44 .....■ .................5.5 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................27 .....■ ...............44.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................26 .....■ .................9.0 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................29 .....■ ...............27.1 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................25 .....■ .............108.7 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
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2: Country/Economy Profiles

Poland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................46 .....■ ...............18.8 Denmark................................0.0
2.18 Cost of registering property ....................................................6 .....■ .................0.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................44 .....■ ...............20.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................40 .....■ ...............31.0 Australia.................................2.0
2.21 Time to register property.......................................................54 .....■ .............197.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................34 .....■ .................3.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................21 .....■ .................1.9 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................28 .....■ .............140.6 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................45 .....■ ...............–5.5 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................23 .....■ ...............48.0 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................32 .....■ .................5.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt..................................................4 .....■ .................0.6 Nigeria
Nigeria ...................................0.3
...................................0.3
206 3.10 Aggregate measure of real estate bubbles...........................20 .....■ .................5.2 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................32 .....■ ...............15.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................30 .....■ ...............14.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ......................................3 .....■ .................6.1 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................35 .....■ ...............45.2 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................26 .....■ .............183.7 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................41 .....■ ...............45.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................45 .....■ .................0.0 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................40 .....■ ...............39.3 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................41 .....■ ...............52.1 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................41 .....■ ...............35.2 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................41 .....■ ...............39.3 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................28 .....■ .................4.0 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................30 .....■ .................2.9 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................21 .....■ .................6.1 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................31 .....■ .................3.1 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................40 .....■ .................4.4 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................20 .....■ ...............50.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................28 .....■ .................0.5 China ...................................19.3
5.02 IPO proceeds amount ...........................................................34 .....■ .................0.3 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................14 .....■ .................2.1 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
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2: Country/Economy Profiles
Poland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................36 .....■ .................0.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................49 .....■ .................1.2 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................25 .....■ .................0.6 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................27 .....■ ........15,625.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................28 .....■ .............411.0 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................16 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................27 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................21 .....■ .................1.3 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................51 .....■ .................0.2 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................47 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................29 .....■ .................0.2 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................29 .....■ .................0.1 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................25 .....■ .................0.3 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 207
agreements ...........................................................................16 .....■ .................0.4 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................24 .....■ .................0.1 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................27 .....■ .................0.0 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....25 .....■ .................0.2 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................22 .....■ .................0.1 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................41 .....■ ...............47.2 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................41 .....■ ...............42.6 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................42 .....■ ...............20.1 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................22 .....■ .................0.1 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............20 .....■ ...............40.0 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................42 .....■ .................0.6 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................12 .....■ .................9.2 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................43 .....■ .................4.2 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................31 .....■ .................3.1 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................27 .....■ .................3.5 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................39 .....■ .................4.0 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................36 .....■ .................3.1 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................29 .....■ .................4.1 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................16 .....■ ......152,738.7 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches.....................................................8 .....■ ...............32.6 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................28 .....■ ...............42.2 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................24 .....■ .............426.5 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................23 .....■ .................0.2 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 208

2: Country/Economy Profiles

Russian Federation
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................142.0 3.3% 4.9% US$ bn
GDP (US$ billions), 2008 ......................................................1,676.6 ■ Public debt securities .........69.9
GDP (current prices) per capita, 2008 ............................11,806.9 20.3% ■ Private debt securities......102.2
GDP (PPP) as share (%) of world total, 2008 ........................3.30 ■ Banking deposits ...............427.3
Average rate of real GDP growth (%), 2004–08....................7.00 ■ Equity securities .............1,503.0

Total 2,102.4
71.5%

Total/GDP: 162.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................40 3.2


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................53 3.0


Financial sector liberalization ....................................................53 1.8
Corporate governance.................................................................53 3.5
Legal and regulatory issues .......................................................53 2.6
Contract enforcement..................................................................35 4.2
2nd pillar: Business environment .............................................34 4.2
Human capital ...............................................................................29 4.3
208
Taxes...............................................................................................46 3.6
Infrastructure ................................................................................34 3.6
Cost of doing business ................................................................26 5.4
3rd pillar: Financial stability......................................................39 4.5
Currency stability............................................................................4 5.9
Banking system stability..............................................................53 3.5
Risk of sovereign debt crisis ......................................................35 4.4
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................55 1.8


Size index .......................................................................................48 1.4
Efficiency index.............................................................................55 2.4
Financial information disclosure................................................45 1.3
5th pillar: Non-banking financial services ...............................4 4.1
IPO activity.......................................................................................3 5.3
M&A activity..................................................................................15 3.4
Insurance .......................................................................................30 2.5
Securitization...................................................................................3 5.3
6th pillar: Financial markets......................................................41 1.8
Foreign exchange markets .........................................................14 1.9
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................33 2.2
Bond market development..........................................................43 1.2
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................49 2.7


Commercial access......................................................................51 3.0
Retail access.................................................................................36 2.5
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 209

2: Country/Economy Profiles
Russian Federation
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................43 .....■ ...............–0.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services......n/a .........................n/a Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................52 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................37 .....■ .................4.3 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................40 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................40 .....■ .................4.3 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................51 .....■ .................3.3 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................54 .....■ .................3.7 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................50 .....■ .................3.4 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................54 .....■ .................3.2 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................32 .....■ .................8.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................50 .....■ .................2.4 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................39 .....■ .................2.8 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................53 .....■ .................3.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................52 .....■ .................3.1 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................49 .....■ .................2.7 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................48 .....■ .................2.7 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................37 .....■ .................2.3 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................53 .....■ .................2.1 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 209
1.21 Strength of legal rights index ................................................49 .....■ .................3.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................38 .....■ .................3.2 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................52 .....■ .................2.7 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................52 .....■ .................2.7 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................6 .....■ .............281.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................36 .....■ ...............37.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................38 .....■ .................5.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts.....................................................9 .....■ ...............13.4 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................47 .....■ .................3.7 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................25 .....■ .................4.7 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................48 .....■ .................3.6 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................42 .....■ .................4.0 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................51 .....■ .................3.4 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ..................................................................9 .....■ ...............72.3 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................52 .....■ .................2.7 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......48 .....■ .................3.7 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ...........................................................n/a .........................n/a Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................43 .....■ .............448.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................44 .....■ .................3.3 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................50 .....■ .................5.1 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................40 .....■ ...............21.1 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................38 .....■ .................2.8 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................26 .....■ ...............31.0 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................17 .....■ .............114.6 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 210

2: Country/Economy Profiles

Russian Federation
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................16 .....■ .................2.6 Denmark................................0.0
2.18 Cost of registering property ....................................................4 .....■ .................0.2 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................20 .....■ .................9.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................38 .....■ ...............29.0 Australia.................................2.0
2.21 Time to register property.......................................................41 .....■ ...............52.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................40 .....■ .................3.8 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................2 .....■ .................7.4 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator.................................................8 .....■ ...............34.7 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................14 .....■ .................6.1 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................27 .....■ .................9.9 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................16 .....■ ...............35.6 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................47 .....■ .................2.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................17 .....■ .................7.2 Nigeria
Nigeria ...................................0.3
...................................0.3
210 3.10 Aggregate measure of real estate bubbles...........................41 .....■ .................1.9 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................38 .....■ ...............12.7 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................35 .....■ ...............11.7 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................32 .....■ .................4.9 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt ...................................................2 .....■ .................6.7 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................37 .....■ .............319.6 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................46 .....■ ...............34.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................29 .....■ .................0.9 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................45 .....■ ...............27.0 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................47 .....■ ...............40.4 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................43 .....■ ...............31.6 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................47 .....■ ...............27.0 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................46 .....■ .................3.3 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................51 .....■ .................7.7 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................51 .....■ ...............58.3 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................55 .....■ ...............11.2 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................22 .....■ .................2.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................37 .....■ ...............10.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................3 .....■ .................8.9 China ...................................19.3
5.02 IPO proceeds amount .............................................................3 .....■ .................1.5 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................17 .....■ .................1.1 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 211

2: Country/Economy Profiles
Russian Federation
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................12 .....■ .................2.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................17 .....■ .................5.0 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................11 .....■ .................2.4 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................20 .....■ ........29,846.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................33 .....■ .............209.4 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................10 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................38 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................22 .....■ .................1.2 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................13 .....■ .................3.7 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .........................2 .....■ .................4.5 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................8 .....■ .................2.7 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................22 .....■ .................0.3 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................16 .....■ .................0.7 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 211
agreements ..........................................................................n/a .........................n/a United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................37 .....■ .................0.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................34 .....■ ...............58.7 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................26 .....■ ...............99.6 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................28 .....■ ...............58.4 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................39 .....■ .................0.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............37 .....■ .................3.0 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................28 .....■ .................7.2 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................30 .....■ .................1.9 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................50 .....■ .................3.6 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................45 .....■ .................2.5 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................36 .....■ .................3.2 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................50 .....■ .................3.1 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................50 .....■ .................2.6 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................30 .....■ .................4.1 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................8 .....■ ......189,220.0 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................46 .....■ .................2.9 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................15 .....■ ...............65.6 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................22 .....■ .................0.5 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 212

2: Country/Economy Profiles

Saudi Arabia
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................24.9 11.7% US$ bn
GDP (US$ billions), 2008 .........................................................481.6 0.9%
■ Public debt securities .........95.2
GDP (current prices) per capita, 2008 ............................19,345.3 ■ Private debt securities..........7.1
GDP (PPP) as share (%) of world total, 2008 ........................0.87 23.8%
■ Banking deposits ...............192.7
Average rate of real GDP growth (%), 2004–08....................4.40 ■ Equity securities ................515.1

63.6% Total 810.2

Total/GDP: 212.1%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................24 3.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................25 4.6


Financial sector liberalization ....................................................25 5.2
Corporate governance.................................................................23 4.8
Legal and regulatory issues .......................................................26 4.1
Contract enforcement..................................................................33 4.3
2nd pillar: Business environment .............................................24 4.9
Human capital ...............................................................................39 4.0
212
Taxes...............................................................................................11 5.8
Infrastructure ................................................................................31 3.8
Cost of doing business ................................................................14 5.9
3rd pillar: Financial stability........................................................6 5.6
Currency stability..........................................................................15 4.9
Banking system stability................................................................5 6.1
Risk of sovereign debt crisis ......................................................20 5.6
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................31 3.6


Size index .......................................................................................42 1.9
Efficiency index...............................................................................3 6.3
Financial information disclosure................................................43 1.4
5th pillar: Non-banking financial services .............................34 2.0
IPO activity.....................................................................................10 3.7
M&A activity..................................................................................54 1.0
Insurance .......................................................................................36 2.2
Securitization.................................................................................49 1.2
6th pillar: Financial markets......................................................31 2.3
Foreign exchange markets .........................................................36 1.1
Derivatives markets .....................................................................27 1.7
Equity market development ........................................................19 3.6
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................10 4.2


Commercial access......................................................................15 4.2
Retail access ...............................................................................n/a n/a
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 213

2: Country/Economy Profiles
Saudi Arabia
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................28 .....■ .................1.2 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......20 .....■ ...............51.8 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................35 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................40 .....■ .................4.2 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................37 .....■ .................4.6 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................39 .....■ .................4.4 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................26 .....■ .................4.3 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................32 .....■ .................5.0 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................24 .....■ .................4.9 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................28 .....■ .................4.7 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................5 .....■ ...............13.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................9 .....■ .................4.0 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................28 .....■ .................3.2 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................37 .....■ .................4.4 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................24 .....■ .................5.3 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................23 .....■ .................4.6 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................22 .....■ .................4.8 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .........................................................9 .....■ .................4.9 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................39 .....■ .................3.5 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 213
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................24 .....■ .................4.1 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................20 .....■ .................5.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................25 .....■ .................5.0 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................42 .....■ .............635.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................49 .....■ ...............44.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................16 .....■ .................6.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................37 .....■ ...............27.5 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................45 .....■ .................3.9 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................37 .....■ .................3.7 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................30 .....■ .................4.3 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................30 .....■ .................4.6 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................15 .....■ .................4.7 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................41 .....■ ...............29.2 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................24 .....■ .................5.0 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ........7 .....■ .................5.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................11 .....■ .................0.4 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................5 .....■ ...............79.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................23 .....■ .................5.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................30 .....■ .................6.1 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................36 .....■ ...............25.8 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................40 .....■ .................2.5 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................43 .....■ ...............16.2 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................16 .....■ .............114.7 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 214

2: Country/Economy Profiles

Saudi Arabia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................39 .....■ ...............14.9 Denmark................................0.0
2.18 Cost of registering property ....................................................1 .....■ .................0.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................45 .....■ ...............22.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................16 .....■ ...............12.0 Australia.................................2.0
2.21 Time to register property.........................................................1 .....■ .................2.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................16 .....■ .................1.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................49 .....■ ...............–4.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................11 .....■ ...............39.2 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................2 .....■ ...............28.9 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt..................................................8 .....■ .................2.4 Nigeria
Nigeria ...................................0.3
...................................0.3
214 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................21 .....■ ...............17.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................20 .....■ ...............17.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................24 .....■ .................5.0 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................11 .....■ ...............19.0 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................24 .....■ .............150.8 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................40 .....■ ...............48.5 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................41 .....■ ...............38.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................43 .....■ ...............51.4 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................37 .....■ ...............43.3 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................42 .....■ ...............38.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................1 .....■ .................6.4 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................9 .....■ .................1.5 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................34 .....■ ...............14.8 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................17 .....■ .................1.8 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................17 .....■ .................2.1 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................35 .....■ ...............14.1 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................11 .....■ .................2.5 China ...................................19.3
5.02 IPO proceeds amount .............................................................6 .....■ .................1.3 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................18 .....■ .................1.1 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 215

2: Country/Economy Profiles
Saudi Arabia
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................54 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................55 .....■ .................0.1 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................47 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................43 .....■ ..........2,291.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................40 .....■ ...............92.6 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................8 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................52 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................34 .....■ .................0.7 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................46 .....■ .................0.7 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................45 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................28 .....■ .................0.2 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................39 .....■ .................0.0 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................34 .....■ .................0.1 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 215
agreements ...........................................................................31 .....■ .................0.0 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................32 .....■ .................0.0 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................22 .....■ .................0.1 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....17 .....■ .................0.7 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................30 .....■ .................0.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................12 .....■ .............160.9 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................21 .....■ .............110.7 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................12 .....■ .............178.1 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................31 .....■ .................0.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................35 .....■ .................4.6 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................20 .....■ .................3.5 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................10 .....■ .................4.2 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................14 .....■ .................4.6 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................13 .....■ .................4.2 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................20 .....■ .................6.4 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 216

2: Country/Economy Profiles

Singapore
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................4.7 US$ bn
20.4%
GDP (US$ billions), 2008 .........................................................181.9 ■ Public debt securities .......160.7
GDP (current prices) per capita, 2008 ............................38,972.1
44.8% ■ Private debt securities........80.0
GDP (PPP) as share (%) of world total, 2008 ........................0.35 10.1% ■ Banking deposits ...............194.9
Average rate of real GDP growth (%), 2004–08....................6.77 ■ Equity securities ................353.5

Total 789.1
24.7%
Total/GDP: 472.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................4 5.0


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................1 6.2


Financial sector liberalization ....................................................15 6.7
Corporate governance...................................................................1 5.8
Legal and regulatory issues .........................................................1 5.9
Contract enforcement....................................................................1 6.3
2nd pillar: Business environment ...............................................2 6.1
Human capital .................................................................................3 5.7
216
Taxes.................................................................................................8 5.9
Infrastructure ................................................................................10 6.0
Cost of doing business ..................................................................1 6.7
3rd pillar: Financial stability........................................................5 5.6
Currency stability............................................................................1 6.4
Banking system stability..............................................................12 5.7
Risk of sovereign debt crisis ......................................................32 4.8
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................11 4.7


Size index .......................................................................................12 4.1
Efficiency index...............................................................................2 6.4
Financial information disclosure................................................27 2.4
5th pillar: Non-banking financial services .............................11 3.4
IPO activity.....................................................................................12 3.2
M&A activity..................................................................................16 3.4
Insurance .........................................................................................9 4.3
Securitization.................................................................................21 2.6
6th pillar: Financial markets........................................................3 5.1
Foreign exchange markets ...........................................................4 6.5
Derivatives markets .......................................................................7 6.2
Equity market development ..........................................................2 5.6
Bond market development..........................................................24 2.9
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................9 4.2


Commercial access........................................................................2 5.1
Retail access.................................................................................13 3.3
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 217

2: Country/Economy Profiles
Singapore
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......18 .....■ ...............52.4 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................2 .....■ .................5.3 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards ...................................................7 .....■ .................5.6 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management ...................................7 .....■ .................6.0 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................16 .....■ .................4.8 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards..........................5 .....■ .................6.1 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms..........................................................4 .....■ .................6.5 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests........................5 .....■ .................5.7 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................4 .....■ ...............13.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................1 .....■ .................5.6 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................51 .....■ .................2.2 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................4 .....■ .................5.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.........................................................................4 .....■ .................6.4 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection ...............................................1 .....■ .................6.2 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.........................................................3 .....■ .................6.4 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .........................................................1 .....■ .................6.4 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ..................................................3 .....■ .................9.2 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 217
1.21 Strength of legal rights index ..................................................1 .....■ ...............10.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................1 .....■ .................6.5 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................15 .....■ .................5.8 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ..................................1 .....■ .................6.6 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................1 .....■ .............150.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .........................2 .....■ ...............21.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................1 .....■ .................9.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................32 .....■ ...............25.8 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................5 .....■ .................5.8 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education...................................1 .....■ .................6.4 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training.............................................................2 .....■ .................5.6 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................14 .....■ .................5.5 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ............................3 .....■ .................5.5 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................20 .....■ ...............58.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ........................................1 .....■ .................6.5 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ........2 .....■ .................6.0 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................35 .....■ ...............10.1 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................7 .....■ ...............84.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure ...............................................2 .....■ .................6.7 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .........................................7 .....■ .................6.8 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................14 .....■ ...............68.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................18 .....■ ...............20.2 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................19 .....■ ...............42.0 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers.................................................5 .....■ .............133.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:22 PM Page 218

2: Country/Economy Profiles

Singapore
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................6 .....■ .................0.7 Denmark................................0.0
2.18 Cost of registering property ..................................................24 .....■ .................2.8 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................1 .....■ .................1.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................2 .....■ .................4.0 Australia.................................2.0
2.21 Time to register property.........................................................9 .....■ .................9.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................3 .....■ .................0.8 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................12 .....■ .................3.7 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................6 .....■ ...............14.8 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................3 .....■ .............128.3 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................31 .....■ ...............63.7 Nigeria
Nigeria ...................................0.3
...................................0.3
218 3.10 Aggregate measure of real estate bubbles...........................37 .....■ .................3.7 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................40 .....■ .................4.6 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................53 .....■ ...............99.2 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................17 .....■ .............110.8 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................15 .....■ .................2.7 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................9 .....■ .............111.4 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................8 .....■ .............129.5 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................22 .....■ ...............91.9 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................11 .....■ .............107.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................15 .....■ .................1.2 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................10 .....■ .................4.8 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................1 .....■ .................1.0 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................11 .....■ .................1.3 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................11 .....■ .................1.4 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................21 .....■ ...............48.3 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................22 .....■ .................0.8 China ...................................19.3
5.02 IPO proceeds amount .............................................................9 .....■ .................1.1 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................15 .....■ .................2.0 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:22 PM Page 219

2: Country/Economy Profiles
Singapore
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................24 .....■ .................0.6 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................6 .....■ ...............11.5 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................20 .....■ .................1.0 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................28 .....■ ........14,245.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................16 .....■ ..........2,790.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................12 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................14 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................2 .....■ .................3.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................12 .....■ .................4.0 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................27 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................5 .....■ .................7.0 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ..........................4 .....■ .................5.9 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................5 .....■ .................5.3 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 219
agreements ...........................................................................15 .....■ .................0.5 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ...............................6 .....■ .................3.5 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................9 .....■ .................0.6 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......7 .....■ .................3.1 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................5 .....■ .................4.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................18 .....■ .............121.3 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.........................................5 .....■ .............196.3 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................6 .....■ .............238.1 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people.....................3 .....■ .................1.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............14 .....■ ...............23.0 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ...............5 .....■ ...............55.3 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................17 .....■ ...............40.7 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................37 .....■ .................0.2 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................7 .....■ .................6.2 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .......................................................3 .....■ .................4.3 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................21 .....■ .................3.8 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ....................................6 .....■ .................4.8 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................3 .....■ .................4.6 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................2 .....■ ...............14.5 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................5 .....■ ......230,508.8 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................35 .....■ ...............11.0 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................23 .....■ ...............50.6 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................11 .....■ ..........1,397.8 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:22 PM Page 220

2: Country/Economy Profiles

Slovak Republic
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................5.4 8.8% US$ bn
GDP (US$ billions), 2008 ...........................................................95.4 ■ Public debt securities .........26.7
33.7%
GDP (current prices) per capita, 2008 ............................17,630.1 ■ Private debt securities..........4.5
GDP (PPP) as share (%) of world total, 2008 ........................0.17 ■ Banking deposits .................41.0
Average rate of real GDP growth (%), 2004–08....................7.40 ■ Equity securities ....................7.0

51.8% Total 79.2


5.7%

Total/GDP: 105.3%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................37 3.3


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................34 4.1


Financial sector liberalization ....................................................38 3.6
Corporate governance.................................................................27 4.7
Legal and regulatory issues .......................................................33 3.7
Contract enforcement..................................................................31 4.3
2nd pillar: Business environment .............................................28 4.6
Human capital ...............................................................................36 4.1
220
Taxes...............................................................................................37 4.2
Infrastructure ................................................................................27 4.4
Cost of doing business ................................................................20 5.5
3rd pillar: Financial stability......................................................20 4.9
Currency stability..........................................................................29 4.3
Banking system stability..............................................................37 4.7
Risk of sovereign debt crisis ......................................................14 5.8
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................33 3.5


Size index .......................................................................................41 2.0
Efficiency index.............................................................................16 5.6
Financial information disclosure................................................34 2.3
5th pillar: Non-banking financial services .............................53 1.2
IPO activity.....................................................................................52 1.0
M&A activity..................................................................................52 1.0
Insurance .......................................................................................43 1.8
Securitization.................................................................................52 1.1
6th pillar: Financial markets......................................................46 1.5
Foreign exchange markets .........................................................40 1.0
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................47 1.4
Bond market development..........................................................33 1.9
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................33 3.3


Commercial access......................................................................33 3.8
Retail access.................................................................................26 2.8
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:22 PM Page 221

2: Country/Economy Profiles
Slovak Republic
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................33 .....■ .................1.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......36 .....■ ...............43.9 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................49 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................11 .....■ .................4.9 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................16 .....■ .................5.1 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................24 .....■ .................5.2 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................19 .....■ .................4.6 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................37 .....■ .................4.8 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................39 .....■ .................3.8 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................37 .....■ .................4.4 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................32 .....■ .................2.9 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................22 .....■ .................3.5 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................47 .....■ .................4.1 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................34 .....■ .................4.6 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................34 .....■ .................3.7 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................45 .....■ .................3.0 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................50 .....■ .................1.7 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................29 .....■ .................5.0 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 221
1.21 Strength of legal rights index ..................................................4 .....■ .................9.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................40 .....■ .................3.2 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................43 .....■ .................3.5 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................30 .....■ .................4.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................33 .....■ .............565.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................43 .....■ .................4.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................31 .....■ ...............25.7 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................51 .....■ .................3.6 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................29 .....■ .................4.5 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................33 .....■ .................4.2 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................36 .....■ .................4.3 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................40 .....■ .................3.8 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................33 .....■ ...............45.3 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................30 .....■ .................4.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......49 .....■ .................3.7 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................39 .....■ ...............12.2 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................37 .....■ .............325.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................34 .....■ .................4.1 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................20 .....■ .................6.5 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................18 .....■ ...............56.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................27 .....■ .................8.8 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................34 .....■ ...............21.3 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................20 .....■ .............112.6 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 222

2: Country/Economy Profiles

Slovak Republic
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................17 .....■ .................3.3 Denmark................................0.0
2.18 Cost of registering property ....................................................2 .....■ .................0.1 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................37 .....■ ...............18.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................25 .....■ ...............16.0 Australia.................................2.0
2.21 Time to register property.......................................................15 .....■ ...............17.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................41 .....■ .................4.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................4 .....■ .................6.5 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................23 .....■ .............105.8 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................47 .....■ ...............–6.3 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................26 .....■ ...............58.9 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................6 .....■ ...............–0.1 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................37 .....■ .................4.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................16 .....■ .................7.0 Nigeria
Nigeria ...................................0.3
...................................0.3
222 3.10 Aggregate measure of real estate bubbles...........................33 .....■ .................4.2 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................24 .....■ ...............16.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................22 .....■ ...............16.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ......................................2 .....■ .................6.3 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................15 .....■ ...............28.7 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................16 .....■ ...............91.8 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................37 .....■ ...............52.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................44 .....■ .................0.0 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................38 .....■ ...............48.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................36 .....■ ...............58.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................39 .....■ ...............38.6 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................38 .....■ ...............48.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................11 .....■ .................4.7 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................25 .....■ .................2.5 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................34 .....■ .................3.3 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................30 .....■ .................2.9 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................25 .....■ ...............39.9 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................18 .....■ .................1.4 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................52 .....■ .................0.0 China ...................................19.3
5.02 IPO proceeds amount ...........................................................52 .....■ .................0.0 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................50 .....■ .................0.0 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 223

2: Country/Economy Profiles
Slovak Republic
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................52 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................52 .....■ .................1.0 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................45 .....■ .................0.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................42 .....■ ..........2,323.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................27 .....■ .............432.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................33 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................32 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................33 .....■ .................0.7 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................50 .....■ .................0.3 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................41 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................43 .....■ .................0.0 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................42 .....■ .................0.0 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................30 .....■ .................0.1 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 223
agreements ..........................................................................n/a .........................n/a United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................33 .....■ .................0.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................55 .....■ .................0.5 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................53 .....■ .................8.4 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................55 .....■ .................0.0 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................16 .....■ .................0.3 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............23 .....■ .................6.2 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............24 .....■ ...............33.6 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................41 .....■ .................0.8 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................16 .....■ .................7.0 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................30 .....■ .................5.0 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................30 .....■ .................3.2 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit..........................................................6 .....■ .................4.6 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................49 .....■ .................3.1 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................15 .....■ .................4.0 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................27 .....■ .................4.3 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................11 .....■ ...............25.7 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................25 .....■ ...............47.8 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................22 .....■ .............460.3 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 224

2: Country/Economy Profiles

South Africa
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................48.7 7.5% US$ bn
GDP (US$ billions), 2008 .........................................................277.2 6.2%
■ Public debt securities .........89.6
GDP (current prices) per capita, 2008 ..............................5,693.3 ■ Private debt securities........74.0
GDP (PPP) as share (%) of world total, 2008 ........................0.72 16.2% ■ Banking deposits ...............192.2
Average rate of real GDP growth (%), 2004–08....................4.66 ■ Equity securities ................833.5
70.1% Total 1,189.4

Total/GDP: 419.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................32 3.5


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................27 4.4


Financial sector liberalization ....................................................41 3.1
Corporate governance...................................................................7 5.4
Legal and regulatory issues .......................................................22 4.4
Contract enforcement..................................................................23 4.8
2nd pillar: Business environment .............................................36 4.2
Human capital ...............................................................................50 3.5
224
Taxes...............................................................................................18 5.3
Infrastructure ................................................................................48 2.9
Cost of doing business ................................................................34 5.0
3rd pillar: Financial stability......................................................31 4.7
Currency stability..........................................................................39 3.9
Banking system stability..............................................................17 5.5
Risk of sovereign debt crisis ......................................................36 4.3
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................30 3.7


Size index .......................................................................................29 2.9
Efficiency index.............................................................................29 5.0
Financial information disclosure................................................25 2.9
5th pillar: Non-banking financial services .............................32 2.1
IPO activity.....................................................................................45 1.3
M&A activity..................................................................................23 2.1
Insurance .......................................................................................15 3.2
Securitization.................................................................................32 1.9
6th pillar: Financial markets......................................................30 2.4
Foreign exchange markets .........................................................22 1.3
Derivatives markets .....................................................................20 2.5
Equity market development ........................................................18 3.7
Bond market development..........................................................35 1.7
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................47 2.9


Commercial access......................................................................28 3.9
Retail access.................................................................................43 1.9
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 225

2: Country/Economy Profiles
South Africa
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......40 .....■ ...............28.4 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................24 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................10 .....■ .................5.0 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards ...................................................2 .....■ .................5.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................17 .....■ .................5.5 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................20 .....■ .................4.5 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards..........................1 .....■ .................6.2 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................26 .....■ .................4.7 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests........................7 .....■ .................5.5 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................22 .....■ ...............10.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry .............................1 .....■ .................9.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................23 .....■ .................3.2 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................41 .....■ .................2.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................2 .....■ .................5.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................15 .....■ .................5.9 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................20 .....■ .................5.2 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................30 .....■ .................3.7 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................33 .....■ .................2.8 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................30 .....■ .................4.9 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 225
1.21 Strength of legal rights index ..................................................4 .....■ .................9.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................18 .....■ .................4.3 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................24 .....■ .................5.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................29 .....■ .................4.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................38 .....■ .............600.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................8 .....■ .................8.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................47 .....■ ...............33.2 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................23 .....■ .................4.8 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................55 .....■ .................2.1 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................17 .....■ .................4.8 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................28 .....■ .................4.6 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................53 .....■ .................3.1 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................50 .....■ ...............15.4 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................28 .....■ .................4.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ........6 .....■ .................5.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................19 .....■ .................3.5 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................24 .....■ .............200.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................27 .....■ .................4.7 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................53 .....■ .................4.6 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................50 .....■ .................8.2 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................48 .....■ .................0.8 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................49 .....■ .................9.6 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................34 .....■ ...............87.1 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 226

2: Country/Economy Profiles

South Africa
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................26 .....■ .................6.0 Denmark................................0.0
2.18 Cost of registering property ..................................................48 .....■ .................8.8 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................37 .....■ ...............18.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................31 .....■ ...............22.0 Australia.................................2.0
2.21 Time to register property.......................................................22 .....■ ...............24.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................23 .....■ .................2.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................53 .....■ .............–10.9 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................21 .....■ ...............88.3 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................49 .....■ ...............–7.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................28 .....■ ...............10.2 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .......................9 .....■ ...............26.6 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................19 .....■ .................6.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................28 .....■ ...............29.9 Nigeria
Nigeria ...................................0.3
...................................0.3
226 3.10 Aggregate measure of real estate bubbles...........................30 .....■ .................4.5 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................31 .....■ ...............15.7 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................33 .....■ ...............12.7 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................48 .....■ .................3.9 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................18 .....■ ...............31.6 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................31 .....■ .............225.5 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................24 .....■ ...............83.5 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................32 .....■ .................0.7 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................25 .....■ ...............61.4 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................29 .....■ ...............66.8 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................9 .....■ .............155.4 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................25 .....■ ...............61.4 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................24 .....■ .................4.2 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................46 .....■ .................4.6 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................14 .....■ .................1.9 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................37 .....■ .................3.8 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................27 .....■ .................2.6 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................18 .....■ ...............64.8 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................42 .....■ .................0.2 China ...................................19.3
5.02 IPO proceeds amount ...........................................................44 .....■ .................0.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................39 .....■ .................0.2 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 227

2: Country/Economy Profiles
South Africa
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................25 .....■ .................0.5 United States ......................41.7
5.05 M&A transaction value to GDP .............................................14 .....■ .................5.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................29 .....■ .................0.5 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................17 .....■ ........42,775.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................24 .....■ .............880.6 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................45 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................2 .....■ .................0.2 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................14 .....■ .................1.8 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................24 .....■ .................2.2 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................32 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................26 .....■ .................0.3 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................23 .....■ .................0.2 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................22 .....■ .................0.4 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 227
agreements ...........................................................................13 .....■ .................0.7 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................23 .....■ .................0.1 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................14 .....■ .................0.3 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....29 .....■ .................0.1 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................31 .....■ .................0.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................38 .....■ ...............54.6 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.........................................3 .....■ .............280.8 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................14 .....■ .............153.4 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................21 .....■ .................0.1 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............18 .....■ ...............19.2 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................24 .....■ ...............12.8 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................23 .....■ .................3.6 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................5 .....■ .................6.3 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................25 .....■ .................3.4 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................37 .....■ .................3.0 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ....................................3 .....■ .................4.9 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................20 .....■ .................3.7 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................45 .....■ .................2.0 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................22 .....■ ........78,813.0 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................39 .....■ .................8.0 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................20 .....■ ...............54.8 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................36 .....■ .................1.0 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................13 .....■ .................4.1 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 228

2: Country/Economy Profiles

Spain
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................45.6 7.5%
US$ bn
26.0%
GDP (US$ billions), 2008 ......................................................1,611.8 ■ Public debt securities .......520.1
GDP (current prices) per capita, 2008 ............................35,331.5 ■ Private debt securities...2,597.4
GDP (PPP) as share (%) of world total, 2008 ........................2.03 37.5% ■ Banking deposits ............2,017.8
Average rate of real GDP growth (%), 2004–08....................3.12 ■ Equity securities .............1,800.1

Total 6,935.3
29.1%
Total/GDP: 481.6%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................15 4.4


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................19 5.1


Financial sector liberalization ....................................................10 7.0
Corporate governance.................................................................24 4.7
Legal and regulatory issues .......................................................23 4.3
Contract enforcement..................................................................27 4.5
2nd pillar: Business environment .............................................23 4.9
Human capital ...............................................................................21 4.7
228
Taxes...............................................................................................24 4.9
Infrastructure ................................................................................20 5.2
Cost of doing business ................................................................35 5.0
3rd pillar: Financial stability......................................................32 4.7
Currency stability..........................................................................41 3.8
Banking system stability..............................................................42 4.5
Risk of sovereign debt crisis ......................................................17 5.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................4 5.1


Size index .........................................................................................6 5.1
Efficiency index.............................................................................12 5.8
Financial information disclosure................................................17 3.6
5th pillar: Non-banking financial services .............................13 3.3
IPO activity.....................................................................................19 2.6
M&A activity..................................................................................11 4.0
Insurance .......................................................................................35 2.3
Securitization...................................................................................9 4.2
6th pillar: Financial markets......................................................14 3.8
Foreign exchange markets .........................................................21 1.4
Derivatives markets .....................................................................17 3.3
Equity market development ..........................................................6 5.1
Bond market development............................................................8 4.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................18 4.0


Commercial access......................................................................38 3.4
Retail access...................................................................................8 4.5
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 229

2: Country/Economy Profiles
Spain
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................21 .....■ .................1.7 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............72.8 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................35 .....■ .................4.4 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................28 .....■ .................4.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................28 .....■ .................5.0 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................34 .....■ .................4.1 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................33 .....■ .................5.0 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................25 .....■ .................4.9 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................36 .....■ .................4.4 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................18 .....■ ...............11.5 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................37 .....■ .................2.7 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ................................3 .....■ .................4.8 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................40 .....■ .................4.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................27 .....■ .................5.1 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................25 .....■ .................4.3 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................24 .....■ .................4.6 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................29 .....■ .................3.2 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................20 .....■ .................6.5 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 229
1.21 Strength of legal rights index ................................................29 .....■ .................6.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................27 .....■ .................3.9 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................34 .....■ .................4.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................24 .....■ .................5.1 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................31 .....■ .............515.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................41 .....■ ...............39.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................38 .....■ .................5.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................17 .....■ ...............17.2 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................6 .....■ .................5.8 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................45 .....■ .................3.3 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................40 .....■ .................3.9 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................22 .....■ .................4.8 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................21 .....■ .................4.4 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................11 .....■ ...............67.4 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................25 .....■ .................5.0 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......40 .....■ .................4.0 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................28 .....■ .................7.8 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................27 .....■ .............234.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................20 .....■ .................5.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................38 .....■ .................5.9 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................22 .....■ ...............52.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................22 .....■ ...............18.2 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................13 .....■ ...............45.9 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................24 .....■ .............109.4 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 230

2: Country/Economy Profiles

Spain
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................39 .....■ ...............14.9 Denmark................................0.0
2.18 Cost of registering property ..................................................44 .....■ .................7.2 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................30 .....■ ...............15.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................48 .....■ ...............47.0 Australia.................................2.0
2.21 Time to register property.......................................................18 .....■ ...............18.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................8 .....■ .................1.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................16 .....■ .................3.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................53 .....■ ...............–9.6 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................12 .....■ ...............–1.0 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................15 .....■ .................0.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................10 .....■ .................8.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria
Nigeria ...................................0.3
...................................0.3
230 3.10 Aggregate measure of real estate bubbles...........................44 .....■ .................1.0 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................15 .....■ ...............19.1 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................15 .....■ ...............19.1 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................28 .....■ .................5.0 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................30 .....■ ...............40.4 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................17 .....■ .............104.3 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................5 .....■ .............179.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................23 .....■ .................1.5 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................6 .....■ .............121.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................3 .....■ .............153.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................7 .....■ .............168.7 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP .............................................................7 .....■ .............121.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................13 .....■ .................2.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................25 .....■ .................4.1 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................7 .....■ .................1.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................15 .....■ .................2.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................22 .....■ .................2.0 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................35 .....■ .................3.2 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................39 .....■ .................8.1 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ................................................4 .....■ ...............45.8 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................8 .....■ .................3.1 China ...................................19.3
5.02 IPO proceeds amount ...........................................................18 .....■ .................0.5 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................25 .....■ .................0.6 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 231

2: Country/Economy Profiles
Spain
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................10 .....■ .................2.7 United States ......................41.7
5.05 M&A transaction value to GDP .............................................13 .....■ .................6.0 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................9 .....■ .................2.5 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................11 .....■ ........74,696.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................21 .....■ ..........1,699.9 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................40 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................22 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................43 .....■ .................0.5 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................8 .....■ .................5.5 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................12 .....■ .................1.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................19 .....■ .................0.5 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................18 .....■ .................0.5 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................23 .....■ .................0.4 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 231
agreements ...........................................................................21 .....■ .................0.2 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................13 .....■ .................1.0 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................15 .....■ .................0.3 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....20 .....■ .................0.3 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................17 .....■ .................0.3 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................6 .....■ .............188.7 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................22 .....■ .............109.8 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................10 .....■ .............207.3 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people.....................6 .....■ .................0.8 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............22 .....■ ...............36.5 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .........................................2 .....■ .............171.7 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................11 .....■ ...............11.5 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................21 .....■ .................5.6 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................33 .....■ .................3.1 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................53 .....■ .................2.5 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................44 .....■ .................3.8 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................41 .....■ .................2.9 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................33 .....■ .................3.7 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................26 .....■ ........74,140.1 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches.....................................................4 .....■ ...............40.5 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs.............................................................4 .....■ .............157.1 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................16 .....■ .............959.2 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
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2: Country/Economy Profiles

Sweden
Key indicators Financial assets by major type, 2007
12.2%
Population (millions), 2008 .........................................................9.2 US$ bn
GDP (US$ billions), 2008 .........................................................484.6 ■ Public debt securities .......189.4
39.5%
GDP (current prices) per capita, 2008 ............................52,789.6 ■ Private debt securities......494.6
GDP (PPP) as share (%) of world total, 2008 ........................0.50 31.9% ■ Banking deposits ...............254.4
Average rate of real GDP growth (%), 2004–08....................2.80 ■ Equity securities ................612.5

Total 1,550.9
16.4%
Total/GDP: 341.7%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................14 4.5


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................4 5.9


Financial sector liberalization ......................................................1 7.0
Corporate governance...................................................................5 5.6
Legal and regulatory issues .........................................................5 5.5
Contract enforcement..................................................................14 5.4
2nd pillar: Business environment ...............................................5 5.9
Human capital .................................................................................5 5.6
232
Taxes...............................................................................................17 5.5
Infrastructure ..................................................................................2 6.5
Cost of doing business ................................................................10 6.1
3rd pillar: Financial stability......................................................18 5.1
Currency stability..........................................................................23 4.4
Banking system stability..............................................................32 4.9
Risk of sovereign debt crisis ........................................................8 6.0
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................13 4.6


Size index .......................................................................................20 3.6
Efficiency index.............................................................................10 5.9
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services .............................22 2.7
IPO activity.....................................................................................36 1.6
M&A activity..................................................................................12 3.7
Insurance .......................................................................................14 3.2
Securitization.................................................................................28 2.1
6th pillar: Financial markets......................................................16 3.6
Foreign exchange markets .........................................................16 1.8
Derivatives markets .....................................................................15 4.2
Equity market development ........................................................12 4.4
Bond market development..........................................................12 3.8
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................26 3.6


Commercial access......................................................................11 4.3
Retail access.................................................................................21 2.9
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 233

2: Country/Economy Profiles
Sweden
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................1.7 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............77.4 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................15 .....■ .................4.7 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards ...................................................1 .....■ .................5.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management ...................................1 .....■ .................6.5 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate...........................................................1 .....■ .................6.2 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards..........................3 .....■ .................6.1 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms..........................................................1 .....■ .................6.7 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests........................1 .....■ .................6.0 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................8 .....■ .................4.0 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................19 .....■ .................3.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................1 .....■ .................5.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.........................................................................5 .....■ .................6.4 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection ...............................................2 .....■ .................6.1 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.........................................................2 .....■ .................6.5 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .........................................................4 .....■ .................5.8 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ..................................................1 .....■ .................9.3 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 233
1.21 Strength of legal rights index ................................................36 .....■ .................5.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................3 .....■ .................5.6 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence .............................................................1 .....■ .................6.6 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ..................................2 .....■ .................6.5 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................28 .....■ .............508.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................43 .....■ ...............31.3 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................11 .....■ .................5.4 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................21 .....■ .................4.8 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training.............................................................1 .....■ .................5.7 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services ...............................................................7 .....■ .................5.8 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................12 .....■ .................4.9 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ..................................................................5 .....■ ...............79.0 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ........................................2 .....■ .................6.5 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......10 .....■ .................4.9 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................37 .....■ ...............11.5 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................14 .....■ .............122.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure ...............................................9 .....■ .................6.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .........................................6 .....■ .................6.8 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ..........................................................................4 .....■ ...............80.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ..............................................2 .....■ ...............36.0 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .......................................................................3 .....■ ...............60.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................19 .....■ .............113.7 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 234

2: Country/Economy Profiles

Sweden
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................4 .....■ .................0.6 Denmark................................0.0
2.18 Cost of registering property ..................................................26 .....■ .................3.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................20 .....■ .................9.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................23 .....■ ...............15.0 Australia.................................2.0
2.21 Time to register property.........................................................1 .....■ .................2.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................23 .....■ .................2.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................28 .....■ .................1.1 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................12 .....■ .................8.3 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................17 .....■ ...............–6.8 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................10 .....■ .................8.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................39 .....■ .............148.5 Nigeria
Nigeria ...................................0.3
...................................0.3
234 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................33 .....■ .................4.8 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................23 .....■ ...............36.7 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................14 .....■ ...............88.3 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................11 .....■ .............124.5 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................36 .....■ ...............49.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................33 .....■ ...............59.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................11 .....■ .............115.7 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................36 .....■ ...............49.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................4 .....■ .................7.5 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................33 .....■ .................3.8 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................21 .....■ .................2.2 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................25 .....■ .................6.8 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets...............................................3 .....■ .................0.9 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................7 .....■ .................1.0 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................29 .....■ .................0.5 China ...................................19.3
5.02 IPO proceeds amount ...........................................................35 .....■ .................0.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................22 .....■ .................0.7 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
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2: Country/Economy Profiles
Sweden
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................13 .....■ .................1.3 United States ......................41.7
5.05 M&A transaction value to GDP .............................................10 .....■ .................9.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................14 .....■ .................2.0 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................19 .....■ ........33,874.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................11 .....■ ..........3,730.2 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................25 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................15 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................26 .....■ .................1.0 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................19 .....■ .................2.7 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................31 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................18 .....■ .................0.6 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................20 .....■ .................0.4 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................12 .....■ .................1.5 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 235
agreements .............................................................................5 .....■ .................2.6 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................21 .....■ .................0.1 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................10 .....■ .................0.5 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....32 .....■ .................0.1 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................13 .....■ .................0.7 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................11 .....■ .............162.2 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................11 .....■ .............134.4 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................9 .....■ .............218.0 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................15 .....■ .................0.3 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............7 .....■ ...............70.1 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............23 .....■ ...............35.9 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................11 .....■ ...............78.0 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................19 .....■ .................6.0 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................3 .....■ .................6.4 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .......................................................4 .....■ .................4.3 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................44 .....■ .................2.9 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................13 .....■ .................4.7 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................8 .....■ .................4.4 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................25 .....■ .................4.6 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................15 .....■ ...............22.8 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................33 .....■ ...............36.9 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 236

2: Country/Economy Profiles

Switzerland
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................7.3 7.2% US$ bn
GDP (US$ billions), 2008 .........................................................492.6 ■ Public debt securities .......187.3
GDP (current prices) per capita, 2008 ............................67,384.5 20.1% ■ Private debt securities......526.6
GDP (PPP) as share (%) of world total, 2008 ........................0.45 48.8% ■ Banking deposits ...............625.6
Average rate of real GDP growth (%), 2004–08....................2.68 ■ Equity securities .............1,274.5

Total 2,614.1
23.9%
Total/GDP: 612.1%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................7 4.9


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment ...........................................7 5.7


Financial sector liberalization ....................................................19 6.5
Corporate governance...................................................................8 5.3
Legal and regulatory issues .........................................................2 5.9
Contract enforcement..................................................................18 5.2
2nd pillar: Business environment ...............................................7 5.8
Human capital .................................................................................6 5.6
236
Taxes...............................................................................................22 5.2
Infrastructure ..................................................................................1 6.6
Cost of doing business ................................................................11 6.1
3rd pillar: Financial stability........................................................2 5.7
Currency stability............................................................................6 5.7
Banking system stability..............................................................26 5.1
Risk of sovereign debt crisis ........................................................2 6.3
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................14 4.6


Size index .........................................................................................5 5.2
Efficiency index.............................................................................22 5.3
Financial information disclosure................................................40 1.7
5th pillar: Non-banking financial services .............................16 3.2
IPO activity.....................................................................................26 2.0
M&A activity....................................................................................9 4.3
Insurance .........................................................................................5 4.6
Securitization.................................................................................33 1.9
6th pillar: Financial markets........................................................4 5.0
Foreign exchange markets ...........................................................5 6.2
Derivatives markets .....................................................................14 4.8
Equity market development ..........................................................3 5.5
Bond market development..........................................................13 3.7
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................8 4.5


Commercial access........................................................................6 4.6
Retail access...................................................................................9 4.3
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 237

2: Country/Economy Profiles
Switzerland
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................1.7 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............56.3 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................29 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................7 .....■ .................5.0 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................11 .....■ .................5.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management ...................................9 .....■ .................5.9 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate...........................................................7 .....■ .................5.3 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................13 .....■ .................5.7 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms..........................................................5 .....■ .................6.4 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................25 .....■ .................4.9 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................1 .....■ ...............14.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................22 .....■ .................6.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................4 .....■ .................4.3 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ................................1 .....■ .................5.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ........................................3 .....■ .................5.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.........................................................................1 .....■ .................6.5 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection ...............................................4 .....■ .................6.1 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.........................................................5 .....■ .................6.1 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .........................................................6 .....■ .................5.6 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ..................................................4 .....■ .................9.0 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 237
1.21 Strength of legal rights index ................................................11 .....■ .................8.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................9 .....■ .................4.9 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence .............................................................6 .....■ .................6.4 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................10 .....■ .................6.0 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................21 .....■ .............417.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................20 .....■ ...............32.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................53 .....■ .................3.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................28 .....■ ...............24.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................1 .....■ .................6.1 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education...................................4 .....■ .................5.7 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training.............................................................3 .....■ .................5.6 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services ...............................................................1 .....■ .................6.3 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ............................2 .....■ .................5.6 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................31 .....■ ...............45.8 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ........................................9 .....■ .................6.0 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......14 .....■ .................4.8 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................47 .....■ ...............16.1 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................3 .....■ ...............63.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure ...............................................1 .....■ .................6.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .........................................4 .....■ .................6.9 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ..........................................................................6 .....■ ...............77.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ..............................................4 .....■ ...............31.8 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .......................................................................1 .....■ ...............65.9 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................23 .....■ .............109.7 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 238

2: Country/Economy Profiles

Switzerland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................14 .....■ .................2.1 Denmark................................0.0
2.18 Cost of registering property ....................................................5 .....■ .................0.4 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ......................................................5 .....■ .................4.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................29 .....■ ...............20.0 Australia.................................2.0
2.21 Time to register property.......................................................14 .....■ ...............16.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................34 .....■ .................3.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................31 .....■ .................0.6 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................11 .....■ .................9.1 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies).............................................................2 .....■ .............138.5 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................10 .....■ .................8.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................41 .....■ .............176.1 Nigeria
Nigeria ...................................0.3
...................................0.3
238 3.10 Aggregate measure of real estate bubbles...........................24 .....■ .................5.0 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ......................................8 .....■ .................5.7 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................32 .....■ ...............40.9 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................10 .....■ ...............65.0 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................4 .....■ .............181.4 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................24 .....■ .................1.4 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................3 .....■ .............158.1 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................4 .....■ .............145.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................6 .....■ .............170.4 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP .............................................................5 .....■ .............136.0 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................19 .....■ .................0.1 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................17 .....■ .................4.5 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................43 .....■ .................4.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................28 .....■ .................8.2 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................14 .....■ .................1.6 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ............................n/a .........................n/a Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................33 .....■ ...............22.5 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................20 .....■ .................0.9 China ...................................19.3
5.02 IPO proceeds amount ...........................................................21 .....■ .................0.4 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................24 .....■ .................0.7 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 239

2: Country/Economy Profiles
Switzerland
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................11 .....■ .................2.1 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................2 .....■ ...............15.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................19 .....■ .................1.1 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................16 .....■ ........43,313.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ....................................................................4 .....■ ..........5,705.5 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................42 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................8 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................4 .....■ .................3.2 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................27 .....■ .................2.1 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................28 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................3 .....■ .................8.5 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ..........................6 .....■ .................4.0 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................4 .....■ .................5.3 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 239
agreements .............................................................................6 .....■ .................1.8 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ...............................5 .....■ .................3.5 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................26 .....■ .................0.0 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....24 .....■ .................0.2 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................3 .....■ .................4.7 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................14 .....■ .............141.9 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.........................................2 .....■ .............301.5 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................2 .....■ .............427.9 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................13 .....■ .................0.3 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP..............8 .....■ ...............44.8 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .........................................5 .....■ .............130.2 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................36 .....■ .................0.4 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................1 .....■ .................6.6 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................18 .....■ .................3.6 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................30 .....■ .................3.5 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................17 .....■ .................4.6 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................21 .....■ .................3.7 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................9 .....■ .................9.5 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................10 .....■ ...............93.7 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................6 .....■ ..........2,182.7 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 240

2: Country/Economy Profiles

Thailand
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................66.4 16.1% US$ bn
GDP (US$ billions), 2008 .........................................................273.2 ■ Public debt securities .........92.7
34.1%
GDP (current prices) per capita, 2008 ..............................4,115.3 9.1% ■ Private debt securities........52.4
GDP (PPP) as share (%) of world total, 2008 ........................0.80 ■ Banking deposits ...............233.2
Average rate of real GDP growth (%), 2004–08....................4.74 ■ Equity securities ................196.0

Total 574.3
40.6%
Total/GDP: 233.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................35 3.3


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................33 4.1


Financial sector liberalization ....................................................36 3.6
Corporate governance.................................................................29 4.6
Legal and regulatory issues .......................................................39 3.4
Contract enforcement..................................................................24 4.7
2nd pillar: Business environment .............................................31 4.4
Human capital ...............................................................................32 4.2
240
Taxes...............................................................................................26 4.8
Infrastructure ................................................................................32 3.7
Cost of doing business ................................................................33 5.1
3rd pillar: Financial stability......................................................36 4.6
Currency stability............................................................................9 5.6
Banking system stability..............................................................52 3.7
Risk of sovereign debt crisis ......................................................33 4.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................34 3.5


Size index .......................................................................................22 3.4
Efficiency index.............................................................................41 4.4
Financial information disclosure................................................36 2.0
5th pillar: Non-banking financial services .............................47 1.6
IPO activity.....................................................................................33 1.8
M&A activity..................................................................................35 1.6
Insurance .......................................................................................49 1.7
Securitization.................................................................................50 1.2
6th pillar: Financial markets......................................................36 2.0
Foreign exchange markets .........................................................30 1.1
Derivatives markets .....................................................................28 1.5
Equity market development ........................................................35 2.1
Bond market development..........................................................25 2.7
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................29 3.3


Commercial access......................................................................31 3.8
Retail access.................................................................................24 2.8
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 241

2: Country/Economy Profiles
Thailand
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......32 .....■ ...............49.1 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................25 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................42 .....■ .................4.1 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................39 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................36 .....■ .................4.6 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................44 .....■ .................3.6 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................31 .....■ .................5.0 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................36 .....■ .................4.0 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................27 .....■ .................4.8 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................13 .....■ ...............12.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry .............................2 .....■ .................8.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................20 .....■ .................3.5 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................42 .....■ .................2.7 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................23 .....■ .................4.9 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................40 .....■ .................4.3 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................40 .....■ .................3.3 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................33 .....■ .................3.5 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................35 .....■ .................2.7 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................39 .....■ .................3.5 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 241
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................36 .....■ .................3.4 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................29 .....■ .................4.2 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................41 .....■ .................3.5 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................25 .....■ .............479.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................29 .....■ ...............35.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................10 .....■ .................7.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................10 .....■ ...............14.3 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................36 .....■ .................4.2 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................34 .....■ .................4.1 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................36 .....■ .................4.1 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................40 .....■ .................4.1 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................30 .....■ .................4.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................27 .....■ ...............49.5 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................41 .....■ .................3.5 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......28 .....■ .................4.2 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................13 .....■ .................1.5 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................30 .....■ .............264.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................26 .....■ .................4.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................28 .....■ .................6.2 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................41 .....■ ...............21.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................46 .....■ .................1.4 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................46 .....■ ...............11.0 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers.................................................8 .....■ .............123.8 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 242

2: Country/Economy Profiles

Thailand
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................19 .....■ .................4.9 Denmark................................0.0
2.18 Cost of registering property ..................................................13 .....■ .................1.1 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................52 .....■ ...............36.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................43 .....■ ...............33.0 Australia.................................2.0
2.21 Time to register property.........................................................1 .....■ .................2.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................30 .....■ .................2.7 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................17 .....■ .................3.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator.................................................9 .....■ ...............38.0 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................29 .....■ ...............–0.1 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................24 .....■ .................2.3 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .......................7 .....■ ...............25.1 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................48 .....■ .................2.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................42 .....■ .................3.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria
Nigeria ...................................0.3
...................................0.3
242 3.10 Aggregate measure of real estate bubbles...........................25 .....■ .................4.9 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................34 .....■ ...............14.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................33 .....■ ...............12.7 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................27 .....■ .................5.0 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................26 .....■ ...............37.9 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................21 .....■ .............121.8 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................22 .....■ ...............93.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................17 .....■ .................2.1 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................14 .....■ ...............89.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................12 .....■ .............109.3 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................25 .....■ ...............82.7 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................15 .....■ ...............89.2 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................23 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................54 .....■ .................2.4 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................20 .....■ .................2.2 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................24 .....■ .................6.7 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................32 .....■ .................3.2 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................45 .....■ .................6.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................29 .....■ ...............31.8 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................30 .....■ .................0.5 China ...................................19.3
5.02 IPO proceeds amount ...........................................................22 .....■ .................0.4 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................25 .....■ .................0.6 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 243

2: Country/Economy Profiles
Thailand
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................32 .....■ .................0.2 United States ......................41.7
5.05 M&A transaction value to GDP .............................................32 .....■ .................2.8 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................26 .....■ .................0.6 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................31 .....■ ..........8,285.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................38 .....■ .............129.7 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................36 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................30 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................42 .....■ .................0.6 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................47 .....■ .................0.5 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................38 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................36 .....■ .................0.1 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................27 .....■ .................0.2 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................29 .....■ .................0.2 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 243
agreements ...........................................................................27 .....■ .................0.0 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................26 .....■ .................0.0 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................19 .....■ .................0.2 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....23 .....■ .................0.3 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................35 .....■ .................0.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................33 .....■ ...............63.9 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................33 .....■ ...............68.9 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................34 .....■ ...............44.0 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................24 .....■ .................0.1 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............13 .....■ ...............48.4 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................20 .....■ ...............25.7 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................29 .....■ .................2.2 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................28 .....■ .................5.1 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................34 .....■ .................3.0 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................18 .....■ .................3.9 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................22 .....■ .................4.5 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................24 .....■ .................3.6 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................32 .....■ .................3.9 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................17 .....■ ......149,800.9 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................36 .....■ ...............10.9 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................16 .....■ ...............65.5 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices...........................8 .....■ ..........2,003.9 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................26 .....■ .................0.1 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 244

2: Country/Economy Profiles

Turkey
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................69.7 US$ bn
GDP (US$ billions), 2008 .........................................................729.4 29.9% ■ Public debt securities .......252.8
33.9%
GDP (current prices) per capita, 2008 ............................10,471.7 ■ Private debt securities........12.2
GDP (PPP) as share (%) of world total, 2008 ........................1.35 ■ Banking deposits ...............294.8
Average rate of real GDP growth (%), 2004–08....................6.08 1.4% ■ Equity securities ................286.6

Total 846.4
34 8%
Total/GDP: 130.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................44 3.0


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................46 3.5


Financial sector liberalization ....................................................48 2.6
Corporate governance.................................................................51 3.8
Legal and regulatory issues .......................................................47 3.1
Contract enforcement..................................................................28 4.5
2nd pillar: Business environment .............................................32 4.4
Human capital ...............................................................................43 3.7
244
Taxes...............................................................................................30 4.7
Infrastructure ................................................................................37 3.5
Cost of doing business ................................................................19 5.5
3rd pillar: Financial stability......................................................51 3.8
Currency stability..........................................................................43 3.7
Banking system stability..............................................................34 4.8
Risk of sovereign debt crisis ......................................................51 2.6
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................41 3.0


Size index .......................................................................................44 1.6
Efficiency index.............................................................................37 4.5
Financial information disclosure................................................29 2.4
5th pillar: Non-banking financial services .............................40 1.8
IPO activity.....................................................................................35 1.7
M&A activity..................................................................................28 1.7
Insurance .......................................................................................46 1.7
Securitization.................................................................................27 2.1
6th pillar: Financial markets......................................................42 1.8
Foreign exchange markets .........................................................34 1.1
Derivatives markets .....................................................................23 2.2
Equity market development ........................................................32 2.3
Bond market development..........................................................41 1.3
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................38 3.0


Commercial access......................................................................44 3.4
Retail access.................................................................................30 2.7
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 245

2: Country/Economy Profiles
Turkey
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......29 .....■ ...............83.5 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................51 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................53 .....■ .................3.4 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................54 .....■ .................3.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................42 .....■ .................4.2 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................49 .....■ .................3.3 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................45 .....■ .................4.2 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................40 .....■ .................3.8 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................48 .....■ .................3.9 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................34 .....■ .................2.9 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................47 .....■ .................2.4 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................41 .....■ .................4.3 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................46 .....■ .................3.9 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................50 .....■ .................2.7 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................43 .....■ .................3.0 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................41 .....■ .................2.2 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................32 .....■ .................4.6 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 245
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................26 .....■ .................3.9 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................40 .....■ .................3.7 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................43 .....■ .................3.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................22 .....■ .............420.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................29 .....■ ...............35.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................25 .....■ .................5.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................20 .....■ ...............18.8 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................46 .....■ .................3.8 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................36 .....■ .................3.8 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................45 .....■ .................3.7 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................45 .....■ .................3.9 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................41 .....■ .................3.7 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................37 .....■ ...............34.6 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................43 .....■ .................3.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......37 .....■ .................4.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................17 .....■ .................3.2 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................25 .....■ .............223.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................33 .....■ .................4.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................35 .....■ .................6.0 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................45 .....■ ...............16.2 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................31 .....■ .................6.1 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................31 .....■ ...............24.3 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................39 .....■ ...............82.8 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 246

2: Country/Economy Profiles

Turkey
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................39 .....■ ...............14.9 Denmark................................0.0
2.18 Cost of registering property ..................................................26 .....■ .................3.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................30 .....■ ...............15.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................6 .....■ .................6.0 Australia.................................2.0
2.21 Time to register property.........................................................7 .....■ .................6.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................38 .....■ .................3.3 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................10 .....■ .................4.6 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................26 .....■ .............125.0 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................46 .....■ ...............–5.7 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................38 .....■ ...............79.4 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................17 .....■ ...............38.3 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................51 .....■ .................2.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................37 .....■ .................4.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt..................................................7 .....■ .................1.9 Nigeria
Nigeria ...................................0.3
...................................0.3
246 3.10 Aggregate measure of real estate bubbles...........................19 .....■ .................5.3 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................48 .....■ .................8.7 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................48 .....■ .................7.7 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................52 .....■ .................3.1 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................29 .....■ ...............40.0 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................36 .....■ .............274.0 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................42 .....■ ...............45.7 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................19 .....■ .................2.1 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................42 .....■ ...............37.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................46 .....■ ...............44.7 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................46 .....■ ...............26.0 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................43 .....■ ...............37.6 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................13 .....■ .................4.7 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................41 .....■ .................4.1 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................43 .....■ ...............32.1 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................39 .....■ .................3.9 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................36 .....■ .................3.3 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................31 .....■ ...............26.3 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................12 .....■ ...............12.7 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................21 .....■ .................0.9 China ...................................19.3
5.02 IPO proceeds amount ...........................................................30 .....■ .................0.3 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................32 .....■ .................0.4 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 247

2: Country/Economy Profiles
Turkey
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................23 .....■ .................0.6 United States ......................41.7
5.05 M&A transaction value to GDP .............................................31 .....■ .................3.0 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................32 .....■ .................0.4 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................32 .....■ ..........8,221.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................39 .....■ .............109.8 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................33 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................46 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................23 .....■ .................1.1 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................22 .....■ .................2.3 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................20 .....■ .................0.4 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover............................................40 .....■ .................0.1 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ........................28 .....■ .................0.2 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover..........................................32 .....■ .................0.1 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 247
agreements ...........................................................................29 .....■ .................0.0 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps .............................34 .....■ .................0.0 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ...........................24 .....■ .................0.0 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .....11 .....■ .................1.5 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ..................23 .....■ .................0.1 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................16 .....■ .............134.3 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................48 .....■ ...............34.3 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................32 .....■ ...............46.0 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................33 .....■ .................0.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............31 .....■ .................0.1 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................38 .....■ .................1.8 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................17 .....■ .................6.3 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................29 .....■ .................5.0 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................52 .....■ .................2.3 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................26 .....■ .................3.6 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................41 .....■ .................3.9 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................42 .....■ .................2.8 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................37 .....■ .................3.4 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................9 .....■ ......185,115.0 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................22 .....■ ...............17.3 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................29 .....■ ...............41.0 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................13 .....■ ..........1,101.5 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................27 .....■ .................0.0 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 248

2: Country/Economy Profiles

Ukraine
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................45.8 8.7% US$ bn
2.7%
GDP (US$ billions), 2008 .........................................................179.7 ■ Public debt securities .........16.5
GDP (current prices) per capita, 2008 ..............................3,920.1 ■ Private debt securities..........5.2
GDP (PPP) as share (%) of world total, 2008 ........................0.50 ■ Banking deposits .................56.1
Average rate of real GDP growth (%), 2004–08....................6.42 59.0%
29.6% ■ Equity securities ................111.8

Total 189.6

Total/GDP: 132.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................53 2.7


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................51 3.1


Financial sector liberalization ....................................................50 2.1
Corporate governance.................................................................52 3.7
Legal and regulatory issues .......................................................50 2.9
Contract enforcement..................................................................45 3.6
2nd pillar: Business environment .............................................45 3.7
Human capital ...............................................................................28 4.3
248
Taxes...............................................................................................53 2.8
Infrastructure ................................................................................33 3.6
Cost of doing business ................................................................46 4.3
3rd pillar: Financial stability......................................................55 3.2
Currency stability..........................................................................48 3.3
Banking system stability..............................................................51 3.9
Risk of sovereign debt crisis ......................................................55 2.2
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................52 2.4


Size index .....................................................................................n/a n/a
Efficiency index.............................................................................53 3.0
Financial information disclosure................................................51 1.1
5th pillar: Non-banking financial services .............................27 2.4
IPO activity.....................................................................................44 1.3
M&A activity..................................................................................39 1.4
Insurance .......................................................................................32 2.5
Securitization...................................................................................7 4.3
6th pillar: Financial markets......................................................54 1.3
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................51 1.3
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................45 2.9


Commercial access......................................................................48 3.1
Retail access.................................................................................29 2.7
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 249

2: Country/Economy Profiles
Ukraine
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services......n/a .........................n/a Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................48 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................41 .....■ .................4.1 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................46 .....■ .................4.4 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................50 .....■ .................4.0 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................52 .....■ .................3.2 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................53 .....■ .................3.7 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................53 .....■ .................3.2 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................55 .....■ .................3.0 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................40 .....■ .................2.7 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................26 .....■ .................3.3 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................55 .....■ .................2.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................54 .....■ .................2.9 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................51 .....■ .................2.6 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................50 .....■ .................2.5 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................45 .....■ .................2.0 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................49 .....■ .................2.5 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 249
1.21 Strength of legal rights index ..................................................4 .....■ .................9.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................51 .....■ .................2.3 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................54 .....■ .................2.3 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................46 .....■ .................3.2 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................13 .....■ .............354.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................52 .....■ .................3.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................50 .....■ ...............41.5 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................48 .....■ .................3.7 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................24 .....■ .................4.7 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................52 .....■ .................3.4 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................44 .....■ .................3.9 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................50 .....■ .................3.4 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ..................................................................7 .....■ ...............76.4 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................46 .....■ .................3.1 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......53 .....■ .................3.0 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................43 .....■ ...............13.5 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................50 .....■ .............848.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................41 .....■ .................3.5 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................47 .....■ .................5.4 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................39 .....■ ...............21.6 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................43 .....■ .................1.7 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................27 .....■ ...............27.8 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers.................................................9 .....■ .............119.6 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 250

2: Country/Economy Profiles

Ukraine
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................23 .....■ .................5.5 Denmark................................0.0
2.18 Cost of registering property ..................................................25 .....■ .................2.9 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................55 .....■ ...............42.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................34 .....■ ...............27.0 Australia.................................2.0
2.21 Time to register property.......................................................48 .....■ ...............93.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................33 .....■ .................2.9 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................26 .....■ .................1.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................19 .....■ ...............76.4 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................48 .....■ ...............–7.2 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................35 .....■ ...............47.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................27 .....■ ...............59.9 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................54 .....■ .................3.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................47 .....■ .................2.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................10 .....■ .................4.0 Nigeria
Nigeria ...................................0.3
...................................0.3
250 3.10 Aggregate measure of real estate bubbles...........................28 .....■ .................4.8 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................51 .....■ .................5.3 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................53 .....■ .................4.3 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................55 .....■ .................2.6 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt ...................................................5 .....■ ...............10.3 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................44 .....■ ..........1,837.1 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP ....................................n/a .........................n/a Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP .......................................n/a .........................n/a Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................42 .....■ ...............52.0 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP............................................................n/a .........................n/a United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................46 .....■ ...............33.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................45 .....■ .................3.3 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................40 .....■ .................3.8 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................32 .....■ ...............10.4 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................52 .....■ .................7.1 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................49 .....■ ...............14.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................44 .....■ .................3.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................43 .....■ .................0.1 China ...................................19.3
5.02 IPO proceeds amount ...........................................................38 .....■ .................0.2 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................42 .....■ .................0.1 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 251

2: Country/Economy Profiles
Ukraine
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................41 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................39 .....■ .................2.4 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................33 .....■ .................0.3 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................41 .....■ ..........3,566.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................43 .....■ ...............77.2 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................12 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................36 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................18 .....■ .................1.5 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................11 .....■ .................4.7 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .........................9 .....■ .................1.6 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 251
agreements ..........................................................................n/a .........................n/a United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................53 .....■ .................2.6 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................38 .....■ ...............55.0 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................52 .....■ .................1.4 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................27 .....■ .................0.1 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................54 .....■ .................3.4 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................47 .....■ .................2.5 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................41 .....■ .................2.9 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................53 .....■ .................2.8 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................47 .....■ .................2.7 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................19 .....■ .................6.9 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts .....................................1 .....■ ......375,499.3 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................45 .....■ .................3.3 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................14 .....■ ...............70.1 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................33 .....■ ...............10.7 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................20 .....■ .................0.6 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 252

2: Country/Economy Profiles

United Arab Emirates


Key indicators Financial assets by major type, 2007
Population (millions), 2008 .........................................................4.8 10.2% US$ bn
GDP (US$ billions), 2008 .........................................................260.1 ■ Public debt securities .........47.9
10.8%
GDP (current prices) per capita, 2008 ............................54,606.5 ■ Private debt securities........51.0
GDP (PPP) as share (%) of world total, 2008 ........................0.27 47.7% ■ Banking deposits ...............147.0
Average rate of real GDP growth (%), 2004–08....................8.20 ■ Equity securities ................224.7

31.2% Total 470.6

Total/GDP: 261.2%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................20 4.2


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................21 5.0


Financial sector liberalization ....................................................22 5.9
Corporate governance.................................................................13 5.1
Legal and regulatory issues .......................................................13 4.9
Contract enforcement..................................................................34 4.2
2nd pillar: Business environment .............................................19 5.2
Human capital ...............................................................................22 4.7
252
Taxes.................................................................................................2 6.2
Infrastructure ................................................................................21 5.2
Cost of doing business ................................................................41 4.7
3rd pillar: Financial stability......................................................17 5.1
Currency stability..........................................................................20 4.6
Banking system stability................................................................1 6.5
Risk of sovereign debt crisis ......................................................41 3.6
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................21 4.2


Size index .....................................................................................n/a n/a
Efficiency index.............................................................................18 5.5
Financial information disclosure................................................41 1.6
5th pillar: Non-banking financial services .............................26 2.4
IPO activity.....................................................................................11 3.5
M&A activity..................................................................................45 1.3
Insurance .......................................................................................21 2.9
Securitization.................................................................................34 1.9
6th pillar: Financial markets......................................................21 3.1
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................25 3.1
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access..........................................................7 4.6


Commercial access........................................................................7 4.6
Retail access ...............................................................................n/a n/a
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 253

2: Country/Economy Profiles
United Arab Emirates
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......23 .....■ ...............38.6 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................27 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................14 .....■ .................4.7 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................20 .....■ .................5.1 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................25 .....■ .................5.1 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................15 .....■ .................4.8 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................20 .....■ .................5.4 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................15 .....■ .................5.5 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................12 .....■ .................5.2 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation ...........................................3 .....■ .................4.6 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ................................8 .....■ .................4.5 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................17 .....■ .................5.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................23 .....■ .................5.5 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................12 .....■ .................5.6 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................15 .....■ .................5.5 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .........................................................3 .....■ .................5.9 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................22 .....■ .................5.9 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 253
1.21 Strength of legal rights index ................................................39 .....■ .................4.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................11 .....■ .................4.7 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................19 .....■ .................5.1 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................14 .....■ .................5.9 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................40 .....■ .............607.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................54 .....■ ...............50.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................47 .....■ .................4.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................34 .....■ ...............26.2 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................18 .....■ .................5.1 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................12 .....■ .................5.1 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................23 .....■ .................4.6 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................19 .....■ .................5.0 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ............................1 .....■ .................6.0 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................46 .....■ ...............22.9 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................14 .....■ .................5.9 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ........3 .....■ .................5.8 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ..............................................................9 .....■ .................0.0 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ....................................................................1 .....■ ...............12.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................10 .....■ .................6.1 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................19 .....■ .................6.5 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................24 .....■ ...............51.6 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................28 .....■ .................8.7 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................25 .....■ ...............31.6 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers.................................................1 .....■ .............176.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 254

2: Country/Economy Profiles

United Arab Emirates


Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................36 .....■ ...............13.4 Denmark................................0.0
2.18 Cost of registering property ..................................................17 .....■ .................2.0 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................51 .....■ ...............30.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................26 .....■ ...............17.0 Australia.................................2.0
2.21 Time to register property.........................................................7 .....■ .................6.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................51 .....■ .................5.1 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................36 .....■ .................0.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................27 .....■ .............134.5 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................5 .....■ ...............15.8 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator .......................................n/a .........................n/a Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................28 .....■ ...............70.4 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises ...................................................1 .....■ .................0.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria
Nigeria ...................................0.3
...................................0.3
254 3.10 Aggregate measure of real estate bubbles...........................18 .....■ .................5.3 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating............................................n/a .........................n/a Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating ........................................n/a .........................n/a Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................49 .....■ .................3.9 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................31 .....■ ...............40.7 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP ....................................n/a .........................n/a Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP .................................................n/a .........................n/a Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP .......................................n/a .........................n/a Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................26 .....■ ...............73.8 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP............................................................n/a .........................n/a United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ..........................................................n/a .........................n/a Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................17 .....■ .................0.5 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................2 .....■ .................6.3 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................6 .....■ .................1.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................50 .....■ ...............57.4 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................19 .....■ .................1.8 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................22 .....■ .................2.5 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................40 .....■ .................7.7 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................14 .....■ .................6.5 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................15 .....■ .................1.5 China ...................................19.3
5.02 IPO proceeds amount .............................................................2 .....■ .................1.6 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................28 .....■ .................0.5 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 255

2: Country/Economy Profiles
United Arab Emirates
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................40 .....■ .................0.1 United States ......................41.7
5.05 M&A transaction value to GDP .............................................41 .....■ .................2.1 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................41 .....■ .................0.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................40 .....■ ..........3,973.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................23 .....■ .............907.1 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................1 .....■ .................0.3 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................40 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP ...........................n/a .........................n/a Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................21 .....■ .................2.3 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................40 .....■ .................0.1 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 255
agreements ..........................................................................n/a .........................n/a United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................28 .....■ ...............82.5 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................16 .....■ .............123.0 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................19 .....■ .............110.4 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................17 .....■ .................0.2 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................25 .....■ .................5.4 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................11 .....■ .................3.9 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................12 .....■ .................4.1 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ....................................7 .....■ .................4.8 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ..........................................................5 .....■ .................4.5 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................18 .....■ .................7.4 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 256

2: Country/Economy Profiles

United Kingdom
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................61.1 9.9% US$ bn
GDP (US$ billions), 2008 ......................................................2,674.1 ■ Public debt securities ....1,203.0
31.6%
GDP (current prices) per capita, 2008 ............................43,785.3 ■ Private debt securities...2,914.6
GDP (PPP) as share (%) of world total, 2008 ........................3.23 23.9% ■ Banking deposits ............4,228.9
Average rate of real GDP growth (%), 2004–08....................2.28 ■ Equity securities .............3,858.5

Total 12,205.0

Total/GDP: 435.4%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................1 5.3


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................15 5.5


Financial sector liberalization ......................................................1 7.0
Corporate governance.................................................................22 4.9
Legal and regulatory issues .......................................................16 4.7
Contract enforcement....................................................................9 5.5
2nd pillar: Business environment .............................................12 5.6
Human capital ...............................................................................14 5.0
256
Taxes...............................................................................................20 5.3
Infrastructure ..................................................................................9 6.0
Cost of doing business ..................................................................8 6.2
3rd pillar: Financial stability......................................................37 4.6
Currency stability..........................................................................44 3.6
Banking system stability..............................................................45 4.4
Risk of sovereign debt crisis ......................................................15 5.8
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services........................................2 5.3


Size index .........................................................................................1 6.0
Efficiency index.............................................................................24 5.3
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services ...............................1 6.4
IPO activity.......................................................................................5 4.9
M&A activity....................................................................................1 6.9
Insurance .........................................................................................1 6.7
Securitization...................................................................................1 7.0
6th pillar: Financial markets........................................................2 5.5
Foreign exchange markets ...........................................................1 7.0
Derivatives markets .......................................................................1 7.0
Equity market development ..........................................................4 5.5
Bond market development..........................................................14 3.6
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................16 4.0


Commercial access......................................................................22 4.0
Retail access ...............................................................................n/a n/a
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 257

2: Country/Economy Profiles
United Kingdom
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.........1 .....■ ...............73.9 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................9 .....■ .................5.0 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................17 .....■ .................5.1 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................12 .....■ .................5.7 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................14 .....■ .................4.8 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................15 .....■ .................5.6 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................12 .....■ .................5.9 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................15 .....■ .................5.1 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ....................................................28 .....■ .................9.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................31 .....■ .................3.0 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................43 .....■ .................2.6 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................28 .....■ .................4.8 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................19 .....■ .................5.6 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................17 .....■ .................5.3 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................12 .....■ .................5.6 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................25 .....■ .................3.4 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................13 .....■ .................7.7 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 257
1.21 Strength of legal rights index ..................................................4 .....■ .................9.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .......................................8 .....■ .................5.0 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................14 .....■ .................6.0 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................18 .....■ .................5.4 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................18 .....■ .............404.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................10 .....■ ...............30.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................8 .....■ .................8.0 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................26 .....■ ...............23.4 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................13 .....■ .................5.4 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................30 .....■ .................4.4 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................20 .....■ .................4.7 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services ...............................................................9 .....■ .................5.6 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................11 .....■ .................4.9 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................18 .....■ ...............59.3 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................19 .....■ .................5.4 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......29 .....■ .................4.2 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................26 .....■ .................7.0 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................10 .....■ .............105.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................24 .....■ .................5.2 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................23 .....■ .................6.4 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................10 .....■ ...............72.0 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................11 .....■ ...............25.7 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .......................................................................7 .....■ ...............55.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................11 .....■ .............118.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 258

2: Country/Economy Profiles

United Kingdom
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................8 .....■ .................0.8 Denmark................................0.0
2.18 Cost of registering property ..................................................32 .....■ .................4.1 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................14 .....■ .................6.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................17 .....■ ...............13.0 Australia.................................2.0
2.21 Time to register property.......................................................19 .....■ ...............21.0 Multiple (3) ............................2.0
2.22 Time to close a business.........................................................8 .....■ .................1.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................34 .....■ .................0.3 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................33 .....■ ...............–1.7 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................20 .....■ .............–27.2 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................41 .....■ .................2.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................40 .....■ .............152.4 Nigeria
Nigeria ...................................0.3
...................................0.3
258 3.10 Aggregate measure of real estate bubbles...........................39 .....■ .................3.4 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................14 .....■ ...............19.8 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................14 .....■ ...............19.8 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................25 .....■ .................5.0 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................39 .....■ ...............51.9 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................15 .....■ ...............90.4 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .......................................6 .....■ .............175.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................21 .....■ .................1.8 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ..........................................4 .....■ .............141.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ..............................................................................6 .....■ .............135.2 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................5 .....■ .............176.3 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP .............................................................4 .....■ .............141.9 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP........................................2 .....■ ...............11.6 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................43 .....■ .................3.4 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................23 .....■ .................2.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................40 .....■ ...............27.5 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................12 .....■ .................1.4 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ...............................5 .....■ .................0.9 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................5 .....■ .................5.7 China ...................................19.3
5.02 IPO proceeds amount ...........................................................19 .....■ .................0.5 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ................................................................5 .....■ .................7.2 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 259

2: Country/Economy Profiles
United Kingdom
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................2 .....■ ...............10.0 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................4 .....■ ...............12.1 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................2 .....■ .................8.8 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................2 .....■ ......539,468.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ....................................................................1 .....■ ..........8,326.0 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................4 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration..............................................................1 .....■ .................0.2 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................8 .....■ .................2.5 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................2 .....■ ...............10.1 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .........................3 .....■ .................3.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................1 .....■ ...............26.3 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ..........................1 .....■ ...............29.2 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................1 .....■ ...............40.8 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 259
agreements .............................................................................1 .....■ ...............45.1 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ...............................1 .....■ ...............45.8 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................2 .....■ ...............34.1 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......1 .....■ ...............46.7 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................1 .....■ ...............42.4 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................1 .....■ .............267.7 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................10 .....■ .............141.4 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................3 .....■ .............378.5 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................10 .....■ .................0.4 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............16 .....■ ...............22.1 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............15 .....■ ...............46.7 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .........................................4 .....■ .............131.6 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................35 .....■ .................0.5 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication ...............................................6 .....■ .................6.3 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................19 .....■ .................3.5 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................55 .....■ .................1.9 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................33 .....■ .................4.2 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................31 .....■ .................3.2 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................15 .....■ .................8.0 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ..................................n/a .........................n/a Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches ..................................................n/a .........................n/a Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs.............................................................5 .....■ .............127.1 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices........................n/a .........................n/a Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 260

2: Country/Economy Profiles

United States
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .....................................................304.4 8.8% US$ bn
GDP (US$ billions), 2008 ....................................................14,264.6 ■ Public debt securities ....5,110.5
GDP (current prices) per capita, 2008 ............................46,859.1 34.3% ■ Private debt securities.22,302.0
GDP (PPP) as share (%) of world total, 2008 ......................20.69 ■ Banking deposits ..........10,759.4
38.4%
Average rate of real GDP growth (%), 2004–08....................2.50 ■ Equity securities ...........19,947.3

Total 58,119.1

Total/GDP: 420.9%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index........................................................3 5.1


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................11 5.6


Financial sector liberalization ....................................................13 6.8
Corporate governance...................................................................9 5.3
Legal and regulatory issues .......................................................14 4.8
Contract enforcement....................................................................8 5.6
2nd pillar: Business environment .............................................10 5.7
Human capital .................................................................................4 5.6
260
Taxes...............................................................................................27 4.8
Infrastructure ................................................................................13 5.8
Cost of doing business ..................................................................4 6.6
3rd pillar: Financial stability......................................................38 4.6
Currency stability..........................................................................50 2.8
Banking system stability..............................................................36 4.7
Risk of sovereign debt crisis ........................................................6 6.1
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................20 4.2


Size index .......................................................................................21 3.4
Efficiency index.............................................................................26 5.1
Financial information disclosure..................................................3 4.0
5th pillar: Non-banking financial services ...............................2 5.9
IPO activity.......................................................................................2 5.4
M&A activity....................................................................................2 6.5
Insurance .........................................................................................4 4.9
Securitization...................................................................................1 7.0
6th pillar: Financial markets........................................................1 5.7
Foreign exchange markets ...........................................................1 7.0
Derivatives markets .......................................................................1 7.0
Equity market development ..........................................................7 5.0
Bond market development............................................................6 4.5
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................12 4.2


Commercial access......................................................................34 3.8
Retail access...................................................................................6 4.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 261

2: Country/Economy Profiles
United States
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization ...................................................1 .....■ .................2.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......15 .....■ ...............51.5 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization ...................................1 .....■ .................1.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ................................1 .....■ .................5.4 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................14 .....■ .................5.2 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................10 .....■ .................5.9 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate...........................................................5 .....■ .................5.4 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................25 .....■ .................5.3 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................18 .....■ .................5.5 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................17 .....■ .................5.0 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................5 .....■ ...............13.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ...........................10 .....■ .................7.0 South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................21 .....■ .................3.4 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ................................7 .....■ .................4.5 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................29 .....■ .................4.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................20 .....■ .................5.5 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................15 .....■ .................5.4 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................19 .....■ .................5.0 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................26 .....■ .................3.4 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................15 .....■ .................7.3 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 261
1.21 Strength of legal rights index ................................................11 .....■ .................8.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................21 .....■ .................4.2 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................18 .....■ .................5.3 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................21 .....■ .................5.2 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................8 .....■ .............300.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................20 .....■ ...............32.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection ...............................................4 .....■ .................8.3 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts.....................................................1 .....■ .................9.4 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools .............................................4 .....■ .................5.9 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................27 .....■ .................4.5 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training.............................................................7 .....■ .................5.3 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services ...............................................................3 .....■ .................6.0 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ............................5 .....■ .................5.2 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ..................................................................3 .....■ ...............81.8 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................21 .....■ .................5.3 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......39 .....■ .................4.0 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................37 .....■ ...............11.5 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................21 .....■ .............187.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................12 .....■ .................5.9 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................15 .....■ .................6.7 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ..........................................................................9 .....■ ...............72.5 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................13 .....■ ...............23.9 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .......................................................................8 .....■ ...............53.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................38 .....■ ...............83.5 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 262

2: Country/Economy Profiles

United States
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business .....................................................6 .....■ .................0.7 Denmark................................0.0
2.18 Cost of registering property ....................................................6 .....■ .................0.5 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................15 .....■ .................7.0 Multiple (4) ............................1.0
2.20 Time to start a business ..........................................................6 .....■ .................6.0 Australia.................................2.0
2.21 Time to register property.......................................................11 .....■ ...............12.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................16 .....■ .................1.5 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................51 .....■ ...............–5.0 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator..............................................n/a .........................n/a Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................44 .....■ ...............–4.7 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ..........................................1 .....■ .................0.0 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) ....................n/a .........................n/a China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)...........................................................19 .....■ .............–17.6 Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................53 .....■ .................3.0 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator....................................................1 .....■ .................9.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt ...............................................n/a .........................n/a Nigeria
Nigeria ...................................0.3
...................................0.3
262 3.10 Aggregate measure of real estate bubbles...........................35 .....■ .................4.0 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ..............................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating...........................................1 .....■ ...............20.0 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................34 .....■ .................4.8 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................25 .....■ ...............37.5 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads ...................................................5 .....■ ...............44.5 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................32 .....■ ...............65.9 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................10 .....■ .................5.5 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................21 .....■ ...............73.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................37 .....■ ...............57.2 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP...............................................................1 .....■ .............202.4 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................21 .....■ ...............73.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................16 .....■ .................0.6 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................47 .....■ .................3.2 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................38 .....■ .................3.5 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ......................................................1 .....■ .................0.0 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................28 .....■ .................2.9 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................19 .....■ .................2.3 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage................................................1 .....■ .............100.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ....................................................................2 .....■ ...............16.9 China ...................................19.3
5.02 IPO proceeds amount ...........................................................33 .....■ .................0.3 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ................................................................2 .....■ ...............11.7 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 263

2: Country/Economy Profiles
United States
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share..................................................................1 .....■ ...............41.7 United States ......................41.7
5.05 M&A transaction value to GDP ...............................................9 .....■ .................9.7 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ......................................1 .....■ ...............30.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ....................................................1 .....■ ...1,230,526.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ....................................................................7 .....■ ..........4,089.3 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................39 .....■ .................0.0 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................12 .....■ .................0.1 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP..............................9 .....■ .................2.4 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ..............................................................1 .....■ ...............16.3 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .........................1 .....■ ...............60.3 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover..............................................2 .....■ ...............24.4 United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover ..........................2 .....■ ...............26.7 United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover............................................2 .....■ ...............10.8 United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 263
agreements .............................................................................2 .....■ ...............26.9 United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ...............................2 .....■ ...............20.5 United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options .............................1 .....■ ...............42.4 United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps .......2 .....■ ...............17.0 United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options ....................2 .....■ ...............30.0 United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio.....................................................3 .....■ .............214.8 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.........................................9 .....■ .............143.7 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP..........................................4 .....■ .............308.5 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................18 .....■ .................0.2 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ...............3 .....■ ...............66.1 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .........................................7 .....■ .............122.7 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................40 .....■ .................0.1 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................10 .....■ .................6.2 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .......................................................6 .....■ .................4.2 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................49 .....■ .................2.7 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................24 .....■ .................4.4 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................22 .....■ .................3.7 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................47 .....■ .................1.7 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................12 .....■ ......176,077.5 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches.....................................................5 .....■ ...............35.4 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs.............................................................2 .....■ .............169.2 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................29 .....■ .............171.8 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ..........................................n/a .........................n/a Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 264

2: Country/Economy Profiles

Venezuela
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................28.1 US$ bn
GDP (US$ billions), 2008 .........................................................319.4 36.8% ■ Public debt securities .........44.0
GDP (current prices) per capita, 2008 ............................11,388.3 ■ Private debt securities........11.9
GDP (PPP) as share (%) of world total, 2008 ........................0.52 53.3% ■ Banking deposits .................63.7
Average rate of real GDP growth (%), 2004–08..................10.43 ■ Equity securities....................n/a

Total 119.6
9.9%
Total/GDP: 52.5%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................55 2.5


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................54 2.5


Financial sector liberalization ....................................................54 1.2
Corporate governance.................................................................50 3.8
Legal and regulatory issues .......................................................55 2.0
Contract enforcement..................................................................54 3.0
2nd pillar: Business environment .............................................54 2.9
Human capital ...............................................................................46 3.6
264
Taxes...............................................................................................55 1.8
Infrastructure ................................................................................45 3.0
Cost of doing business ................................................................51 3.4
3rd pillar: Financial stability......................................................42 4.4
Currency stability............................................................................2 6.2
Banking system stability..............................................................44 4.5
Risk of sovereign debt crisis ......................................................49 2.7
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................49 2.5


Size index .......................................................................................52 1.1
Efficiency index.............................................................................34 4.6
Financial information disclosure................................................55 1.0
5th pillar: Non-banking financial services .............................48 1.5
IPO activity.....................................................................................53 1.0
M&A activity..................................................................................53 1.0
Insurance .......................................................................................31 2.5
Securitization.................................................................................40 1.5
6th pillar: Financial markets......................................................45 1.6
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................55 1.0
Bond market development..........................................................31 2.2
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................55 2.1


Commercial access......................................................................54 2.6
Retail access.................................................................................46 1.7
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 265

2: Country/Economy Profiles
Venezuela
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................44 .....■ ...............–0.5 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......45 .....■ ...............19.9 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................53 .....■ .................3.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................54 .....■ .................3.4 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................55 .....■ .................3.7 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................48 .....■ .................4.1 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................50 .....■ .................3.3 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................52 .....■ .................3.8 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................55 .....■ .................2.9 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................52 .....■ .................3.5 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power ......................................................5 .....■ ...............13.0 Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................55 .....■ .................1.8 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................55 .....■ .................1.2 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................52 .....■ .................3.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................55 .....■ .................2.1 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................55 .....■ .................2.0 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................55 .....■ .................1.8 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................51 .....■ .................1.6 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................55 .....■ .................1.9 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 265
1.21 Strength of legal rights index ................................................49 .....■ .................3.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................55 .....■ .................1.5 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................55 .....■ .................1.4 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................55 .....■ .................2.1 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ....................................................29 .....■ .............510.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .........................9 .....■ ...............29.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................54 .....■ .................2.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................51 .....■ ...............43.7 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................35 .....■ .................4.3 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................48 .....■ .................3.0 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................49 .....■ .................3.5 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................53 .....■ .................3.4 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................55 .....■ .................2.7 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................24 .....■ ...............52.0 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................55 .....■ .................2.1 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......55 .....■ .................2.3 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................50 .....■ ...............23.7 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................51 .....■ .............864.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................51 .....■ .................3.0 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................54 .....■ .................4.6 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................42 .....■ ...............20.7 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................37 .....■ .................3.1 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................40 .....■ ...............18.4 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................35 .....■ ...............86.1 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 266

2: Country/Economy Profiles

Venezuela
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................50 .....■ ...............26.8 Denmark................................0.0
2.18 Cost of registering property ..................................................18 .....■ .................2.2 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................53 .....■ ...............38.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................54 .....■ .............141.0 Australia.................................2.0
2.21 Time to register property.......................................................38 .....■ ...............47.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................41 .....■ .................4.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate...................................5 .....■ .................5.2 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator...............................................17 .....■ ...............70.4 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP.............................................8 .....■ ...............12.3 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................23 .....■ .................0.6 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .......................6 .....■ ...............24.4 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................23 .....■ .................1.3 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................47 .....■ .................2.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt................................................11 .....■ .................4.5 Nigeria
Nigeria ...................................0.3
...................................0.3
266 3.10 Aggregate measure of real estate bubbles ..........................n/a .........................n/a Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................50 .....■ .................7.7 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................48 .....■ .................7.7 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................51 .....■ .................3.2 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt ...................................................6 .....■ ...............13.8 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads.................................................n/a .........................n/a Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................51 .....■ ...............22.6 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................36 .....■ .................0.4 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................47 .....■ ...............24.7 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................53 .....■ ...............28.4 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................49 .....■ ...............18.3 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................49 .....■ ...............24.5 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP......................................27 .....■ .................0.0 Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ..............................................8 .....■ .................4.9 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs.............................................................45 .....■ .................4.4 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................19 .....■ .................5.5 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................51 .....■ .................6.8 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans .............................19 .....■ .................2.3 Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................24 .....■ .................0.0 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................53 .....■ .................0.0 China ...................................19.3
5.02 IPO proceeds amount ...........................................................53 .....■ .................0.0 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................53 .....■ .................0.0 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 267

2: Country/Economy Profiles
Venezuela
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................48 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................53 .....■ .................0.6 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................52 .....■ .................0.0 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................33 .....■ ..........7,172.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................31 .....■ .............259.3 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums.............................3 .....■ .................0.2 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................31 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP............................48 .....■ .................0.3 Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................32 .....■ .................1.7 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................52 .....■ .................0.0 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 267
agreements ..........................................................................n/a .........................n/a United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................49 .....■ ...............10.0 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................55 .....■ .................3.7 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................54 .....■ .................0.4 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................41 .....■ .................0.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP............29 .....■ .................1.0 Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP .............16 .....■ ...............46.1 Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP .......................................34 .....■ .................3.5 Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP ........................................14 .....■ .................8.1 Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................49 .....■ .................3.7 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................53 .....■ .................2.2 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................34 .....■ .................3.4 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ..................................54 .....■ .................2.7 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................52 .....■ .................2.4 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ........................................52 .....■ .................0.3 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................30 .....■ ........51,840.1 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................20 .....■ ...............18.5 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs...........................................................36 .....■ ...............28.0 Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................34 .....■ .................3.0 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate ...........................................21 .....■ .................0.6 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 268

2: Country/Economy Profiles

Vietnam
Key indicators Financial assets by major type, 2007
Population (millions), 2008 .......................................................86.3 16.2% US$ bn
GDP (US$ billions), 2008 ...........................................................89.8 28.4%
■ Public debt securities .........34.2
GDP (current prices) per capita, 2008 ..............................1,040.4 ■ Private debt securities..........0.2
GDP (PPP) as share (%) of world total, 2008 ........................0.35 ■ Banking deposits .................66.6
0.2%
Average rate of real GDP growth (%), 2004–08....................7.82 ■ Equity securities ..................19.5

Total 120.5
55.2%
Total/GDP: 169.5%

Financial Development Index 2009


Rank (out of 55) Score (1–7 scale)

2009 Index......................................................45 3.0


1 2 3 4 5 6 7

Factors, policies, and institutions INPUTS

1st pillar: Institutional environment .........................................41 3.7


Financial sector liberalization ....................................................39 3.2
Corporate governance.................................................................43 4.1
Legal and regulatory issues .......................................................38 3.4
Contract enforcement..................................................................39 4.0
2nd pillar: Business environment .............................................49 3.4
Human capital ...............................................................................51 3.4
268
Taxes...............................................................................................50 3.1
Infrastructure ................................................................................47 2.9
Cost of doing business ................................................................44 4.3
3rd pillar: Financial stability......................................................49 3.8
Currency stability..........................................................................46 3.5
Banking system stability..............................................................28 5.1
Risk of sovereign debt crisis ......................................................53 2.5
1 2 3 4 5 6 7

Financial intermediation

4th pillar: Banking financial services......................................37 3.3


Size index .......................................................................................28 3.0
Efficiency index.............................................................................40 4.4
Financial information disclosure................................................39 1.7
5th pillar: Non-banking financial services .............................42 1.7
IPO activity.....................................................................................20 2.4
M&A activity..................................................................................51 1.1
Insurance .......................................................................................44 1.8
Securitization.................................................................................39 1.6
6th pillar: Financial markets......................................................43 1.7
Foreign exchange markets........................................................n/a n/a
Derivatives markets....................................................................n/a n/a
Equity market development ........................................................42 1.7
Bond market development ........................................................n/a n/a
1 2 3 4 5 6 7

Financial access

7th pillar: Financial access........................................................32 3.3


Commercial access......................................................................23 4.0
Retail access.................................................................................32 2.6
1 2 3 4 5 6 7
OUTPUTS

Note: For further details and explanation, please refer to “How Read the Country/Economy Profiles.”
Part 1.r3 10/14/09 2:23 PM Page 269

2: Country/Economy Profiles
Vietnam
Financial Development Index in detail ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

1st pillar: Institutional environment


Financial sector liberalization
1.01 Capital account liberalization .................................................45 .....■ ...............–1.1 Multiple (18) ..........................2.5
. . . . . . . . . . . . .2.5
1.02 Commitments to WTO agreement on trade in services.......26 .....■ ...............52.3 Turkey . . . . . . . . . . . . . . . . .83.5
Turkey..................................83.5
1.03 Domestic financial sector liberalization .................................40 .....■ .................2.0 Multiple (33) ..........................1.0
. . . . . . . . . . . . .1.0

Corporate governance
1.04 Extent of incentive-based compensation ..............................36 .....■ .................4.3 United States ........................5.4
. . . . . . . . . . . .5.4
1.05 Efficacy of corporate boards .................................................41 .....■ .................4.5 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.06 Reliance on professional management .................................44 .....■ .................4.2 Sweden .................................6.5
. . . . . . . . . . . . . . . .6.5
1.07 Willingness to delegate.........................................................46 .....■ .................3.6 Sweden .................................6.2
. . . . . . . . . . . . . . . .6.2
1.08 Strength of auditing and reporting standards........................51 .....■ .................3.8 South Africa...........................6.2
Africa . . . . . . . . . . . . .6.2
1.09 Ethical behavior of firms........................................................35 .....■ .................4.0 Sweden .................................6.7
. . . . . . . . . . . . . . . .6.7
1.10 Protection of minority shareholders’ interests......................35 .....■ .................4.4 Sweden .................................6.0
. . . . . . . . . . . . . . . .6.0
1.11 Official supervisory power....................................................n/a .........................n/a Multiple (3) ..........................14.0
. . . . . . . . . . . . .14.0
1.12 Private monitoring of the banking industry ..........................n/a .........................n/a South Africa...........................9.0
Africa . . . . . . . . . . . . .9.0

Legal and regulatory issues


1.13 Burden of government regulation .........................................38 .....■ .................2.7 Singapore ..............................5.6
. . . . . . . . . . . . . . .5.6
1.14 Centralization of economic policymaking ..............................25 .....■ .................3.3 Switzerland . . . . . . . . . . . . . .5.7
Switzerland............................5.7
1.15 Regulation of securities exchanges ......................................49 .....■ .................4.0 Sweden .................................5.9
. . . . . . . . . . . . . . . .5.9
1.16 Property rights.......................................................................36 .....■ .................4.4 Switzerland . . . . . . . . . . . . . .6.5
Switzerland............................6.5
1.17 Intellectual property protection .............................................45 .....■ .................3.0 Singapore ..............................6.2
. . . . . . . . . . . . . . .6.2
1.18 Diversion of public funds.......................................................38 .....■ .................3.2 Denmark . . . . . . . . . . . . . . . .6.6
Denmark................................6.6
1.19 Public trust of politicians .......................................................20 .....■ .................3.6 Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
1.20 Corruption perceptions index ................................................46 .....■ .................2.7 Multiple (2) ............................9.3
. . . . . . . . . . . . . .9.3 269
1.21 Strength of legal rights index ................................................18 .....■ .................7.0 Multiple (3) ..........................10.0
. . . . . . . . . . . . .10.0

Contract enforcement
1.22 Effectiveness of law-making bodies .....................................23 .....■ .................4.1 Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
1.23 Judicial independence ...........................................................39 .....■ .................3.8 Sweden .................................6.6
. . . . . . . . . . . . . . . .6.6
1.24 Irregular payments in judicial decisions ................................51 .....■ .................2.8 Singapore ..............................6.6
. . . . . . . . . . . . . . .6.6
1.25 Time to enforce a contract ......................................................7 .....■ .............295.0 Singapore ..........................150.0
. . . . . . . . . . . . .150.0
1.26 Number of procedures to enforce a contract .......................25 .....■ ...............34.0 Ireland . . . . . . . . . . . . . . . . .20.0
Ireland..................................20.0
1.27 Strength of investor protection .............................................54 .....■ .................2.7 Singapore ..............................9.3
. . . . . . . . . . . . . . .9.3
1.28 Cost of enforcing contracts...................................................41 .....■ ...............31.0 United States ........................9.4
. . . . . . . . . . . .9.4

2nd pillar: Business environment


Human capital
2.01 Quality of management schools ...........................................54 .....■ .................3.4 Switzerland............................6.1
Switzerland . . . . . . . . . . . . . .6.1
2.02 Quality of math and science education.................................31 .....■ .................4.4 Singapore
Singapore ..............................6.4
. . . . . . . . . . . . . . .6.4
2.03 Extent of staff training...........................................................31 .....■ .................4.2 Sweden .................................5.7
Sweden . . . . . . . . . . . . . . . .5.7
2.04 Local availability of specialized research
and training services .............................................................51 .....■ .................3.6 Switzerland............................6.3
Switzerland . . . . . . . . . . . . . .6.3
2.05 Brain drain and ease of hiring foreign labor ..........................38 .....■ .................3.9 United
United Arab
Arab Emirates
Emirates ............6.0
. . . . . .6.0
2.06 Tertiary enrollment ................................................................53 .....■ .................9.5 Finland .................................93.2
Finland . . . . . . . . . . . . . . . .93.2
Taxes
2.07 Irregular payments in tax collection ......................................51 .....■ .................2.7 Singapore
Singapore ..............................6.5
. . . . . . . . . . . . . . .6.5
2.08 Distortive effect on competition of taxes and subsidies ......35 .....■ .................4.1 Hong
Hong Kong
Kong SAR
SAR ....................6.1
. . . . . . . . . .6.1
2.09 Marginal tax variation ............................................................27 .....■ .................7.4 Germany ..............................–6.9
Germany . . . . . . . . . . . . . . .–6.9
2.10 Time to pay taxes ..................................................................54 .....■ ..........1,050.0 United
United Arab
Arab Emirates
Emirates ..........12.0
. . . . .12.0
Infrastructure
2.11 Quality of overall infrastructure .............................................52 .....■ .................2.8 Switzerland............................6.8
Switzerland . . . . . . . . . . . . . .6.8
2.12 Quality of telephone infrastructure .......................................41 .....■ .................5.8 Finland ...................................6.9
Finland . . . . . . . . . . . . . . . . .6.9
2.13 Internet users ........................................................................43 .....■ ...............20.5 Norway
Norway ................................85.0
. . . . . . . . . . . . . . . .85.0
2.14 Broadband Internet subscribers ............................................44 .....■ .................1.5 Denmark..............................36.0
Denmark . . . . . . . . . . . . . . .36.0
2.15 Telephone lines .....................................................................23 .....■ ...............32.7 Switzerland..........................65.9
Switzerland . . . . . . . . . . . . .65.9
2.16 Mobile telephone subscribers...............................................53 .....■ ...............27.2 United Arab
United Arab Emirates
Emirates ........176.5
. . . .176.5

(Cont’d.)
Part 1.r3 10/14/09 2:23 PM Page 270

2: Country/Economy Profiles

Vietnam
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

2nd pillar: Business environment (cont’d.)


Cost of doing business
2.17 Cost of starting a business ...................................................42 .....■ ...............16.8 Denmark................................0.0
2.18 Cost of registering property ..................................................14 .....■ .................1.2 Saudi Arabia ..........................0.0
2.19 Cost of closing a business ....................................................30 .....■ ...............15.0 Multiple (4) ............................1.0
2.20 Time to start a business ........................................................49 .....■ ...............50.0 Australia.................................2.0
2.21 Time to register property.......................................................44 .....■ ...............57.0 Multiple (3) ............................2.0
2.22 Time to close a business.......................................................50 .....■ .................5.0 Ireland....................................0.4

3rd pillar: Financial stability


Currency stability
3.01 Change in real effective exchange rate.................................44 .....■ ...............–0.7 Brazil....................................11.7
Brazil . . . . . . . . . . . . . . . . . .11.7
3.02 External vulnerability indicator.................................................4 .....■ ...............27.3 Egypt
Egypt ...................................13.9
...................................13.9
3.03 Current account balance to GDP...........................................52 .....■ ...............–9.4 Kuwait
Kuwait .................................44.7
.................................44.7
3.04 Dollarization vulnerability indicator ........................................36 .....■ ...............47.9 Multiple (22)
Multiple (22) ..........................0.0
..........................0.0
3.05 External debt to GDP (developing economies) .....................18 .....■ ...............39.6 China
China ...................................10.9
...................................10.9
3.06 Net international investment position to GDP
(advanced economies)..........................................................n/a .........................n/a Hong
Hong Kong
Kong SAR
SAR ................251.9
................251.9
Banking system stability
3.07 Frequency of banking crises .................................................32 .....■ .................1.5 Multiple
Multiple (14)
(14) ..........................0.0
. . . . . . . . . . . . .0.0
3.08 Financial strengths indicator..................................................47 .....■ .................2.0 Multiple
Multiple (9) ............................9.0
(9) ............................9.0
3.09 Manageability of private debt..................................................2 .....■ .................0.3 Nigeria
Nigeria ...................................0.3
...................................0.3
270 3.10 Aggregate measure of real estate bubbles.............................3 .....■ .................6.5 Ireland....................................6.7
Ireland....................................6.7
Risk of sovereign debt crisis
3.11 Local currency sovereign rating ............................................47 .....■ .................9.7 Multiple
Multiple (13)
(13) ........................20.0
. . . . . . . . . . . .20.0
3.12 Foreign currency sovereign rating.........................................45 .....■ .................8.7 Multiple
Multiple (13)
(13) ........................20.0
........................20.0
3.13 Aggregate macroprudential indicator ....................................53 .....■ .................3.1 Peru .......................................6.5
Peru .......................................6.5
3.14 Manageability of public debt .................................................36 .....■ ...............48.1 Chile
Chile ......................................5.2
......................................5.2
3.15 Credit default swap spreads .................................................39 .....■ .............338.4 Norway
Norway ................................32.5
................................32.5

4th pillar: Banking financial services


Size index
4.01 Deposit money bank assets to GDP .....................................23 .....■ ...............85.2 Denmark............................199.3
Denmark . . . . . . . . . . . . . .199.3
4.02 Central bank assets to GDP ..................................................22 .....■ .................1.5 Egypt ...................................27.9
Egypt ...................................27.9
4.03 Financial system deposits to GDP ........................................28 .....■ ...............57.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.04 M2 to GDP ............................................................................18 .....■ ...............95.0 Hong Kong SAR ................312.7
Hong Kong SAR ................312.7
4.05 Private credit to GDP.............................................................29 .....■ ...............76.7 United States ....................202.4
United States ....................202.4
4.06 Bank deposits to GDP ...........................................................29 .....■ ...............57.8 Hong Kong SAR ................267.9
Hong Kong SAR ................267.9
4.07 Money market instruments to GDP .....................................n/a .........................n/a Ireland..................................45.0
Ireland..................................45.0
Efficiency index
4.08 Aggregate profitability indicator ............................................18 .....■ .................4.5 Saudi Arabia ..........................6.4
Saudi Arabia . . . . . . . . . . . . .6.4
4.09 Bank overhead costs...............................................................2 .....■ .................1.0 Singapore ..............................1.0
Singapore ..............................1.0
4.10 Public ownership of banks ....................................................55 .....■ ...............73.7 Belgium .................................0.0
Belgium .................................0.0
4.11 Bank operating costs to assets.............................................27 .....■ .................2.8 Japan .....................................0.8
Japan .....................................0.8
4.12 Non-performing bank loans to total loans ............................n/a .........................n/a Denmark................................0.3
Denmark................................0.3
Financial information disclosure
4.13 Private credit bureau coverage..............................................46 .....■ .................0.0 Australia.............................100.0
Australia . . . . . . . . . . . . . .100.0
4.14 Public credit registry coverage ..............................................11 .....■ ...............13.4 China ...................................58.8
China ...................................58.8

5th pillar: Non-banking financial services


IPO activity
5.01 IPO market share ..................................................................36 .....■ .................0.3 China ...................................19.3
5.02 IPO proceeds amount ...........................................................11 .....■ .................0.9 China . . . . SAR
Hong Kong . . . .....................2.8
. . . . . . . . .19.3
5.03 Share of world IPOs ..............................................................34 .....■ .................0.3 Hong Kong
China SAR ....................2.8
...................................12.9
China ...................................12.9
Part 1.r3 10/14/09 2:23 PM Page 271

2: Country/Economy Profiles
Vietnam
Financial Development Index in detail (cont’d.) ■ Development Advantage ■ Development Disadvantage

INDICATOR RANK/55 SCORE BEST PERFORMER SCORE

5th pillar: Non-banking financial services (cont’d.)


M&A activity
5.04 M&A market share................................................................51 .....■ .................0.0 United States ......................41.7
5.05 M&A transaction value to GDP .............................................51 .....■ .................1.0 Hong Kong SAR ..................16.8
5.06 Share of total number of M&A deals ....................................40 .....■ .................0.2 United States ......................30.2
Insurance
5.07 Insurance premiums, direct ..................................................49 .....■ ..........1,082.0 United States ..........1,230,526.0
. . . . .1,230,526.0
5.08 Insurance density ..................................................................50 .....■ ...............12.4 United Kingdom .............8,326.0
5.09 Real growth of direct insurance premiums...........................23 .....■ .................0.1 United Arab Emirates ............0.3
5.10 Insurance penetration............................................................43 .....■ .................0.0 United Kingdom ....................0.2
5.11 Relative value-added of insurance to GDP ...........................n/a .........................n/a Hong Kong SAR ....................3.9
Securitization
5.12 Securitization to GDP ............................................................33 .....■ .................1.6 United States ......................16.3
. . . . . . . . . . .16.3
5.13 Share of total number of securitization deals .......................33 .....■ .................0.2 United States ......................60.3

6th pillar: Financial markets


Foreign exchange markets
6.01 Spot foreign exchange turnover ...........................................n/a .........................n/a United
United Kingdom ..................26.3
Kingdom . . . . . . . . .26.3
6.02 Outright forward foreign exchange turnover........................n/a .........................n/a United
United Kingdom ..................29.2
Kingdom ..................29.2
6.03 Foreign exchange swap turnover .........................................n/a .........................n/a United
United Kingdom ..................40.8
Kingdom ..................40.8
Derivatives markets
6.04 Interest rate derivatives turnover: Forward rate 271
agreements ..........................................................................n/a .........................n/a United
United Kingdom ..................45.1
Kingdom . . . . . . . . .45.1
6.05 Interest rate derivatives turnover: Swaps ............................n/a .........................n/a United
United Kingdom ..................45.8
Kingdom ..................45.8
6.06 Interest rate derivatives turnover: Options ..........................n/a .........................n/a United
United States ......................42.4
States ......................42.4
6.07 Foreign exchange derivatives turnover: Currency swaps ....n/a .........................n/a United
United Kingdom ..................46.7
Kingdom ..................46.7
6.08 Foreign exchange derivatives turnover: Options..................n/a .........................n/a United
United Kingdom ..................42.4
Kingdom ..................42.4
Equity market development
6.09 Stock market turnover ratio...................................................25 .....■ ...............87.8 United Kingdom ................267.7
United Kingdom . . . . . . . .267.7
6.10 Stock market capitalization to GDP.......................................52 .....■ ...............20.1 Hong Kong SAR ................500.5
Hong Kong SAR ................500.5
6.11 Stock market value traded to GDP........................................43 .....■ ...............17.7 Hong Kong
Hong Kong SAR
SAR ................443.6
................443.6
6.12 Number of listed companies per 10,000 people...................46 .....■ .................0.0 Hong Kong SAR
Hong Kong SAR ....................1.5
....................1.5
Bond market development
6.13 Private domestic bond market capitalization to GDP ...........n/a .........................n/a Denmark............................202.7
[r5]Denmark . . . . . . . . . . .202.7
6.14 Public domestic bond market capitalization to GDP ............n/a .........................n/a Japan .................................198.6
Japan .................................198.6
6.15 Private international bonds to GDP ......................................n/a .........................n/a Ireland................................279.1
Ireland................................279.1
6.16 Public international bonds to GDP........................................n/a .........................n/a Panama................................46.9
Panama................................46.9

7th pillar: Financial access


Commercial access
7.01 Financial market sophistication .............................................53 .....■ .................3.4 Switzerland............................6.6
Switzerland . . . . . . . . . . . . . .6.6
7.02 Venture capital availability .....................................................35 .....■ .................3.0 Hong Kong SAR ....................4.6
Hong Kong SAR ....................4.6
7.03 Ease of access to credit........................................................13 .....■ .................4.1 Panama..................................5.2
Panama..................................5.2
7.04 Financing through local equity market ....................................8 .....■ .................4.8 Hong Kong SAR ....................5.3
Hong Kong SAR ....................5.3
7.05 Ease of access to loans ........................................................40 .....■ .................2.9 Finland ...................................4.7
Finland ...................................4.7
7.06 Foreign direct investment to GDP ..........................................8 .....■ .................9.5 Hong Kong SAR ..................28.9
Hong Kong SAR ..................28.9
Retail access
7.07 Market penetration of bank accounts ...................................36 .....■ ..........8,300.0 Ukraine .......................375,499.3
Ukraine . . . . . . . . . . .375,499.3
7.08 Commercial bank branches...................................................44 .....■ .................3.3 Italy......................................53.0
Italy......................................53.0
7.09 Total number of ATMs ..........................................................n/a .........................n/a Canada...............................202.8
Canada...............................202.8
7.10 Total number of point of sale (POS) devices.........................25 .....■ .............292.6 Austria ............................4,889.6
Austria ............................4,889.6
7.11 MFI borrowers’ penetration rate .............................................2 .....■ ...............29.0 Bangladesh..........................41.2
Bangladesh..........................41.2
Part 1.r3 10/14/09 2:23 PM Page 272
Part 2.r2 10/14/09 3:32 PM Page 273

Part 3
Data Tables
Part 2.r2 10/14/09 3:32 PM Page 274
Part 2.r2 10/14/09 3:32 PM Page 275

How to Read the Data Tables


How to Read the Data Tables

The following pages provide detailed data for all 55 Two types of data are presented in the tables:
economies included in The Financial Development Report
• Survey data: These data are the results drawn
2009. The data tables are organized into seven sections:
from the World Economic Forum’s Executive
Opinion Survey.
I. Institutional environment
II. Business environment • Hard data: These data are indicators obtained
III. Financial stability from a variety of sources.
IV. Banking financial services
V. Non-banking financial services
VI. Financial markets Survey data
VII. Financial access Data yielded from the World Economic Forum’s
Executive Opinion Survey are presented in blue-colored
The seven sections correspond to the seven pillars of the bar graphs. Survey questions asked for responses on a
Financial Development Index. scale of 1 to 7, where an answer of 1 corresponds to the
lowest possible score and an answer of 7 corresponds to
the highest possible score. For each Survey question,
individual responses are aggregated at the economy level 275
in order to produce country scores. For more informa-
1.05 1.06 tion on the Executive Opinion Survey and a detailed
Efficacy of corporate boards Reliance on professional management explanation of how country scores are computed, please
Corporate governance by investors and boards of directors in your Senior management positions in your country are (1 = usually held by
country is characterized by (1 = management has little accountability;
7 = investors and boards exert strong supervision of management
relatives; 7 = held by professional managers chosen for their superior
qualification) refer to Chapter 1.1.
decisions)

For each Survey variable, the corresponding Survey


|

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.83 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.97 7

1 Sweden...........................5.87 1 Sweden...........................6.46
2
3
South Africa ....................5.78
Canada ............................5.68
2
3
Norway............................6.21
Finland.............................6.18
question and the two extreme answers are shown. Scores
4 Australia ..........................5.65 4 Denmark .........................6.08
5
6
Finland.............................5.64
Norway............................5.61
5
6
Netherlands.....................6.05
Australia ..........................6.01
are reported with a precision of two decimal points,
7 Singapore ........................5.59 7 Singapore ........................5.99
8
9
Denmark .........................5.53
Netherlands.....................5.44
8
9
Canada ............................5.96
Switzerland .....................5.86 although exact figures are used to determine rankings.
10 Chile ................................5.41 10 United States ..................5.85
11
12
13
Switzerland .....................5.30
Germany .........................5.26
Belgium...........................5.18
11
12
13
Ireland .............................5.77
United Kingdom ..............5.73
Germany .........................5.68
For example, in the case of the variable 1.13 on the
14 United States ..................5.18 14 Austria.............................5.61
15
16
Czech Republic ...............5.17
Slovak Republic...............5.13
15
16
Japan...............................5.56
Belgium...........................5.54
burden of government regulation, Kazakhstan’s score is
17 United Kingdom ..............5.12 17 South Africa ....................5.54
18
19
Japan...............................5.11
Malaysia ..........................5.10
18
19
Chile ................................5.42
Israel ...............................5.39
2.99784 and the United Kingdom’s score is 2.99663.
20 United Arab Emirates......5.08 20 Czech Republic ...............5.32
21
22
Austria.............................5.06
France .............................5.06
21
22
Malaysia ..........................5.26
India ................................5.26 These countries rank 30 and 31 respectively, although
23 Indonesia.........................4.98 23 France .............................5.24
24
25
26
Ireland .............................4.94
Bahrain ............................4.92
Peru.................................4.80
24
25
26
Slovak Republic...............5.19
United Arab Emirates......5.09
Brazil ...............................5.08
they are listed with the same rounded score of 3.00.
27 Panama ...........................4.80 27 Hong Kong SAR ..............5.03
28 Spain ...............................4.72 28 Spain ...............................4.96
29 Hong Kong SAR ..............4.71 29 Korea, Rep. .....................4.91
30 Israel ...............................4.69 30 Poland .............................4.87
31 Korea, Rep. .....................4.67 31 China ...............................4.86
32
33
Brazil ...............................4.67
Jordan .............................4.66
32
33
Philippines.......................4.85
Argentina.........................4.74 A dotted line on the graph indicates the mean
34 Philippines.......................4.65 34 Peru.................................4.70
35
36
37
India ................................4.63
Egypt...............................4.62
Saudi Arabia ....................4.59
35
36
37
Indonesia.........................4.70
Thailand...........................4.57
Nigeria.............................4.47
score across the 55 economies. Standard deviations,
38 Colombia .........................4.53 38 Panama ...........................4.45
39
40
Thailand...........................4.51
Russian Federation .........4.51
39
40
Saudi Arabia ....................4.41
Russian Federation .........4.27
which give an indication of how closely or widely the
41 Vietnam ...........................4.48 41 Jordan .............................4.23
42
43
Nigeria.............................4.48
Hungary...........................4.46
42
43
Turkey..............................4.20
Colombia .........................4.18
individual responses are spread around the mean country
44 Poland .............................4.45 44 Vietnam ...........................4.16
45
46
China ...............................4.41
Ukraine............................4.40
45
46
Bahrain ............................4.15
Hungary...........................4.10 score, can be provided upon request to the Global
47 Kazakhstan ......................4.33 47 Mexico ............................4.07
48
49
50
Argentina.........................4.28
Mexico ............................4.26
Kuwait .............................4.26
48
49
50
Venezuela........................4.07
Pakistan...........................4.02
Ukraine............................4.02
Competitiveness Network at the World Economic
51 Pakistan...........................3.91 51 Bangladesh .....................3.90
52
53
Bangladesh .....................3.91
Italy .................................3.88
52
53
Kuwait .............................3.87
Kazakhstan ......................3.86
Forum.
54 Turkey..............................3.80 54 Egypt...............................3.74
55 Venezuela........................3.66 55 Italy .................................3.47

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 276

How to Read the Data Tables

1.01 1.02
Capital account liberalization Commitments to WTO agreement on trade in
services
This index measures the degree of capital account liberalization
within a country, standardized on a 1–7 scale | 2007 This index measures the extent of commitments to the WTO’s General
Agreement on Trade in Services (GATS) within the financial services
sector, standardized on a 0–7 (most liberalized) scale | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Austria ...............................7.00 1 Austria ...............................7.00


1 Bahrain ..............................7.00 1 Belgium .............................7.00
1 Belgium .............................7.00 1 Denmark............................7.00
1 Canada...............................7.00 1 France................................7.00
1 Denmark............................7.00 1 Germany............................7.00
1 Finland ...............................7.00 1 Ireland................................7.00
1 Germany............................7.00 1 Italy....................................7.00
1 Hong Kong SAR ................7.00 1 Netherlands .......................7.00
1 Ireland................................7.00 1 Spain..................................7.00
1 Italy....................................7.00 1 Sweden .............................7.00
1 Jordan................................7.00 1 United Kingdom.................7.00
1 Netherlands .......................7.00 12 Switzerland........................6.94
1 Norway ..............................7.00 13 Canada...............................6.85
1 Panama..............................7.00 14 Japan .................................6.73
1 Singapore ..........................7.00 15 United States.....................6.56
1 Spain..................................7.00 16 Bahrain ..............................6.21
1 Sweden .............................7.00 17 Hungary .............................6.20
1 Switzerland........................7.00 18 Norway ..............................6.18
1 United Arab Emirates ........7.00 19 Singapore ..........................5.87
1 United Kingdom.................7.00 20 Saudi Arabia.......................5.79
1 United States.....................7.00 21 Jordan................................5.72
22 Japan .................................6.55 22 Panama..............................5.57
23 France................................6.51 23 United Arab Emirates ........5.33
24 Egypt .................................6.47 24 Vietnam .............................4.90
25 Israel..................................5.94 25 Turkey ................................4.86
26 Australia.............................5.73 26 Czech Republic..................4.83
27 Saudi Arabia.......................5.67 27 Malaysia ............................4.61
28 Czech Republic..................5.45 28 Nigeria ...............................4.47
29 Chile ..................................5.37 29 Philippines .........................4.37
30 Hungary .............................5.02 30 China .................................4.21
31 Kuwait ...............................4.81 31 Finland ...............................3.94
32 Peru ...................................4.79 32 Thailand .............................3.72
33 Slovak Republic .................4.19 33 Hong Kong SAR ................3.66
34 Brazil..................................3.37 34 Egypt .................................3.55
35 Indonesia ...........................3.36 35 Australia.............................3.46
36 Mexico...............................3.35 36 Slovak Republic .................3.33
37 Korea, Rep.........................3.21 37 Poland................................2.82
38 Malaysia ............................2.93 38 Kuwait ...............................2.81
39 Poland................................2.72 39 Argentina ...........................2.77
40 Philippines .........................2.35 40 South Africa.......................2.58
41 Nigeria ...............................1.94 41 Israel..................................2.44
42 Colombia ...........................1.89 42 Colombia ...........................2.31
43 Russian Federation............1.47 43 Indonesia ...........................2.09
44 Venezuela ..........................1.46 44 Peru ...................................1.84
45 Argentina ...........................1.06 45 Venezuela ..........................1.47
46 Bangladesh........................1.00 46 Mexico...............................1.29
46 China .................................1.00 47 Bangladesh........................1.00
46 India...................................1.00 47 Brazil..................................1.00
46 Kazakhstan ........................1.00 47 Chile ..................................1.00
46 Pakistan .............................1.00 47 India...................................1.00
46 South Africa.......................1.00 47 Pakistan .............................1.00
46 Thailand .............................1.00 n/a Kazakhstan...........................n/a
46 Turkey ................................1.00 n/a Korea, Rep. ..........................n/a
46 Ukraine ..............................1.00 n/a Russian Federation ..............n/a
46 Vietnam .............................1.00 n/a Ukraine ................................n/a

SOURCE: Menzie Chinn and Hiro Ito. 2009. “Financial Openness Index.” SOURCE: The World Bank, World Trade Indicators 2008
Dataset available at http://www.ssc.wisc.edu/~mchinn/research.html.
Interaction results from World Economic Forum analysis.

276 Hard data


While Survey data provide qualitative information,
hard data provide an objective measure of a quantity (for
example, gross domestic product, IPO market share,
insurance direct premiums, and so on).We use the latest
data available from international organizations (such as
the International Monetary Fund, the World Bank, vari-
ous United Nations agencies, the Bank of International
Settlements, and the International Telecommunication
Union), the research of respected academics in the field,
and firms of international stature who engage in profes-
sional research on the topics related to the Index. In the
following pages, hard data variables are presented in
black-shaded bar graphs. For each indicator, a short
description appears at the top of the page.The base year
(i.e., the year when the majority of the data were col-
lected) follows the description.When the year differs
from the base year for a particular economy, this is indi-
cated in a footnote. A more detailed description and the
full source for each variable can be found in the Technical
Notes and Sources section at the end of this Report.
When data are not available or are too outdated, “n/a”
is used in lieu of the rank and the value.
In the case of hard data, true ties between two or
more economies are possible. In such cases, shared rank-
ings are indicated accordingly. For example, the time it
takes to close a business is 4.20 years in both Egypt and
Kuwait.They share the rank of 46 for that variable in
Table 2.22.
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Index of Data Tables


Index of Data Tables

Section I: Institutional environment...............................................279 3.03 Current account balance to GDP ..................................309


1.01 Capital account liberalization.........................................280 3.04 Dollarization vulnerability indicator................................309
1.02 Commitments to WTO agreement on trade 3.05 External debt to GDP (developing economies).............310
in services.....................................................................280 3.06 Net international investment position to GDP
1.03 Domestic financial sector liberalization.........................281 (advanced economies) ..................................................310
1.04 Extent of incentive-based compensation .....................281 3.07 Frequency of banking crises.........................................311
1.05 Efficacy of corporate boards.........................................282 3.08 Financial strengths indicator .........................................311
1.06 Reliance on professional management ........................282 3.09 Manageability of private debt .......................................312
1.07 Willingness to delegate ................................................283 3.10 Aggregate measure of real estate bubbles ..................312
1.08 Strength of auditing and reporting standards ...............283 3.11 Local currency sovereign rating....................................313
1.09 Ethical behavior of firms ...............................................284 3.12 Foreign currency sovereign rating ................................313
1.10 Protection of minority shareholders’ interests .............284 3.13 Aggregate macroprudential indicator............................314
1.11 Official supervisory power ............................................285 3.14 Manageability of public debt.........................................314
1.12 Private monitoring of the banking industry...................285 3.15 Credit default swap spreads.........................................315
1.13 Burden of government regulation.................................286
1.14 Centralization of economic policymaking .....................286
1.15 Regulation of securities exchanges..............................287
Section IV: Banking financial services.........................................317
1.16 Property rights ..............................................................287 4.01 Deposit money bank assets to GDP ............................318
1.17 Intellectual property protection.....................................288 4.02 Central bank assets to GDP..........................................318
1.18 Diversion of public funds ..............................................288 4.03 Financial system deposits to GDP................................319
1.19 Public trust of politicians...............................................289 4.04 M2 to GDP....................................................................319
1.20 Corruption perceptions index........................................289 4.05 Private credit to GDP ....................................................320 277
1.21 Strength of legal rights index........................................290 4.06 Bank deposits to GDP ..................................................320
1.22 Effectiveness of law-making bodies.............................290 4.07 Money market instruments to GDP .............................321
1.23 Judicial independence ..................................................291 4.08 Aggregate profitability indicator ....................................321
1.24 Irregular payments in judicial decisions ........................291 4.09 Bank overhead costs ....................................................322
1.25 Time to enforce a contract............................................292 4.10 Public ownership of banks............................................322
1.26 Number of procedures to enforce a contract ...............292 4.11 Bank operating costs to assets ....................................323
1.27 Strength of investor protection.....................................293 4.12 Non-performing bank loans to total loans.....................323
1.28 Cost of enforcing contracts ..........................................293 4.13 Private credit bureau coverage .....................................324
4.14 Public credit registry coverage .....................................324

Section II: Business environment...................................................295


2.01 Quality of management schools...................................296
Section V: Non-banking financial services .................................325
2.02 Quality of math and science education ........................296 5.01 IPO market share..........................................................326
2.03 Extent of staff training ..................................................297 5.02 IPO proceeds amount...................................................326
2.04 Local availability of specialized research 5.03 Share of world IPOs .....................................................327
and training services .....................................................297 5.04 M&A market share .......................................................327
2.05 Brain drain and ease of hiring foreign labor..................298 5.05 M&A transaction value to GDP.....................................328
2.06 Tertiary enrollment .......................................................298 5.06 Share of total number of M&A deals............................328
2.07 Irregular payments in tax collection..............................299 5.07 Insurance premiums, direct ..........................................329
2.08 Distortive effect on competition of taxes 5.08 Insurance density..........................................................329
and subsidies ................................................................299 5.09 Real growth of direct insurance premiums ..................330
2.09 Marginal tax variation....................................................300 5.10 Insurance penetration ...................................................330
2.10 Time to pay taxes .........................................................300 5.11 Relative value-added of insurance to GDP ...................331
2.11 Quality of overall infrastructure ....................................301 5.12 Securitization to GDP....................................................331
2.12 Quality of telephone infrastructure...............................301 5.13 Share of total number of securitization deals ...............332
2.13 Internet users ...............................................................302
2.14 Broadband Internet subscribers....................................302
2.15 Telephone lines .............................................................303 Section VI: Financial markets..........................................................333
2.16 Mobile telephone subscribers ......................................303 6.01 Spot foreign exchange turnover ...................................334
2.17 Cost of starting a business ...........................................304 6.02 Outright forward foreign exchange turnover ................334
2.18 Cost of registering property..........................................304 6.03 Foreign exchange swap turnover .................................335
2.19 Cost of closing a business............................................305 6.04 Interest rate derivatives turnover: Forward rate
2.20 Time to start a business ...............................................305 agreements...................................................................335
2.21 Time to register property ..............................................306 6.05 Interest rate derivatives turnover: Swaps.....................336
2.22 Time to close a business ..............................................306 6.06 Interest rate derivatives turnover: Options...................336
6.07 Foreign exchange derivatives turnover: Currency
swaps............................................................................337
Section III: Financial stability..........................................................307 6.08 Foreign exchange derivatives turnover: Options ..........337
3.01 Change in real effective exchange rate ........................308 6.09 Stock market turnover ratio ..........................................338
3.02 External vulnerability indicator ......................................308 6.10 Stock market capitalization to GDP ..............................338
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Index of Data Tables

6.11 Stock market value traded to GDP ...............................339


6.12 Number of listed companies per 10,000 people ..........339
6.13 Private domestic bond market capitalization to GDP ...340
6.14 Public domestic bond market capitalization to GDP.....340
6.15 Private international bonds to GDP...............................341
6.16 Public international bonds to GDP ................................341

Section VII: Financial access ..........................................................343


7.01 Financial market sophistication.....................................344
7.02 Venture capital availability .............................................344
7.03 Ease of access to credit ...............................................345
7.04 Financing through local equity market..........................345
7.05 Ease of access to loans ................................................346
7.06 Foreign direct investment to GDP ................................346
7.07 Market penetration of bank accounts...........................347
7.08 Commercial bank branches ..........................................347
7.09 Total number of ATMs ..................................................348
7.10 Total number of point of sale (POS) devices ................348
7.11 MFI borrowers’ penetration rate ..................................349

278
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Data Tables

Section I
Institutional environment

279
Part 2.r2 10/14/09 3:32 PM Page 280

3: Data Tables | Institutional environment


1.01 1.02
Capital account liberalization Commitments to WTO agreement on trade in
services
This index measures the degree of capital account liberalization
within a country, standardized on a 1–7 scale | 2007 This index measures the extent of commitments to the WTO’s General
Agreement on Trade in Services (GATS) within the financial services
sector, standardized on a 0–7 (most liberalized) scale | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Austria ...............................7.00 1 Austria ...............................7.00


1 Bahrain ..............................7.00 1 Belgium .............................7.00
1 Belgium .............................7.00 1 Denmark............................7.00
1 Canada...............................7.00 1 France................................7.00
1 Denmark............................7.00 1 Germany............................7.00
1 Finland ...............................7.00 1 Ireland................................7.00
1 Germany............................7.00 1 Italy....................................7.00
1 Hong Kong SAR ................7.00 1 Netherlands .......................7.00
1 Ireland................................7.00 1 Spain..................................7.00
1 Italy....................................7.00 1 Sweden .............................7.00
1 Jordan................................7.00 1 United Kingdom.................7.00
1 Netherlands .......................7.00 12 Switzerland........................6.94
1 Norway ..............................7.00 13 Canada...............................6.85
1 Panama..............................7.00 14 Japan .................................6.73
1 Singapore ..........................7.00 15 United States.....................6.56
1 Spain..................................7.00 16 Bahrain ..............................6.21
1 Sweden .............................7.00 17 Hungary .............................6.20
1 Switzerland........................7.00 18 Norway ..............................6.18
1 United Arab Emirates ........7.00 19 Singapore ..........................5.87
1 United Kingdom.................7.00 20 Saudi Arabia.......................5.79
1 United States.....................7.00 21 Jordan................................5.72
280 22 Japan .................................6.55 22 Panama..............................5.57
23 France................................6.51 23 United Arab Emirates ........5.33
24 Egypt .................................6.47 24 Vietnam .............................4.90
25 Israel..................................5.94 25 Turkey ................................4.86
26 Australia.............................5.73 26 Czech Republic..................4.83
27 Saudi Arabia.......................5.67 27 Malaysia ............................4.61
28 Czech Republic..................5.45 28 Nigeria ...............................4.47
29 Chile ..................................5.37 29 Philippines .........................4.37
30 Hungary .............................5.02 30 China .................................4.21
31 Kuwait ...............................4.81 31 Finland ...............................3.94
32 Peru ...................................4.79 32 Thailand .............................3.72
33 Slovak Republic .................4.19 33 Hong Kong SAR ................3.66
34 Brazil..................................3.37 34 Egypt .................................3.55
35 Indonesia ...........................3.36 35 Australia.............................3.46
36 Mexico...............................3.35 36 Slovak Republic .................3.33
37 Korea, Rep.........................3.21 37 Poland................................2.82
38 Malaysia ............................2.93 38 Kuwait ...............................2.81
39 Poland................................2.72 39 Argentina ...........................2.77
40 Philippines .........................2.35 40 South Africa.......................2.58
41 Nigeria ...............................1.94 41 Israel..................................2.44
42 Colombia ...........................1.89 42 Colombia ...........................2.31
43 Russian Federation............1.47 43 Indonesia ...........................2.09
44 Venezuela ..........................1.46 44 Peru ...................................1.84
45 Argentina ...........................1.06 45 Venezuela ..........................1.47
46 Bangladesh........................1.00 46 Mexico...............................1.29
46 China .................................1.00 47 Bangladesh........................1.00
46 India...................................1.00 47 Brazil..................................1.00
46 Kazakhstan ........................1.00 47 Chile ..................................1.00
46 Pakistan .............................1.00 47 India...................................1.00
46 South Africa.......................1.00 47 Pakistan .............................1.00
46 Thailand .............................1.00 n/a Kazakhstan...........................n/a
46 Turkey ................................1.00 n/a Korea, Rep. ..........................n/a
46 Ukraine ..............................1.00 n/a Russian Federation ..............n/a
46 Vietnam .............................1.00 n/a Ukraine ................................n/a

SOURCE: Menzie Chinn and Hiro Ito. 2009. “Financial Openness Index.” SOURCE: The World Bank, World Trade Indicators 2008
Dataset available at http://www.ssc.wisc.edu/~mchinn/research.html.
Interaction results from World Economic Forum analysis.
Part 2.r2 10/14/09 3:32 PM Page 281

1.03 1.04

3: Data Tables | Institutional environment


Domestic financial sector liberalization Extent of incentive-based compensation
This index measures the degree of domestic financial sector Cash compensation of management (1 = is based exclusively on
liberalization within a country, standardized on a 1–7 scale | 2009 salary; 7 = is made up in large part of performance-based benefits
[bonus, stock options, etc.])

RANK COUNTRY/ECONOMY HARD DATA

1 Australia.............................7.00 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.41 7

1 Austria ...............................7.00 1 United States ..................5.43


1 Bahrain ..............................7.00 2 Singapore ........................5.28
1 Belgium .............................7.00 3 Canada ............................5.21
1 Canada...............................7.00 4 Australia ..........................5.11
1 Denmark............................7.00 5 Hong Kong SAR ..............5.07
1 Finland ...............................7.00 6 Germany .........................5.01
1 France................................7.00 7 Switzerland .....................5.01
1 Germany............................7.00 8 France .............................4.99
1 Hong Kong SAR ................7.00 9 United Kingdom ..............4.99
1 Ireland................................7.00 10 South Africa ....................4.95
1 Italy....................................7.00 11 Slovak Republic...............4.93
1 Japan .................................7.00 12 Chile ................................4.83
1 Malaysia ............................7.00 13 Malaysia ..........................4.68
1 Netherlands .......................7.00 14 United Arab Emirates......4.67
1 Norway ..............................7.00 15 Sweden...........................4.67
1 Panama..............................7.00 16 Denmark .........................4.65
1 Singapore ..........................7.00 17 Israel ...............................4.64
1 Spain..................................7.00 18 China ...............................4.63
1 Sweden .............................7.00 19 Ireland .............................4.62
1 United Kingdom.................7.00 20 Czech Republic ...............4.62
1 United States.....................7.00 21 Panama ...........................4.61
23 Nigeria ...............................6.47 22 Austria.............................4.58
281
24 South Africa.......................6.33 23 Netherlands.....................4.57
25 Israel..................................5.94 24 Indonesia.........................4.55
26 United Arab Emirates ........5.70 25 Poland .............................4.54
27 Thailand .............................5.59 26 Belgium...........................4.50
28 Chile ..................................5.37 27 Kuwait .............................4.50
29 Philippines .........................5.34 28 India ................................4.47
30 Brazil..................................5.27 29 Brazil ...............................4.46
31 Switzerland........................5.26 30 Finland.............................4.45
32 Mexico...............................4.90 31 Bahrain ............................4.45
33 Colombia ...........................4.89 32 Japan...............................4.37
34 Peru ...................................4.79 33 Argentina.........................4.37
35 Saudi Arabia.......................4.74 34 Hungary...........................4.36
36 Argentina ...........................4.65 35 Spain ...............................4.36
37 Korea, Rep.........................4.08 36 Vietnam ...........................4.34
38 Kuwait ...............................4.02 37 Russian Federation .........4.33
39 Vietnam .............................3.97 38 Korea, Rep. .....................4.31
40 Czech Republic..................3.84 39 Norway............................4.26
41 Egypt .................................3.69 40 Saudi Arabia ....................4.25
42 Pakistan .............................3.66 41 Ukraine............................4.13
43 Kazakhstan ........................3.58 42 Thailand...........................4.10
44 Hungary .............................3.54 43 Philippines.......................4.09
45 Poland................................3.54 44 Italy .................................4.09
46 Ukraine ..............................3.38 45 Kazakhstan ......................4.01
47 China .................................3.26 46 Mexico ............................3.98
48 India...................................3.19 47 Peru.................................3.80
49 Slovak Republic .................3.17 48 Egypt...............................3.79
50 Indonesia ...........................2.80 49 Colombia .........................3.70
51 Turkey ................................2.78 50 Pakistan...........................3.65
52 Russian Federation............2.16 51 Nigeria.............................3.59
53 Venezuela ..........................1.00 52 Jordan .............................3.47
n/a Bangladesh ..........................n/a 53 Turkey..............................3.41
n/a Jordan..................................n/a 54 Venezuela........................3.39
55 Bangladesh .....................2.83
SOURCE: Graciela Kaminsky and Sergio Schmukler. 2003. “Short-Run
Pain, Long-Run Gain: The Effects of Financial Liberalization.” IMF SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Working Paper 03/34 Washington, DC: International Monetary Fund.
Updated as of 2009 based on World Economic Forum analysis.
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3: Data Tables | Institutional environment


1.05 1.06
Efficacy of corporate boards Reliance on professional management
Corporate governance by investors and boards of directors in your Senior management positions in your country are (1 = usually held by
country is characterized by (1 = management has little accountability; relatives; 7 = held by professional managers chosen for their superior
7 = investors and boards exert strong supervision of management qualification)
decisions)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.83 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.97 7

1 Sweden...........................5.87 1 Sweden...........................6.46
2 South Africa ....................5.78 2 Norway............................6.21
3 Canada ............................5.68 3 Finland.............................6.18
4 Australia ..........................5.65 4 Denmark .........................6.08
5 Finland.............................5.64 5 Netherlands.....................6.05
6 Norway............................5.61 6 Australia ..........................6.01
7 Singapore ........................5.59 7 Singapore ........................5.99
8 Denmark .........................5.53 8 Canada ............................5.96
9 Netherlands.....................5.44 9 Switzerland .....................5.86
10 Chile ................................5.41 10 United States ..................5.85
11 Switzerland .....................5.30 11 Ireland .............................5.77
12 Germany .........................5.26 12 United Kingdom ..............5.73
13 Belgium...........................5.18 13 Germany .........................5.68
14 United States ..................5.18 14 Austria.............................5.61
15 Czech Republic ...............5.17 15 Japan...............................5.56
16 Slovak Republic...............5.13 16 Belgium...........................5.54
17 United Kingdom ..............5.12 17 South Africa ....................5.54
18 Japan...............................5.11 18 Chile ................................5.42
19 Malaysia ..........................5.10 19 Israel ...............................5.39
20 United Arab Emirates......5.08 20 Czech Republic ...............5.32
21 Austria.............................5.06 21 Malaysia ..........................5.26
282 22 France .............................5.06 22 India ................................5.26
23 Indonesia.........................4.98 23 France .............................5.24
24 Ireland .............................4.94 24 Slovak Republic...............5.19
25 Bahrain ............................4.92 25 United Arab Emirates......5.09
26 Peru.................................4.80 26 Brazil ...............................5.08
27 Panama ...........................4.80 27 Hong Kong SAR ..............5.03
28 Spain ...............................4.72 28 Spain ...............................4.96
29 Hong Kong SAR ..............4.71 29 Korea, Rep. .....................4.91
30 Israel ...............................4.69 30 Poland .............................4.87
31 Korea, Rep. .....................4.67 31 China ...............................4.86
32 Brazil ...............................4.67 32 Philippines.......................4.85
33 Jordan .............................4.66 33 Argentina.........................4.74
34 Philippines.......................4.65 34 Peru.................................4.70
35 India ................................4.63 35 Indonesia.........................4.70
36 Egypt...............................4.62 36 Thailand...........................4.57
37 Saudi Arabia ....................4.59 37 Nigeria.............................4.47
38 Colombia .........................4.53 38 Panama ...........................4.45
39 Thailand...........................4.51 39 Saudi Arabia ....................4.41
40 Russian Federation .........4.51 40 Russian Federation .........4.27
41 Vietnam ...........................4.48 41 Jordan .............................4.23
42 Nigeria.............................4.48 42 Turkey..............................4.20
43 Hungary...........................4.46 43 Colombia .........................4.18
44 Poland .............................4.45 44 Vietnam ...........................4.16
45 China ...............................4.41 45 Bahrain ............................4.15
46 Ukraine............................4.40 46 Hungary...........................4.10
47 Kazakhstan ......................4.33 47 Mexico ............................4.07
48 Argentina.........................4.28 48 Venezuela........................4.07
49 Mexico ............................4.26 49 Pakistan...........................4.02
50 Kuwait .............................4.26 50 Ukraine............................4.02
51 Pakistan...........................3.91 51 Bangladesh .....................3.90
52 Bangladesh .....................3.91 52 Kuwait .............................3.87
53 Italy .................................3.88 53 Kazakhstan ......................3.86
54 Turkey..............................3.80 54 Egypt...............................3.74
55 Venezuela........................3.66 55 Italy .................................3.47

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 283

1.07 1.08

3: Data Tables | Institutional environment


Willingness to delegate Strength of auditing and reporting standards
Willingness to delegate authority to subordinates is (1 = low—top Financial auditing and reporting standards regarding company
management controls all important decisions; 7 = high—authority is financial performance in your country are (1 = extremely weak;
mostly delegated to business unit heads and other lower-level 7 = extremely strong—the best in the world)
managers)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.32 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 5.08 7

1 Sweden...........................6.23 1 South Africa ....................6.22


2 Denmark .........................5.90 2 Finland.............................6.18
3 Netherlands.....................5.76 3 Sweden...........................6.12
4 Norway............................5.73 4 Norway............................6.11
5 United States ..................5.39 5 Singapore ........................6.09
6 Finland.............................5.36 6 Canada ............................6.08
7 Switzerland .....................5.31 7 Hong Kong SAR ..............6.01
8 Germany .........................5.18 8 Australia ..........................6.00
9 Canada ............................5.15 9 Austria.............................5.98
10 Austria.............................5.00 10 Netherlands.....................5.93
11 Australia ..........................5.00 11 Denmark .........................5.85
12 Belgium...........................4.96 12 Germany .........................5.79
13 Japan...............................4.85 13 Switzerland .....................5.67
14 United Kingdom ..............4.81 14 Belgium...........................5.65
15 United Arab Emirates......4.79 15 United Kingdom ..............5.63
16 Singapore ........................4.76 16 Chile ................................5.58
17 Malaysia ..........................4.65 17 France .............................5.56
18 Ireland .............................4.58 18 India ................................5.53
19 Slovak Republic...............4.56 19 Jordan .............................5.43
20 South Africa ....................4.52 20 United Arab Emirates......5.41
21 Indonesia.........................4.51 21 Bahrain ............................5.35
22 Kuwait .............................4.50 22 Ireland .............................5.34
283
23 Bahrain ............................4.50 23 Hungary...........................5.30
24 Egypt...............................4.37 24 Japan...............................5.29
25 Czech Republic ...............4.35 25 United States ..................5.29
26 Saudi Arabia ....................4.29 26 Czech Republic ...............5.25
27 Panama ...........................4.28 27 Israel ...............................5.24
28 India ................................4.28 28 Malaysia ..........................5.24
29 Philippines.......................4.24 29 Panama ...........................5.11
30 Hong Kong SAR ..............4.24 30 Egypt...............................5.07
31 Brazil ...............................4.22 31 Thailand...........................5.03
32 France .............................4.18 32 Saudi Arabia ....................5.01
33 Israel ...............................4.13 33 Spain ...............................4.99
34 Spain ...............................4.13 34 Korea, Rep. .....................4.93
35 Chile ................................4.06 35 Poland .............................4.89
36 Nigeria.............................4.02 36 Philippines.......................4.86
37 Jordan .............................4.02 37 Slovak Republic...............4.84
38 Peru.................................3.92 38 Kuwait .............................4.83
39 Argentina.........................3.91 39 Peru.................................4.79
40 Poland .............................3.88 40 Mexico ............................4.74
41 China ...............................3.86 41 Brazil ...............................4.72
42 Colombia .........................3.81 42 China ...............................4.71
43 Korea, Rep. .....................3.66 43 Indonesia.........................4.63
44 Thailand...........................3.62 44 Pakistan...........................4.35
45 Mexico ............................3.62 45 Turkey..............................4.22
46 Vietnam ...........................3.58 46 Colombia .........................4.20
47 Pakistan...........................3.48 47 Kazakhstan ......................4.07
48 Kazakhstan ......................3.39 48 Italy .................................3.95
49 Turkey..............................3.33 49 Nigeria.............................3.92
50 Venezuela........................3.33 50 Argentina.........................3.88
51 Russian Federation .........3.26 51 Vietnam ...........................3.85
52 Ukraine............................3.20 52 Venezuela........................3.77
53 Italy .................................3.05 53 Ukraine............................3.68
54 Hungary...........................2.96 54 Russian Federation .........3.66
55 Bangladesh .....................2.92 55 Bangladesh .....................3.59

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 284

3: Data Tables | Institutional environment


1.09 1.10
Ethical behavior of firms Protection of minority shareholders’ interests
The corporate ethics (ethical behavior in interactions with public Interests of minority shareholders in your country are (1 = not
officials, politicians, and other enterprises) of firms in your country protected by law; 7 = protected by law and actively enforced)
are (1 = among the world’s worst; 7 = among the best in the world)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.72 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.68 7

1 Sweden...........................6.66 1 Sweden...........................6.01
2 Finland.............................6.61 2 Finland.............................5.86
3 Denmark .........................6.58 3 Norway............................5.81
4 Singapore ........................6.51 4 Denmark .........................5.71
5 Switzerland .....................6.37 5 Singapore ........................5.67
6 Netherlands.....................6.36 6 Canada ............................5.58
7 Norway............................6.35 7 South Africa ....................5.48
8 Canada ............................6.24 8 Germany .........................5.41
9 Australia ..........................6.20 9 Jordan .............................5.31
10 Austria.............................6.16 10 Australia ..........................5.22
11 Germany .........................5.93 11 Austria.............................5.21
12 United Kingdom ..............5.87 12 United Arab Emirates......5.20
13 Hong Kong SAR ..............5.82 13 Netherlands.....................5.19
14 Ireland .............................5.57 14 Malaysia ..........................5.13
15 United Arab Emirates......5.54 15 United Kingdom ..............5.12
16 Belgium...........................5.52 16 Belgium...........................5.08
17 Chile ................................5.47 17 United States ..................5.05
18 United States ..................5.46 18 Chile ................................5.03
19 Japan...............................5.39 19 Bahrain ............................5.01
20 France .............................5.38 20 Israel ...............................5.01
21 Bahrain ............................5.32 21 Ireland .............................4.98
284 22 Israel ...............................5.19 22 Hong Kong SAR ..............4.97
23 Jordan .............................4.97 23 Japan...............................4.93
24 Saudi Arabia ....................4.90 24 India ................................4.93
25 Spain ...............................4.85 25 Switzerland .....................4.88
26 South Africa ....................4.71 26 France .............................4.85
27 Malaysia ..........................4.68 27 Thailand...........................4.81
28 Korea, Rep. .....................4.59 28 Saudi Arabia ....................4.73
29 Poland .............................4.50 29 Indonesia.........................4.70
30 Egypt...............................4.37 30 Peru.................................4.58
31 China ...............................4.26 31 Brazil ...............................4.58
32 Kuwait .............................4.21 32 Egypt...............................4.56
33 India ................................4.11 33 Poland .............................4.54
34 Panama ...........................4.02 34 Panama ...........................4.50
35 Vietnam ...........................4.00 35 Vietnam ...........................4.40
36 Thailand...........................3.96 36 Spain ...............................4.37
37 Colombia .........................3.89 37 Slovak Republic...............4.36
38 Czech Republic ...............3.85 38 Nigeria.............................4.36
39 Slovak Republic...............3.84 39 China ...............................4.35
40 Turkey..............................3.77 40 Mexico ............................4.35
41 Peru.................................3.71 41 Korea, Rep. .....................4.33
42 Italy .................................3.64 42 Hungary...........................4.33
43 Kazakhstan ......................3.63 43 Philippines.......................4.31
44 Brazil ...............................3.62 44 Kuwait .............................4.16
45 Mexico ............................3.60 45 Colombia .........................4.10
46 Hungary...........................3.59 46 Czech Republic ...............4.09
47 Pakistan...........................3.58 47 Pakistan...........................4.07
48 Indonesia.........................3.52 48 Turkey..............................3.95
49 Nigeria.............................3.47 49 Kazakhstan ......................3.75
50 Russian Federation .........3.37 50 Argentina.........................3.71
51 Philippines.......................3.32 51 Bangladesh .....................3.65
52 Argentina.........................3.24 52 Venezuela........................3.51
53 Ukraine............................3.23 53 Italy .................................3.41
54 Bangladesh .....................3.08 54 Russian Federation .........3.17
55 Venezuela........................2.87 55 Ukraine............................2.97

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 285

1.11 1.12

3: Data Tables | Institutional environment


Official supervisory power Private monitoring of the banking industry
This index measures the extent to which official supervisory This index measures the degree to which the private sector monitors
authorities have the authority to take specific actions to prevent the banking industry (higher percentage values indicate greater
and correct problems | 2006 transparency) | 2006

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Brazil................................14.00 1 South Africa.......................9.00


1 Hungary ...........................14.00 2 Australia.............................8.00
1 Switzerland......................14.00 2 Bahrain ..............................8.00
4 Singapore ........................13.50 2 Japan .................................8.00
5 Australia...........................13.00 2 Mexico...............................8.00
5 Ireland..............................13.00 2 Netherlands .......................8.00
5 Malaysia ..........................13.00 2 Singapore ..........................8.00
5 Saudi Arabia.....................13.00 2 Spain..................................8.00
5 United States...................13.00 2 Thailand .............................8.00
5 Venezuela ........................13.00 10 Argentina ...........................7.00
11 Belgium ...........................12.50 10 Brazil..................................7.00
11 Korea, Rep.......................12.50 10 France................................7.00
13 Bahrain ............................12.00 10 Germany............................7.00
13 Japan ...............................12.00 10 Hungary .............................7.00
13 Panama............................12.00 10 Ireland................................7.00
13 Peru .................................12.00 10 Italy....................................7.00
13 Thailand ...........................12.00 10 Korea, Rep.........................7.00
18 Mexico.............................11.50 10 Malaysia ............................7.00
18 Spain................................11.50 10 Panama..............................7.00
20 Argentina .........................11.00 10 United Kingdom.................7.00
20 Chile ................................11.00 10 United States.....................7.00
22 Austria .............................10.50 22 Belgium .............................6.00
285
22 South Africa.....................10.50 22 Chile ..................................6.00
24 Czech Republic................10.00 22 Czech Republic..................6.00
24 Denmark..........................10.00 22 Finland ...............................6.00
24 India.................................10.00 22 Jordan................................6.00
27 Poland................................9.50 22 Russian Federation............6.00
28 Finland ...............................9.00 22 Sweden .............................6.00
28 France................................9.00 22 Switzerland........................6.00
28 Germany............................9.00 30 Peru ...................................5.00
28 United Kingdom.................9.00 n/a Austria .................................n/a
32 Russian Federation............8.50 n/a Bangladesh ..........................n/a
33 Italy....................................7.50 n/a Canada.................................n/a
34 Canada...............................7.00 n/a China....................................n/a
n/a Bangladesh ..........................n/a n/a Colombia..............................n/a
n/a China....................................n/a n/a Denmark ..............................n/a
n/a Colombia..............................n/a n/a Egypt ...................................n/a
n/a Egypt ...................................n/a n/a Hong Kong SAR...................n/a
n/a Hong Kong SAR...................n/a n/a India .....................................n/a
n/a Indonesia .............................n/a n/a Indonesia .............................n/a
n/a Israel ....................................n/a n/a Israel ....................................n/a
n/a Jordan..................................n/a n/a Kazakhstan...........................n/a
n/a Kazakhstan...........................n/a n/a Kuwait..................................n/a
n/a Kuwait..................................n/a n/a Nigeria .................................n/a
n/a Netherlands .........................n/a n/a Norway ................................n/a
n/a Nigeria .................................n/a n/a Pakistan ...............................n/a
n/a Norway ................................n/a n/a Philippines ...........................n/a
n/a Pakistan ...............................n/a n/a Poland..................................n/a
n/a Philippines ...........................n/a n/a Saudi Arabia.........................n/a
n/a Slovak Republic ...................n/a n/a Slovak Republic ...................n/a
n/a Sweden ...............................n/a n/a Turkey ..................................n/a
n/a Turkey ..................................n/a n/a Ukraine ................................n/a
n/a Ukraine ................................n/a n/a United Arab Emirates ..........n/a
n/a United Arab Emirates ..........n/a n/a Venezuela ............................n/a
n/a Vietnam ...............................n/a n/a Vietnam ...............................n/a

SOURCE: James Barth, Gerard Caprio, and Ross Levine. 2007. “Bank SOURCE: James Barth, Gerard Caprio, and Ross Levine. 2007. “Bank
Regulations Are Changing: But for Better or Worse?” World Bank Regulations Are Changing: But for Better or Worse?” World Bank
Discussion Paper No. 4646, Washington, DC Discussion Paper No. 4646, Washington, DC
Part 2.r2 10/14/09 3:32 PM Page 286

3: Data Tables | Institutional environment


1.13 1.14
Burden of government regulation Centralization of economic policymaking
Complying with administrative requirements for businesses (permits, Economic policymaking in your country is (1 = centralized—
regulations, reporting) issued by the government in your country is national government controls almost all important decisions; 7 =
(1 = burdensome; 7 = not burdensome) decentralized—states and cities have important decision rights
affecting economic development)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 3.21 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 3.33 7

1 Singapore ........................5.57 1 Switzerland .....................5.65


2 Hong Kong SAR ..............5.17 2 Belgium...........................5.08
3 United Arab Emirates......4.63 3 Spain ...............................4.75
4 Switzerland .....................4.28 4 Indonesia.........................4.75
5 Finland.............................4.27 5 Germany .........................4.69
6 Malaysia ..........................4.05 6 Poland .............................4.68
7 Jordan .............................4.01 7 United States ..................4.45
8 Sweden...........................3.99 8 United Arab Emirates......4.45
9 Saudi Arabia ....................3.97 9 Australia ..........................4.43
10 China ...............................3.91 10 Austria.............................4.42
11 Japan...............................3.90 11 Canada ............................4.38
12 Indonesia.........................3.88 12 Czech Republic ...............4.30
13 Denmark .........................3.82 13 Finland.............................4.22
14 Bahrain ............................3.72 14 Netherlands.....................3.93
15 Panama ...........................3.71 15 Denmark .........................3.87
16 Chile ................................3.56 16 Malaysia ..........................3.84
17 Canada ............................3.55 17 Israel ...............................3.80
18 Austria.............................3.53 18 China ...............................3.73
19 Norway............................3.48 19 Sweden...........................3.69
20 Thailand...........................3.46 20 Italy .................................3.66
21 United States ..................3.39 21 India ................................3.65
286 22 Pakistan...........................3.29 22 Slovak Republic...............3.55
23 South Africa ....................3.23 23 Hong Kong SAR ..............3.53
24 Australia ..........................3.20 24 Kazakhstan ......................3.45
25 Egypt...............................3.15 25 Vietnam ...........................3.27
26 Ireland .............................3.13 26 Ukraine............................3.27
27 Nigeria.............................3.13 27 Korea, Rep. .....................3.25
28 Israel ...............................3.13 28 Saudi Arabia ....................3.25
29 Germany .........................3.03 29 Peru.................................3.22
30 Kazakhstan ......................3.00 30 Mexico ............................3.12
31 United Kingdom ..............3.00 31 Norway............................3.11
32 Slovak Republic...............2.94 32 Colombia .........................3.08
33 Netherlands.....................2.94 33 Pakistan...........................3.07
34 Turkey..............................2.92 34 Nigeria.............................2.91
35 India ................................2.88 35 Philippines.......................2.91
36 Korea, Rep. .....................2.83 36 France .............................2.90
37 Spain ...............................2.71 37 Hungary...........................2.90
38 Vietnam ...........................2.71 38 Jordan .............................2.84
39 Colombia .........................2.69 39 Russian Federation .........2.79
40 Ukraine............................2.69 40 Brazil ...............................2.77
41 Argentina.........................2.68 41 South Africa ....................2.71
42 Poland .............................2.67 42 Thailand...........................2.71
43 Belgium...........................2.67 43 United Kingdom ..............2.65
44 Philippines.......................2.67 44 Panama ...........................2.56
45 Czech Republic ...............2.66 45 Bahrain ............................2.50
46 Kuwait .............................2.63 46 Japan...............................2.47
47 Mexico ............................2.58 47 Turkey..............................2.39
48 Peru.................................2.52 48 Chile ................................2.36
49 Bangladesh .....................2.47 49 Kuwait .............................2.28
50 Russian Federation .........2.43 50 Egypt...............................2.26
51 France .............................2.33 51 Singapore ........................2.20
52 Italy .................................2.17 52 Ireland .............................1.83
53 Hungary...........................2.13 53 Bangladesh .....................1.81
54 Brazil ...............................1.85 54 Argentina.........................1.64
55 Venezuela........................1.84 55 Venezuela........................1.22

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 287

1.15 1.16

3: Data Tables | Institutional environment


Regulation of securities exchanges Property rights
Regulation of securities exchanges in your country is (1 = not Property rights, including over financial assets (1 = are poorly defined
transparent, ineffective, and subject to undue influence from industry and not protected by law; 7 = are clearly defined and well protected
and government; 7 = transparent, effective, and independent from by law)
undue influence from industry and government)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.75 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.97 7

1 Sweden...........................5.94 1 Switzerland .....................6.55


2 South Africa ....................5.92 2 Denmark .........................6.48
3 Switzerland .....................5.85 3 Finland.............................6.46
4 Singapore ........................5.82 4 Singapore ........................6.41
5 Australia ..........................5.75 5 Sweden...........................6.41
6 Denmark .........................5.73 6 Austria.............................6.37
7 Norway............................5.71 7 Hong Kong SAR ..............6.28
8 Brazil ...............................5.64 8 Germany .........................6.27
9 India ................................5.60 9 Norway............................6.27
10 Finland.............................5.58 10 Canada ............................6.21
11 Netherlands.....................5.54 11 Australia ..........................6.17
12 Hong Kong SAR ..............5.38 12 Netherlands.....................6.11
13 France .............................5.35 13 Ireland .............................6.06
14 Germany .........................5.30 14 Japan...............................5.90
15 Canada ............................5.25 15 South Africa ....................5.87
16 Panama ...........................5.19 16 France .............................5.80
17 United Arab Emirates......5.18 17 Belgium...........................5.76
18 Jordan .............................5.15 18 Jordan .............................5.75
19 Bahrain ............................5.13 19 United Kingdom ..............5.59
20 Belgium...........................5.09 20 United States ..................5.53
21 Malaysia ..........................5.00 21 Chile ................................5.51
22 Austria.............................4.95 22 Bahrain ............................5.50
287
23 Thailand...........................4.95 23 United Arab Emirates......5.47
24 Czech Republic ...............4.88 24 Saudi Arabia ....................5.31
25 Poland .............................4.87 25 China ...............................5.25
26 Japan...............................4.87 26 Malaysia ..........................5.21
27 Indonesia.........................4.79 27 Spain ...............................5.14
28 United Kingdom ..............4.78 28 Kuwait .............................5.12
29 United States ..................4.72 29 Korea, Rep. .....................4.97
30 Nigeria.............................4.62 30 Panama ...........................4.85
31 Hungary...........................4.57 31 India ................................4.78
32 Korea, Rep. .....................4.55 32 Czech Republic ...............4.72
33 Israel ...............................4.53 33 Hungary...........................4.62
34 Chile ................................4.52 34 Slovak Republic...............4.55
35 Ireland .............................4.50 35 Israel ...............................4.45
36 Mexico ............................4.46 36 Vietnam ...........................4.43
37 Saudi Arabia ....................4.40 37 Egypt...............................4.43
38 Bangladesh .....................4.37 38 Italy .................................4.41
39 Egypt...............................4.33 39 Brazil ...............................4.38
40 Spain ...............................4.29 40 Thailand...........................4.28
41 Turkey..............................4.25 41 Poland .............................4.25
42 Pakistan...........................4.21 42 Indonesia.........................4.11
43 Italy .................................4.19 43 Colombia .........................3.97
44 Philippines.......................4.18 44 Mexico ............................3.95
45 Peru.................................4.18 45 Peru.................................3.95
46 Colombia .........................4.12 46 Turkey..............................3.90
47 Slovak Republic...............4.11 47 Nigeria.............................3.89
48 Argentina.........................4.06 48 Philippines.......................3.81
49 Vietnam ...........................4.03 49 Pakistan...........................3.78
50 China ...............................4.02 50 Kazakhstan ......................3.62
51 Kuwait .............................4.02 51 Bangladesh .....................3.48
52 Venezuela........................3.48 52 Russian Federation .........3.07
53 Russian Federation .........3.30 53 Argentina.........................2.92
54 Kazakhstan ......................3.19 54 Ukraine............................2.85
55 Ukraine............................2.69 55 Venezuela........................2.08

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 288

3: Data Tables | Institutional environment


1.17 1.18
Intellectual property protection Diversion of public funds
Intellectual property protection in your country (1 = is weak and not In your country, diversion of public funds to companies, individuals,
enforced; 7 = is strong and enforced) or groups due to corruption (1 = is common; 7 = never occurs)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.29 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.19 7

1 Singapore ........................6.21 1 Denmark .........................6.57


2 Sweden...........................6.11 2 Sweden...........................6.50
3 Finland.............................6.09 3 Singapore ........................6.43
4 Switzerland .....................6.08 4 Finland.............................6.40
5 Austria.............................6.07 5 Switzerland .....................6.06
6 Denmark .........................5.99 6 Norway............................5.98
7 Netherlands.....................5.84 7 Australia ..........................5.90
8 France .............................5.81 8 Netherlands.....................5.87
9 Australia ..........................5.79 9 Hong Kong SAR ..............5.79
10 Germany .........................5.72 10 Germany .........................5.75
11 Norway............................5.66 11 Ireland .............................5.71
12 United Arab Emirates......5.57 12 United Kingdom ..............5.64
13 Ireland .............................5.57 13 Austria.............................5.63
14 Canada ............................5.47 14 Canada ............................5.58
15 United States ..................5.44 15 United Arab Emirates......5.54
16 Japan...............................5.43 16 Israel ...............................5.33
17 United Kingdom ..............5.33 17 Belgium...........................5.14
18 Belgium...........................5.27 18 Bahrain ............................5.08
19 Hong Kong SAR ..............5.26 19 United States ..................5.01
20 South Africa ....................5.22 20 Japan...............................4.92
21 Bahrain ............................5.08 21 France .............................4.91
288 22 Jordan .............................4.74 22 Saudi Arabia ....................4.84
23 Saudi Arabia ....................4.64 23 Jordan .............................4.71
24 Malaysia ..........................4.51 24 Spain ...............................4.57
25 Spain ...............................4.31 25 Korea, Rep. .....................4.11
26 Korea, Rep. .....................4.20 26 Malaysia ..........................4.10
27 Israel ...............................4.03 27 Poland .............................3.99
28 China ...............................4.02 28 Chile ................................3.90
29 Czech Republic ...............4.02 29 China ...............................3.70
30 Kuwait .............................4.01 30 South Africa ....................3.67
31 Italy .................................3.91 31 India ................................3.60
32 Hungary...........................3.88 32 Indonesia.........................3.57
33 Panama ...........................3.84 33 Thailand...........................3.48
34 Slovak Republic...............3.73 34 Kuwait .............................3.48
35 Egypt...............................3.67 35 Peru.................................3.43
36 India ................................3.65 36 Panama ...........................3.38
37 Poland .............................3.58 37 Kazakhstan ......................3.23
38 Chile ................................3.57 38 Vietnam ...........................3.16
39 Indonesia.........................3.54 39 Italy .................................3.14
40 Thailand...........................3.27 40 Egypt...............................3.08
41 Kazakhstan ......................3.25 41 Pakistan...........................3.08
42 Mexico ............................3.19 42 Czech Republic ...............3.05
43 Nigeria.............................3.08 43 Turkey..............................3.04
44 Brazil ...............................3.04 44 Hungary...........................3.03
45 Vietnam ...........................3.02 45 Slovak Republic...............3.03
46 Colombia .........................3.00 46 Colombia .........................2.92
47 Pakistan...........................2.96 47 Mexico ............................2.90
48 Philippines.......................2.92 48 Russian Federation .........2.74
49 Russian Federation .........2.75 49 Bangladesh .....................2.62
50 Turkey..............................2.68 50 Ukraine............................2.53
51 Ukraine............................2.65 51 Nigeria.............................2.33
52 Peru.................................2.51 52 Brazil ...............................2.30
53 Argentina.........................2.49 53 Philippines.......................2.28
54 Bangladesh .....................2.37 54 Argentina.........................2.16
55 Venezuela........................2.00 55 Venezuela........................1.82

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 289

1.19 1.20

3: Data Tables | Institutional environment


Public trust of politicians Corruption perceptions index
Public trust in the financial honesty of politicians is (1 = very low; Composite index measuring the perceived levels of corruption in a
7 = very high) given country as determined by expert assessments and opinion
surveys. Higher scores indicate less extensive corruption | 2008

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 3.35 7 RANK COUNTRY/ECONOMY HARD DATA

1 Singapore ........................6.45 1 Denmark............................9.30


2 Denmark .........................6.11 1 Sweden .............................9.30
3 United Arab Emirates......5.88 3 Singapore ..........................9.20
4 Sweden...........................5.80 4 Finland ...............................9.00
5 Norway............................5.72 4 Switzerland........................9.00
6 Switzerland .....................5.63 6 Netherlands .......................8.90
7 Finland.............................5.50 7 Australia.............................8.70
8 Netherlands.....................5.31 7 Canada...............................8.70
9 Saudi Arabia ....................4.92 9 Austria ...............................8.10
10 Australia ..........................4.92 9 Hong Kong SAR ................8.10
11 Hong Kong SAR ..............4.85 11 Germany............................7.90
12 Canada ............................4.25 11 Norway ..............................7.90
13 Austria.............................4.21 13 Ireland................................7.70
14 Germany .........................4.06 13 United Kingdom.................7.70
15 China ...............................4.05 15 Belgium .............................7.30
16 France .............................3.94 15 Japan .................................7.30
17 Jordan .............................3.91 15 United States.....................7.30
18 Bahrain ............................3.91 18 Chile ..................................6.90
19 Malaysia ..........................3.82 18 France................................6.90
20 Vietnam ...........................3.63 20 Spain..................................6.50
21 Egypt...............................3.52 21 Israel..................................6.00
22 Israel ...............................3.51 22 United Arab Emirates ........5.90
289
23 Kuwait .............................3.51 23 Korea, Rep.........................5.60
24 Belgium...........................3.47 24 Bahrain ..............................5.40
25 United Kingdom ..............3.45 25 Czech Republic..................5.20
26 United States ..................3.42 26 Hungary .............................5.10
27 Chile ................................3.35 26 Jordan................................5.10
28 Ireland .............................3.30 26 Malaysia ............................5.10
29 Spain ...............................3.25 29 Slovak Republic .................5.00
30 Indonesia.........................3.17 30 South Africa.......................4.90
31 Kazakhstan ......................3.12 31 Italy....................................4.80
32 Japan...............................3.11 32 Poland................................4.60
33 South Africa ....................2.84 32 Turkey ................................4.60
34 Korea, Rep. .....................2.79 34 Kuwait ...............................4.30
35 Thailand...........................2.66 35 Colombia ...........................3.80
36 India ................................2.38 36 China .................................3.60
37 Russian Federation .........2.32 36 Mexico...............................3.60
38 Pakistan...........................2.27 36 Peru ...................................3.60
39 Panama ...........................2.20 39 Brazil..................................3.50
40 Colombia .........................2.19 39 Saudi Arabia.......................3.50
41 Turkey..............................2.18 39 Thailand .............................3.50
42 Mexico ............................2.14 42 India...................................3.40
43 Poland .............................2.08 42 Panama..............................3.40
44 Peru.................................2.07 44 Argentina ...........................2.90
45 Ukraine............................1.98 45 Egypt .................................2.80
46 Italy .................................1.95 46 Nigeria ...............................2.70
47 Hungary...........................1.90 46 Vietnam .............................2.70
48 Czech Republic ...............1.83 48 Indonesia ...........................2.60
49 Bangladesh .....................1.79 49 Pakistan .............................2.50
50 Slovak Republic...............1.74 49 Ukraine ..............................2.50
51 Venezuela........................1.60 51 Philippines .........................2.30
52 Brazil ...............................1.58 52 Kazakhstan ........................2.20
53 Nigeria.............................1.57 53 Bangladesh........................2.10
54 Philippines.......................1.56 53 Russian Federation............2.10
55 Argentina.........................1.45 55 Venezuela ..........................1.90

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: Transparency International, Corruption Perceptions Index 2008
Part 2.r2 10/14/09 3:32 PM Page 290

3: Data Tables | Institutional environment


1.21 1.22
Strength of legal rights index Effectiveness of law-making bodies
This index measures the degree to which collateral and bankruptcy How effective is your national parliament/congress as a law-making
laws protect the rights of borrowers and lenders and thus facilitate institution? (1 = very ineffective; 7 = very effective—among the best
lending. The index ranges from 0 to 10, with higher scores indicating in the world)
that collateral and bankruptcy laws are better designed to expand
access to credit | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY SCORE 1 MEAN: 3.81 7

1 Hong Kong SAR ..............10.00 1 Singapore ........................6.46


1 Malaysia ..........................10.00 2 Denmark .........................5.98
1 Singapore ........................10.00 3 Sweden...........................5.62
4 Australia.............................9.00 4 Australia ..........................5.58
4 Denmark............................9.00 5 Norway............................5.40
4 Israel..................................9.00 6 Finland.............................5.39
4 Slovak Republic .................9.00 7 Canada ............................5.08
4 South Africa.......................9.00 8 United Kingdom ..............4.97
4 Ukraine ..............................9.00 9 Switzerland .....................4.93
4 United Kingdom.................9.00 10 Malaysia ..........................4.74
11 Bangladesh........................8.00 11 United Arab Emirates......4.74
11 India...................................8.00 12 France .............................4.72
11 Ireland................................8.00 13 Netherlands.....................4.67
11 Nigeria ...............................8.00 14 India ................................4.64
11 Poland................................8.00 15 Germany .........................4.60
11 Switzerland........................8.00 16 Ireland .............................4.44
11 United States.....................8.00 17 China ...............................4.39
18 Austria ...............................7.00 18 South Africa ....................4.34
18 Belgium .............................7.00 19 Austria.............................4.29
18 Finland ...............................7.00 20 Japan...............................4.29
18 France................................7.00 21 United States ..................4.17
290 18 Germany............................7.00 22 Israel ...............................4.16
18 Hungary .............................7.00 23 Vietnam ...........................4.10
18 Japan .................................7.00 24 Saudi Arabia ....................4.08
18 Korea, Rep.........................7.00 25 Hong Kong SAR ..............4.06
18 Norway ..............................7.00 26 Turkey..............................3.88
18 Peru ...................................7.00 27 Spain ...............................3.85
18 Vietnam .............................7.00 28 Kazakhstan ......................3.71
29 Canada...............................6.00 29 Bahrain ............................3.68
29 China .................................6.00 30 Jordan .............................3.66
29 Czech Republic..................6.00 31 Chile ................................3.64
29 Netherlands .......................6.00 32 Indonesia.........................3.54
29 Pakistan .............................6.00 33 Egypt...............................3.48
29 Panama..............................6.00 34 Nigeria.............................3.44
29 Spain..................................6.00 35 Belgium...........................3.38
36 Colombia ...........................5.00 36 Thailand...........................3.37
36 Kazakhstan ........................5.00 37 Kuwait .............................3.24
36 Sweden .............................5.00 38 Russian Federation .........3.23
39 Argentina ...........................4.00 39 Czech Republic ...............3.20
39 Bahrain ..............................4.00 40 Slovak Republic...............3.19
39 Chile ..................................4.00 41 Colombia .........................3.00
39 Jordan................................4.00 42 Bangladesh .....................2.91
39 Kuwait ...............................4.00 43 Pakistan...........................2.86
39 Mexico...............................4.00 44 Poland .............................2.82
39 Saudi Arabia.......................4.00 45 Mexico ............................2.64
39 Thailand .............................4.00 46 Italy .................................2.62
39 Turkey ................................4.00 47 Korea, Rep. .....................2.62
39 United Arab Emirates ........4.00 48 Hungary...........................2.54
49 Brazil..................................3.00 49 Philippines.......................2.50
49 Egypt .................................3.00 50 Panama ...........................2.45
49 Indonesia ...........................3.00 51 Ukraine............................2.33
49 Italy....................................3.00 52 Brazil ...............................2.32
49 Philippines .........................3.00 53 Peru.................................2.25
49 Russian Federation............3.00 54 Argentina.........................2.04
49 Venezuela ..........................3.00 55 Venezuela........................1.52

SOURCE: The World Bank, Doing Business 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 291

1.23 1.24

3: Data Tables | Institutional environment


Judicial independence Irregular payments in judicial decisions
Is the judiciary in your country independent from influences of In your industry, how frequently would you estimate that firms make
members of government, citizens, or firms? (1 = no—heavily undocumented extra payments or bribes connected with getting
influenced; 7 = yes—entirely independent) favorable judicial decisions? (1 = common; 7 = never occurs)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.56 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.58 7

1 Sweden...........................6.61 1 Singapore ........................6.57


2 Denmark .........................6.50 2 Sweden...........................6.53
3 Finland.............................6.48 3 Finland.............................6.44
4 Australia ..........................6.44 4 Denmark .........................6.44
5 Germany .........................6.41 5 Norway............................6.23
6 Switzerland .....................6.37 6 Ireland .............................6.14
7 Netherlands.....................6.37 7 Netherlands.....................6.05
8 Ireland .............................6.34 8 Canada ............................6.04
9 Canada ............................6.21 9 Australia ..........................6.04
10 Norway............................6.17 10 Switzerland .....................6.02
11 Austria.............................6.08 11 Hong Kong SAR ..............5.97
12 Hong Kong SAR ..............6.03 12 Chile ................................5.96
13 Israel ...............................6.03 13 Japan...............................5.96
14 United Kingdom ..............6.02 14 United Arab Emirates......5.87
15 Singapore ........................5.79 15 Austria.............................5.76
16 Japan...............................5.49 16 Germany .........................5.63
17 Belgium...........................5.36 17 Israel ...............................5.42
18 United States ..................5.34 18 United Kingdom ..............5.40
19 United Arab Emirates......5.05 19 Belgium...........................5.40
20 Saudi Arabia ....................5.00 20 Bahrain ............................5.38
21 Jordan .............................4.97 21 United States ..................5.25
22 Bahrain ............................4.96 22 Jordan .............................5.15
291
23 India ................................4.96 23 France .............................5.10
24 South Africa ....................4.96 24 Spain ...............................5.06
25 France .............................4.76 25 Saudi Arabia ....................4.98
26 Chile ................................4.71 26 Poland .............................4.78
27 Kuwait .............................4.64 27 Korea, Rep. .....................4.77
28 Malaysia ..........................4.21 28 Czech Republic ...............4.45
29 Thailand...........................4.20 29 South Africa ....................4.42
30 Poland .............................4.14 30 Slovak Republic...............4.39
31 Hungary...........................4.12 31 Peru.................................4.36
32 Korea, Rep. .....................4.08 32 China ...............................4.29
33 Nigeria.............................4.08 33 Hungary...........................4.26
34 Spain ...............................4.07 34 Malaysia ..........................4.22
35 Czech Republic ...............4.01 35 Kuwait .............................4.06
36 China ...............................3.95 36 Panama ...........................3.96
37 Egypt...............................3.88 37 Italy .................................3.86
38 Indonesia.........................3.83 38 Colombia .........................3.73
39 Vietnam ...........................3.79 39 Brazil ...............................3.69
40 Turkey..............................3.71 40 Mexico ............................3.56
41 Colombia .........................3.64 41 Thailand...........................3.51
42 Brazil ...............................3.59 42 Kazakhstan ......................3.45
43 Slovak Republic...............3.51 43 Turkey..............................3.43
44 Bangladesh .....................3.48 44 Egypt...............................3.39
45 Mexico ............................3.24 45 India ................................3.38
46 Italy .................................3.14 46 Ukraine............................3.16
47 Philippines.......................3.14 47 Indonesia.........................3.13
48 Pakistan...........................3.11 48 Pakistan...........................3.05
49 Kazakhstan ......................3.10 49 Nigeria.............................2.82
50 Panama ...........................2.96 50 Argentina.........................2.80
51 Peru.................................2.86 51 Vietnam ...........................2.75
52 Russian Federation .........2.69 52 Russian Federation .........2.68
53 Argentina.........................2.41 53 Philippines.......................2.36
54 Ukraine............................2.25 54 Bangladesh .....................2.24
55 Venezuela........................1.45 55 Venezuela........................2.09

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 292

3: Data Tables | Institutional environment


1.25 1.26
Time to enforce a contract Number of procedures to enforce a contract
Time in days to resolve a dispute related to a contract | 2008 Number of procedures from the moment the plaintiff files a lawsuit in
court until the moment of payment | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Singapore ......................150.00 1 Ireland..............................20.00


2 Hong Kong SAR ............211.00 2 Singapore ........................21.00
3 Kazakhstan ....................230.00 3 Hong Kong SAR ..............24.00
3 Korea, Rep.....................230.00 4 Austria .............................25.00
5 Finland ...........................235.00 4 Belgium ...........................25.00
6 Russian Federation........281.00 4 Netherlands .....................25.00
7 Vietnam .........................295.00 7 Czech Republic................27.00
8 United States.................300.00 8 Australia...........................28.00
9 Norway ..........................310.00 9 Venezuela ........................29.00
10 Japan .............................316.00 10 France..............................30.00
11 France............................331.00 10 Germany..........................30.00
12 Hungary .........................335.00 10 Japan ...............................30.00
13 Ukraine ..........................354.00 10 Malaysia ..........................30.00
14 Denmark........................380.00 10 Slovak Republic ...............30.00
15 Germany........................394.00 10 South Africa.....................30.00
16 Australia.........................395.00 10 Sweden ...........................30.00
17 Austria ...........................397.00 10 Ukraine ............................30.00
18 United Kingdom.............404.00 10 United Kingdom...............30.00
19 China .............................406.00 19 Panama............................31.00
20 Mexico...........................415.00 20 Finland .............................32.00
21 Switzerland....................417.00 20 Switzerland......................32.00
292 22 Turkey ............................420.00 20 United States...................32.00
23 Nigeria ...........................457.00 23 Hungary ...........................33.00
24 Peru ...............................468.00 23 Norway ............................33.00
25 Thailand .........................479.00 25 China ...............................34.00
26 Chile ..............................480.00 25 Colombia .........................34.00
27 Belgium .........................505.00 25 Denmark..........................34.00
28 Sweden .........................508.00 25 Vietnam ...........................34.00
29 Venezuela ......................510.00 29 Israel................................35.00
30 Netherlands ...................514.00 29 Korea, Rep.......................35.00
31 Ireland............................515.00 29 Thailand ...........................35.00
31 Spain..............................515.00 29 Turkey ..............................35.00
33 Slovak Republic .............565.00 33 Argentina .........................36.00
34 Kuwait ...........................566.00 33 Canada.............................36.00
35 Canada...........................570.00 33 Chile ................................36.00
35 Indonesia .......................570.00 36 Philippines .......................37.00
37 Argentina .......................590.00 36 Russian Federation..........37.00
38 Malaysia ........................600.00 38 Kazakhstan ......................38.00
38 South Africa...................600.00 38 Mexico.............................38.00
40 United Arab Emirates ....607.00 38 Poland..............................38.00
41 Brazil..............................616.00 41 Indonesia .........................39.00
42 Bahrain ..........................635.00 41 Jordan..............................39.00
42 Saudi Arabia...................635.00 41 Nigeria .............................39.00
44 Panama..........................686.00 41 Spain................................39.00
45 Jordan............................689.00 45 Bangladesh......................41.00
46 Czech Republic..............820.00 45 Italy..................................41.00
47 Poland............................830.00 45 Peru .................................41.00
48 Philippines .....................842.00 48 Egypt ...............................42.00
49 Israel..............................890.00 49 Saudi Arabia.....................44.00
50 Pakistan .........................976.00 50 Brazil................................45.00
51 Egypt ..........................1,010.00 51 India.................................46.00
52 Italy.............................1,210.00 52 Pakistan ...........................47.00
53 Colombia ....................1,346.00 53 Bahrain ............................48.00
54 India............................1,420.00 54 Kuwait .............................50.00
55 Bangladesh.................1,442.00 54 United Arab Emirates ......50.00

SOURCE: The World Bank, Doing Business 2009 SOURCE: The World Bank, Doing Business 2009
Part 2.r2 10/14/09 3:32 PM Page 293

1.27 1.28

3: Data Tables | Institutional environment


Strength of investor protection Cost of enforcing contracts
This index assesses the strength of investor protection on a 0–10 Cost of enforcing contracts as a percentage of claim | 2008
(best) scale | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Singapore ..........................9.30 1 United States.....................9.40


2 Hong Kong SAR ................9.00 2 Norway ..............................9.90
3 Malaysia ............................8.70 3 Korea, Rep.......................10.30
4 Canada...............................8.30 4 Finland .............................10.40
4 Ireland................................8.30 5 China ...............................11.10
4 Israel..................................8.30 6 Poland..............................12.00
4 United States.....................8.30 7 Hungary ...........................13.00
8 South Africa.......................8.00 8 Kuwait .............................13.30
8 United Kingdom.................8.00 9 Russian Federation..........13.40
10 Thailand .............................7.70 10 Thailand ...........................14.30
11 Belgium .............................7.00 11 Germany..........................14.40
11 Japan .................................7.00 12 Hong Kong SAR ..............14.50
13 Bangladesh........................6.70 13 Bahrain ............................14.70
13 Norway ..............................6.70 14 Argentina .........................16.50
13 Peru ...................................6.70 14 Brazil................................16.50
16 Colombia ...........................6.30 16 Belgium ...........................16.60
16 Denmark............................6.30 17 Spain................................17.20
16 Kuwait ...............................6.30 18 France..............................17.40
16 Pakistan .............................6.30 19 Austria .............................18.00
16 Saudi Arabia.......................6.30 20 Turkey ..............................18.80
21 Chile ..................................6.00 21 Australia...........................20.70
21 India...................................6.00 22 Kazakhstan ......................22.00
293
21 Mexico...............................6.00 23 Canada.............................22.30
21 Poland................................6.00 24 Japan ...............................22.70
25 Australia.............................5.70 25 Denmark..........................23.30
25 Bahrain ..............................5.70 26 United Kingdom...............23.40
25 Finland ...............................5.70 27 Pakistan ...........................23.80
25 Indonesia ...........................5.70 28 Switzerland......................24.00
25 Italy....................................5.70 29 Netherlands .....................24.40
25 Kazakhstan ........................5.70 30 Israel................................25.30
25 Nigeria ...............................5.70 31 Slovak Republic ...............25.70
25 Sweden .............................5.70 32 Singapore ........................25.80
25 Turkey ................................5.70 33 Philippines .......................26.00
34 Brazil..................................5.30 34 Egypt ...............................26.20
34 Egypt .................................5.30 34 United Arab Emirates ......26.20
34 France................................5.30 36 Ireland..............................26.90
34 Korea, Rep.........................5.30 37 Malaysia ..........................27.50
38 China .................................5.00 37 Saudi Arabia.....................27.50
38 Czech Republic..................5.00 39 Chile ................................28.60
38 Germany............................5.00 40 Italy..................................29.90
38 Russian Federation............5.00 41 Vietnam ...........................31.00
38 Spain..................................5.00 42 Jordan..............................31.20
43 Argentina ...........................4.70 43 Sweden ...........................31.30
43 Netherlands .......................4.70 44 Mexico.............................32.00
43 Panama..............................4.70 44 Nigeria .............................32.00
43 Slovak Republic .................4.70 46 Czech Republic................33.00
47 Hungary .............................4.30 47 South Africa.....................33.20
47 Jordan................................4.30 48 Peru .................................35.70
47 United Arab Emirates ........4.30 49 India.................................39.60
50 Austria ...............................4.00 50 Ukraine ............................41.50
50 Philippines .........................4.00 51 Venezuela ........................43.70
52 Ukraine ..............................3.70 52 Panama............................50.00
53 Switzerland........................3.00 53 Colombia .........................52.60
54 Venezuela ..........................2.70 54 Bangladesh......................63.30
54 Vietnam .............................2.70 55 Indonesia .......................122.70

SOURCE: The World Bank, Doing Business 2009 SOURCE: The World Bank, Doing Business 2009
Part 2.r2 10/14/09 3:32 PM Page 294
Part 2.r2 10/14/09 3:32 PM Page 295

Data Tables

Section II
Business environment

295
Part 2.r2 10/14/09 3:32 PM Page 296

3: Data Tables | Business environment


2.01 2.02
Quality of management schools Quality of math and science education
Management or business schools in your country are (1 = limited or Math and science education in your country’s schools (1 = lag far
of poor quality; 7 = among the best in the world) behind most other countries; 7 = are among the best in the world)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.64 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.28 7

1 Switzerland .....................6.13 1 Singapore ........................6.43


2 Canada ............................5.97 2 Finland.............................6.36
3 France .............................5.92 3 Belgium...........................6.08
4 United States ..................5.85 4 Switzerland .....................5.71
5 Singapore ........................5.84 5 France .............................5.51
6 Spain ...............................5.83 6 Czech Republic ...............5.41
7 Belgium...........................5.79 7 Hong Kong SAR ..............5.39
8 Denmark .........................5.64 8 Canada ............................5.31
9 Netherlands.....................5.51 9 Denmark .........................5.23
10 Finland.............................5.44 10 Netherlands.....................5.21
11 Sweden...........................5.40 11 Korea, Rep. .....................5.19
12 India ................................5.38 12 United Arab Emirates......5.15
13 United Kingdom ..............5.36 13 India ................................5.03
14 Chile ................................5.35 14 Poland .............................4.95
15 Australia ..........................5.30 15 Ireland .............................4.93
16 Ireland .............................5.27 16 Japan...............................4.93
17 Norway............................5.19 17 Hungary...........................4.93
18 United Arab Emirates......5.13 18 Australia ..........................4.85
19 Argentina.........................5.11 19 Malaysia ..........................4.81
20 Austria.............................5.09 20 China ...............................4.81
21 Germany .........................4.96 21 Sweden...........................4.81
296 22 Hong Kong SAR ..............4.90 22 Jordan .............................4.74
23 South Africa ....................4.83 23 Austria.............................4.73
24 Malaysia ..........................4.78 24 Ukraine............................4.68
25 Czech Republic ...............4.71 25 Russian Federation .........4.68
26 Philippines.......................4.66 26 Germany .........................4.53
27 Bahrain ............................4.57 27 United States ..................4.47
28 Korea, Rep. .....................4.48 28 Indonesia.........................4.46
29 Poland .............................4.47 29 Slovak Republic...............4.46
30 Italy .................................4.45 30 United Kingdom ..............4.45
31 Mexico ............................4.39 31 Vietnam ...........................4.44
32 Indonesia.........................4.32 32 Bahrain ............................4.35
33 Jordan .............................4.31 33 Norway............................4.24
34 Peru.................................4.30 34 Thailand...........................4.14
35 Venezuela........................4.28 35 Kazakhstan ......................3.86
36 Thailand...........................4.22 36 Turkey..............................3.81
37 Colombia .........................4.20 37 Saudi Arabia ....................3.73
38 Nigeria.............................4.13 38 Italy .................................3.66
39 Israel ...............................4.10 39 Colombia .........................3.56
40 Brazil ...............................4.09 40 Kuwait .............................3.49
41 Hungary...........................4.06 41 Pakistan...........................3.40
42 China ...............................4.00 42 Philippines.......................3.38
43 Pakistan...........................3.90 43 Nigeria.............................3.36
44 Japan...............................3.89 44 Argentina.........................3.35
45 Saudi Arabia ....................3.87 45 Spain ...............................3.34
46 Turkey..............................3.84 46 Israel ...............................3.19
47 Russian Federation .........3.69 47 Panama ...........................2.98
48 Ukraine............................3.66 48 Venezuela........................2.95
49 Kazakhstan ......................3.63 49 Chile ................................2.91
50 Kuwait .............................3.63 50 Bangladesh .....................2.86
51 Slovak Republic...............3.61 51 Brazil ...............................2.71
52 Bangladesh .....................3.61 52 Egypt...............................2.70
53 Panama ...........................3.59 53 Mexico ............................2.58
54 Vietnam ...........................3.39 54 Peru.................................2.23
55 Egypt...............................3.33 55 South Africa ....................2.07

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 297

2.03 2.04

3: Data Tables | Business environment


Extent of staff training Local availability of specialized research and
training services
The general approach of companies in your country to human
resources is (1 = to invest little in training and employee development; In your country, specialized research and training services are
7 = to invest heavily to attract, train, and retain employees) (1 = not available; 7 = available from world-class local institutions)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.38 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.69 7

1 Sweden...........................5.68 1 Switzerland .....................6.30


2 Singapore ........................5.63 2 Germany .........................6.03
3 Switzerland .....................5.63 3 United States ..................5.98
4 Denmark .........................5.63 4 Netherlands.....................5.97
5 Japan...............................5.45 5 Finland.............................5.94
6 Norway............................5.41 6 Denmark .........................5.89
7 United States ..................5.31 7 Sweden...........................5.84
8 Finland.............................5.27 8 France .............................5.75
9 Netherlands.....................5.23 9 United Kingdom ..............5.64
10 Germany .........................5.18 10 Belgium...........................5.63
11 Canada ............................5.03 11 Canada ............................5.62
12 Belgium...........................4.94 12 Austria.............................5.55
13 Ireland .............................4.89 13 Japan...............................5.51
14 Malaysia ..........................4.89 14 Singapore ........................5.50
15 France .............................4.86 15 Norway............................5.40
16 Australia ..........................4.84 16 Czech Republic ...............5.29
17 South Africa ....................4.81 17 Australia ..........................5.28
18 Austria.............................4.80 18 Hong Kong SAR ..............5.05
19 Hong Kong SAR ..............4.77 19 United Arab Emirates......5.01
20 United Kingdom ..............4.73 20 Ireland .............................4.87
21 Czech Republic ...............4.67 21 Malaysia ..........................4.85
22 Korea, Rep. .....................4.66 22 Spain ...............................4.82
297
23 United Arab Emirates......4.65 23 Israel ...............................4.79
24 Indonesia.........................4.52 24 Brazil ...............................4.79
25 India ................................4.51 25 Poland .............................4.78
26 Israel ...............................4.49 26 India ................................4.68
27 Bahrain ............................4.47 27 Korea, Rep. .....................4.61
28 Philippines.......................4.38 28 South Africa ....................4.59
29 Chile ................................4.38 29 Chile ................................4.58
30 Saudi Arabia ....................4.29 30 Saudi Arabia ....................4.58
31 Vietnam ...........................4.23 31 Italy .................................4.54
32 China ...............................4.22 32 Jordan .............................4.45
33 Slovak Republic...............4.17 33 China ...............................4.35
34 Brazil ...............................4.16 34 Indonesia.........................4.35
35 Panama ...........................4.10 35 Hungary...........................4.33
36 Thailand...........................4.06 36 Slovak Republic...............4.31
37 Poland .............................4.06 37 Mexico ............................4.21
38 Jordan .............................3.99 38 Argentina.........................4.16
39 Kuwait .............................3.87 39 Colombia .........................4.14
40 Spain ...............................3.86 40 Thailand...........................4.08
41 Mexico ............................3.77 41 Kazakhstan ......................3.97
42 Peru.................................3.70 42 Russian Federation .........3.96
43 Argentina.........................3.70 43 Nigeria.............................3.92
44 Kazakhstan ......................3.67 44 Ukraine............................3.91
45 Turkey..............................3.66 45 Turkey..............................3.88
46 Nigeria.............................3.63 46 Panama ...........................3.87
47 Hungary...........................3.62 47 Egypt...............................3.86
48 Russian Federation .........3.57 48 Kuwait .............................3.84
49 Venezuela........................3.48 49 Philippines.......................3.79
50 Colombia .........................3.42 50 Peru.................................3.78
51 Egypt...............................3.41 51 Vietnam ...........................3.62
52 Ukraine............................3.37 52 Pakistan...........................3.42
53 Pakistan...........................3.30 53 Venezuela........................3.38
54 Italy .................................3.06 54 Bahrain ............................3.38
55 Bangladesh .....................2.64 55 Bangladesh .....................3.05

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 298

3: Data Tables | Business environment


2.05 2.06
Brain drain and ease of hiring foreign labor Tertiary enrollment
This variable is the average of the results to two questions in the Gross tertiary enrollment rate | 2007 or most recent year available
Survey: Your country’s talented people (1 = normally leave to pursue
opportunities in other countries; 7 = almost always remain in the
country); and Labor regulation in your country (1 = prevents your
company from employing foreign labor; 7 = does not prevent your
company from employing foreign labor)
RANK COUNTRY/ECONOMY HARD DATA
RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.25 7
1 Finland .............................93.22
1 United Arab Emirates......6.01 2 Korea, Rep.......................92.60
2 Switzerland .....................5.56 3 United States...................81.77
3 Singapore ........................5.49 4 Denmark..........................79.94
4 Ireland .............................5.25 5 Sweden ...........................78.99
5 United States ..................5.22 6 Norway ............................77.51
6 Hong Kong SAR ..............5.19 7 Ukraine ............................76.38
7 Chile ................................5.02 8 Australia...........................72.70
8 Norway............................5.01 9 Russian Federation..........72.28
9 Finland.............................5.00 10 Hungary ...........................68.60
10 Netherlands.....................4.92 11 Spain................................67.36
11 United Kingdom ..............4.92 12 Italy..................................66.99
12 Sweden...........................4.89 13 Poland..............................65.58
13 Denmark .........................4.85 14 Argentina .........................63.77
14 Bahrain ............................4.83 15 Belgium ...........................62.84
15 Saudi Arabia ....................4.74 16 Canada2 ...........................62.36
16 Kuwait .............................4.73 17 Netherlands .....................59.81
17 Canada ............................4.64 18 United Kingdom...............59.34
18 Indonesia.........................4.64 19 Ireland..............................58.77
19 China ...............................4.62 20 Singapore5 .......................58.60
20 Belgium...........................4.51 21 Israel................................57.57
298 21 Spain ...............................4.42 22 Japan ...............................57.31
22 Czech Republic ...............4.39 23 France..............................56.16
23 Malaysia ..........................4.37 24 Venezuela4 .......................51.96
24 Australia ..........................4.28 25 Austria .............................49.89
25 Panama ...........................4.26 26 Czech Republic................49.85
26 Germany .........................4.24 27 Thailand5 ..........................49.51
27 Peru.................................4.20 28 Kazakhstan5 .....................47.01
28 Brazil ...............................4.19 29 Chile ................................46.57
29 Japan...............................4.19 30 Germany4 .........................46.34
30 Thailand...........................4.15 31 Switzerland......................45.80
31 India ................................4.12 32 Panama4 ..........................45.49
32 Nigeria.............................4.10 33 Slovak Republic ...............45.32
33 Korea, Rep. .....................4.09 34 Jordan..............................39.05
34 France .............................4.06 35 Peru4 ................................35.06
35 Argentina.........................3.98 36 Egypt3 ..............................34.75
36 Hungary...........................3.94 37 Turkey ..............................34.62
37 Austria.............................3.92 38 Hong Kong SAR ..............32.97
38 Vietnam ...........................3.88 39 Bahrain4 ...........................32.05
39 Italy .................................3.86 40 Colombia .........................31.80
40 Slovak Republic...............3.77 41 Saudi Arabia4 ...................29.22
41 Turkey..............................3.71 42 Malaysia4 .........................28.58
42 Mexico ............................3.70 43 Philippines4 ......................28.47
43 Colombia .........................3.67 44 Mexico.............................26.08
44 Pakistan...........................3.64 45 Brazil................................25.48
45 Israel ...............................3.62 46 United Arab Emirates5 .....22.90
46 Kazakhstan ......................3.56 47 China ...............................21.58
47 Poland .............................3.51 48 Kuwait4 ............................17.56
48 Jordan .............................3.45 49 Indonesia .........................16.98
49 Egypt...............................3.44 50 South Africa4....................15.41
50 Ukraine............................3.42 51 India4 ................................11.85
51 Russian Federation .........3.35 52 Nigeria3 ............................10.15
52 Philippines.......................3.19 53 Vietnam1 ............................9.47
53 South Africa ....................3.13 54 Bangladesh........................6.78
54 Bangladesh .....................2.97 55 Pakistan .............................5.12
55 Venezuela........................2.72
SOURCE: UNESCO Institute for Statistics (June 2009); The World Bank,
SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 World Development Indicators 2009; national sources
1 2 3 4 5
2001 2004 2005 2006 2008
Part 2.r2 10/14/09 3:32 PM Page 299

2.07 2.08

3: Data Tables | Business environment


Irregular payments in tax collection Distortive effect on competition of taxes and
subsidies
In your industry, how frequently would you estimate that firms make
undocumented extra payments or bribes connected with annual tax In your country, government subsidies and tax breaks seriously
payments? (1 = common; 7 = never occurs) distort competition (1 = strongly agree; 7 = strongly disagree)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.59 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.32 7

1 Singapore ........................6.55 1 Hong Kong SAR ..............6.06


2 Sweden...........................6.53 2 Singapore ........................5.97
3 Denmark .........................6.46 3 United Arab Emirates......5.80
4 Finland.............................6.45 4 Bahrain ............................5.66
5 Norway............................6.23 5 Chile ................................5.47
6 Ireland .............................6.17 6 South Africa ....................5.13
7 Netherlands.....................6.05 7 Saudi Arabia ....................5.05
8 Australia ..........................6.05 8 Norway............................5.05
9 Switzerland .....................6.03 9 Ireland .............................4.97
10 Canada ............................5.97 10 Sweden...........................4.93
11 Hong Kong SAR ..............5.97 11 Denmark .........................4.87
12 Chile ................................5.97 12 Netherlands.....................4.84
13 Japan...............................5.96 13 Australia ..........................4.82
14 United Arab Emirates......5.89 14 Switzerland .....................4.78
15 Austria.............................5.75 15 Finland.............................4.73
16 Bahrain ............................5.70 16 Peru.................................4.73
17 Israel ...............................5.69 17 Austria.............................4.72
18 Germany .........................5.64 18 China ...............................4.66
19 United Kingdom ..............5.44 19 Israel ...............................4.58
20 Belgium...........................5.41 20 Nigeria.............................4.52
21 United States ..................5.27 21 Jordan .............................4.47
22 Jordan .............................5.16 22 France .............................4.47
299
23 France .............................5.09 23 Kuwait .............................4.35
24 Saudi Arabia ....................5.04 24 Indonesia.........................4.34
25 Spain ...............................5.03 25 Canada ............................4.30
26 Korea, Rep. .....................4.77 26 Belgium...........................4.26
27 Poland .............................4.77 27 Malaysia ..........................4.20
28 South Africa ....................4.42 28 Thailand...........................4.20
29 Peru.................................4.42 29 United Kingdom ..............4.17
30 Slovak Republic...............4.38 30 Egypt...............................4.13
31 Czech Republic ...............4.37 31 Bangladesh .....................4.13
32 Hungary...........................4.27 32 Japan...............................4.09
33 China ...............................4.27 33 Panama ...........................4.09
34 Malaysia ..........................4.22 34 Korea, Rep. .....................4.08
35 Kuwait .............................3.95 35 Vietnam ...........................4.08
36 Panama ...........................3.94 36 Czech Republic ...............4.08
37 Italy .................................3.88 37 Turkey..............................4.07
38 Colombia .........................3.74 38 India ................................4.00
39 Brazil ...............................3.71 39 United States ..................3.99
40 Mexico ............................3.58 40 Spain ...............................3.98
41 Thailand...........................3.52 41 Pakistan...........................3.98
42 Kazakhstan ......................3.45 42 Poland .............................3.91
43 Turkey..............................3.43 43 Philippines.......................3.85
44 Egypt...............................3.41 44 Mexico ............................3.84
45 India ................................3.39 45 Brazil ...............................3.81
46 Ukraine............................3.12 46 Colombia .........................3.81
47 Indonesia.........................3.10 47 Germany .........................3.80
48 Pakistan...........................3.07 48 Russian Federation .........3.72
49 Argentina.........................2.84 49 Slovak Republic...............3.69
50 Nigeria.............................2.80 50 Italy .................................3.67
51 Vietnam ...........................2.74 51 Kazakhstan ......................3.60
52 Russian Federation .........2.68 52 Hungary...........................3.32
53 Philippines.......................2.36 53 Ukraine............................2.97
54 Bangladesh .....................2.21 54 Argentina.........................2.33
55 Venezuela........................2.09 55 Venezuela........................2.26

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 300

3: Data Tables | Business environment


2.09 2.10
Marginal tax variation Time to pay taxes
Variation between the top tax rate on corporate income and the taxes Time to prepare, file, and pay or withhold the corporate income tax,
and mandatory contributions paid by a prototypical business as a the value-added tax, and social security contributions (hours per
percentage of commercial profits | 2009 year) | 2009

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Germany ..........................–6.90 1 United Arab Emirates ......12.00


2 Canada.............................–6.00 2 Bahrain ............................36.00
3 Japan ...............................–4.00 3 Switzerland......................63.00
4 Kuwait..............................–3.70 4 Ireland..............................76.00
5 Hong Kong SAR...............–2.10 5 Saudi Arabia.....................79.00
6 Ireland..............................–1.70 6 Hong Kong SAR ..............80.00
7 Chile.................................–1.30 7 Singapore ........................84.00
8 Italy ..................................–0.50 8 Norway ............................87.00
9 Bahrain ..............................0.00 9 Jordan............................101.00
9 United Arab Emirates ........0.00 10 United Kingdom.............105.00
11 Saudi Arabia.......................0.40 11 Australia.........................107.00
12 Israel..................................0.80 12 Kuwait ...........................118.00
13 Denmark............................1.50 13 Canada...........................119.00
13 Thailand .............................1.50 14 Sweden .........................122.00
15 Australia.............................2.80 15 France............................132.00
16 Peru ...................................2.90 16 Denmark........................135.00
17 Turkey ................................3.20 17 Malaysia ........................145.00
18 Indonesia ...........................3.40 18 Belgium .........................156.00
19 South Africa.......................3.50 19 Austria ...........................170.00
20 Norway ..............................3.60 20 Netherlands ...................180.00
21 Netherlands .......................3.70 21 United States.................187.00
300 22 Mexico...............................4.80 22 Philippines .....................195.00
23 Poland................................6.00 23 Germany........................196.00
24 Egypt .................................6.40 24 South Africa...................200.00
25 Hungary .............................6.90 25 Turkey ............................223.00
26 United Kingdom.................7.00 26 Israel..............................230.00
27 Vietnam .............................7.40 27 Spain..............................234.00
28 Spain..................................7.80 28 Korea, Rep.....................250.00
29 Nigeria ...............................8.20 29 Colombia .......................256.00
30 Korea, Rep.........................8.90 30 Thailand .........................264.00
31 Finland ...............................9.00 31 Indonesia .......................266.00
32 Malaysia ............................9.20 32 Finland ...........................269.00
33 Austria ...............................9.90 33 India...............................271.00
33 Jordan................................9.90 33 Kazakhstan ....................271.00
35 Singapore ........................10.10 35 Bangladesh....................302.00
36 India.................................11.10 36 Chile ..............................316.00
37 Sweden ...........................11.50 37 Slovak Republic .............325.00
37 United States...................11.50 38 Hungary .........................330.00
39 Slovak Republic ...............12.20 39 Italy................................334.00
40 Brazil................................12.70 40 Japan .............................355.00
41 China ...............................13.00 41 Poland............................418.00
42 Panama............................13.10 42 Peru ...............................424.00
43 Ukraine ............................13.50 43 Russian Federation........448.00
44 Kazakhstan ......................14.40 44 Argentina .......................453.00
45 Czech Republic................15.00 45 Panama..........................482.00
46 Colombia .........................15.10 46 China .............................504.00
47 Switzerland......................16.10 47 Mexico...........................549.00
48 Bangladesh......................17.70 48 Pakistan .........................560.00
49 Pakistan ...........................21.10 49 Egypt .............................711.00
50 Venezuela ........................23.70 50 Ukraine ..........................848.00
51 France..............................26.10 51 Venezuela ......................864.00
52 Belgium ...........................28.10 52 Czech Republic..............930.00
53 Argentina .........................32.20 53 Nigeria ...........................938.00
n/a Philippines ...........................n/a 54 Vietnam ......................1,050.00
n/a Russian Federation ..............n/a 55 Brazil...........................2,600.00

SOURCE: Top tax rate data from Heritage Foundation, 2009 Index of SOURCE: The World Bank, Doing Business 2009
Economic Freedom; profit tax data from The World Bank, Doing
Business 2009
Part 2.r2 10/14/09 3:32 PM Page 301

2.11 2.12

3: Data Tables | Business environment


Quality of overall infrastructure Quality of telephone infrastructure
General infrastructure in your country is (1 = underdeveloped; New telephone lines for your business are (1 = scarce and difficult to
7 = extensive and efficient by international standards) obtain; 7 = widely available and highly reliable)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.67 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 6.11 7

1 Switzerland .....................6.77 1 Finland.............................6.90


2 Singapore ........................6.70 2 Norway............................6.89
3 Hong Kong SAR ..............6.69 3 Austria.............................6.89
4 Austria.............................6.60 4 Switzerland .....................6.88
5 France .............................6.55 5 Hong Kong SAR ..............6.86
6 Germany .........................6.54 6 Sweden...........................6.83
7 Finland.............................6.47 7 Singapore ........................6.80
8 Denmark .........................6.25 8 Japan...............................6.80
9 Sweden...........................6.19 9 Denmark .........................6.78
10 United Arab Emirates......6.08 10 Israel ...............................6.78
11 Canada ............................5.95 11 Canada ............................6.76
12 United States ..................5.89 12 France .............................6.72
13 Belgium...........................5.83 13 Chile ................................6.72
14 Japan...............................5.81 14 Netherlands.....................6.71
15 Netherlands.....................5.81 15 United States ..................6.70
16 Korea, Rep. .....................5.77 16 Germany .........................6.58
17 Chile ................................5.61 17 Jordan .............................6.56
18 Bahrain ............................5.43 18 Egypt...............................6.55
19 Malaysia ..........................5.39 19 United Arab Emirates......6.53
20 Spain ...............................5.25 20 Slovak Republic...............6.53
21 Jordan .............................5.22 21 Belgium...........................6.51
22 Norway............................5.19 22 Brazil ...............................6.46
301
23 Saudi Arabia ....................5.17 23 United Kingdom ..............6.45
24 United Kingdom ..............5.16 24 Hungary...........................6.42
25 Australia ..........................4.99 25 Czech Republic ...............6.41
26 Thailand...........................4.77 26 India ................................6.34
27 South Africa ....................4.74 27 Bahrain ............................6.27
28 Kuwait .............................4.71 28 Thailand...........................6.24
29 Israel ...............................4.50 29 Korea, Rep. .....................6.14
30 Czech Republic ...............4.48 30 Saudi Arabia ....................6.11
31 Egypt...............................4.39 31 Peru.................................6.09
32 Hungary...........................4.33 32 Ireland .............................6.07
33 Turkey..............................4.16 33 Panama ...........................6.07
34 Slovak Republic...............4.12 34 Colombia .........................5.98
35 Ireland .............................4.06 35 Turkey..............................5.98
36 China ...............................3.99 36 Malaysia ..........................5.93
37 Panama ...........................3.97 37 Mexico ............................5.93
38 Kazakhstan ......................3.84 38 Spain ...............................5.93
39 Mexico ............................3.77 39 Australia ..........................5.86
40 Italy .................................3.77 40 China ...............................5.82
41 Ukraine............................3.49 41 Vietnam ...........................5.80
42 Brazil ...............................3.43 42 Nigeria.............................5.64
43 Colombia .........................3.42 43 Philippines.......................5.59
44 Russian Federation .........3.34 44 Poland .............................5.55
45 Pakistan...........................3.21 45 Argentina.........................5.49
46 India ................................3.21 46 Pakistan...........................5.42
47 Argentina.........................3.18 47 Ukraine............................5.38
48 Indonesia.........................3.15 48 Kuwait .............................5.36
49 Philippines.......................3.12 49 Italy .................................5.29
50 Peru.................................3.00 50 Russian Federation .........5.14
51 Venezuela........................2.98 51 Kazakhstan ......................5.03
52 Vietnam ...........................2.83 52 Indonesia.........................4.78
53 Poland .............................2.64 53 South Africa ....................4.58
54 Bangladesh .....................2.52 54 Venezuela........................4.56
55 Nigeria.............................2.43 55 Bangladesh .....................4.40

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 302

3: Data Tables | Business environment


2.13 2.14
Internet users Broadband Internet subscribers
Internet users per 100 inhabitants | 2007 Total broadband Internet subscribers per 100 inhabitants | 2007 or
most recent year available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Norway ............................85.00 1 Denmark..........................35.99


2 Netherlands .....................84.00 2 Sweden ...........................35.97
3 Denmark..........................81.00 3 Netherlands .....................33.54
4 Sweden ...........................80.00 4 Switzerland......................31.79
5 Finland .............................79.00 5 Norway ............................30.64
6 Switzerland......................77.00 6 Finland .............................30.64
7 Korea, Rep.......................76.30 7 Korea, Rep.......................30.50
8 Canada.............................73.00 8 Canada.............................27.60
9 United States...................72.50 9 Hong Kong SAR ..............26.35
10 Germany..........................72.00 10 Belgium ...........................25.97
10 United Kingdom...............72.00 11 United Kingdom...............25.68
12 Australia...........................69.00 12 France..............................25.22
13 Japan ...............................68.85 13 United States...................23.94
14 Singapore ........................68.00 14 Germany..........................23.73
15 Austria .............................67.00 15 Australia...........................23.29
16 Belgium ...........................67.00 16 Japan ...............................22.10
17 Ireland..............................57.00 17 Israel................................22.06
18 Slovak Republic ...............56.00 18 Singapore ........................20.18
19 Malaysia ..........................55.67 19 Austria .............................19.40
20 Hong Kong SAR ..............54.97 20 Ireland..............................18.74
21 Italy..................................54.35 21 Italy..................................18.45
22 Spain................................52.00 22 Spain................................18.23
23 Hungary ...........................52.00 23 Hungary ...........................14.25
302
24 United Arab Emirates ......51.59 24 Czech Republic................12.90
25 France..............................51.21 25 Bahrain ..............................9.07
26 Czech Republic................49.00 26 Poland................................9.00
27 Poland..............................44.00 27 Slovak Republic .................8.76
28 Brazil................................35.20 28 United Arab Emirates ........8.67
29 Bahrain ............................33.22 29 Chile ..................................7.86
30 Kuwait .............................31.57 30 Argentina ...........................6.58
31 Chile ................................30.95 31 Turkey ................................6.08
32 Israel................................28.87 32 China .................................5.00
33 Peru .................................27.37 33 Panama..............................4.30
34 Colombia .........................26.22 34 Mexico...............................4.27
35 Argentina .........................25.92 35 Malaysia ............................3.80
36 Saudi Arabia.....................25.79 36 Brazil..................................3.54
37 Mexico.............................22.41 37 Venezuela ..........................3.10
38 Panama............................22.29 38 Russian Federation............2.81
39 Ukraine ............................21.64 39 Colombia ...........................2.62
40 Russian Federation..........21.05 40 Saudi Arabia.......................2.52
41 Thailand ...........................21.00 41 Peru ...................................2.04
42 Venezuela ........................20.68 42 Kazakhstan ........................1.75
43 Vietnam ...........................20.45 43 Ukraine ..............................1.73
44 Jordan..............................19.02 44 Vietnam .............................1.48
45 Turkey ..............................16.24 45 Jordan................................1.45
46 China ...............................16.00 46 Thailand .............................1.43
47 Egypt ...............................13.95 47 Kuwait1 ..............................0.93
48 Kazakhstan ......................12.32 48 South Africa.......................0.78
49 Pakistan ...........................10.68 49 Egypt .................................0.63
50 South Africa.......................8.16 50 Philippines .........................0.56
51 India...................................6.93 51 India...................................0.27
52 Nigeria ...............................6.75 52 Indonesia ...........................0.11
53 Philippines .........................6.03 53 Pakistan .............................0.03
54 Indonesia ...........................5.61 54 Nigeria1 ..............................0.00
55 Bangladesh........................0.32 55 Bangladesh1 .......................0.00

SOURCE: International Telecommunication Union, World SOURCE: International Telecommunication Union, World
Telecommunication Indicators 2008; national sources Telecommunication Indicators 2008; national sources
1
2005
Part 2.r2 10/14/09 3:32 PM Page 303

2.15 2.16

3: Data Tables | Business environment


Telephone lines Mobile telephone subscribers
Main telephone lines per 100 inhabitants | 2007 or most recent year Mobile cellular telephone subscribers per 100 inhabitants | 2007
available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Switzerland......................65.91 1 United Arab Emirates ....176.50


2 Germany..........................65.07 2 Italy................................153.12
3 Sweden ...........................60.38 3 Hong Kong SAR ............149.20
4 Hong Kong SAR ..............57.24 4 Bahrain ..........................148.28
5 France..............................56.45 5 Singapore ......................133.54
6 Canada.............................55.48 6 Israel..............................128.50
7 United Kingdom...............55.43 7 Czech Republic..............124.88
8 United States...................53.35 8 Thailand .........................123.77
9 Denmark..........................51.91 9 Ukraine ..........................119.55
10 Ireland..............................49.13 10 Austria ...........................118.55
11 Australia...........................47.05 11 United Kingdom.............118.47
12 Korea, Rep.......................46.44 12 Germany........................117.62
13 Spain................................45.91 13 Netherlands ...................117.46
14 Netherlands .....................44.67 14 Ireland............................115.86
15 Belgium ...........................44.63 15 Finland ...........................115.22
16 Israel1 ...............................43.88 16 Saudi Arabia...................114.74
16 Italy1 .................................43.88 17 Russian Federation........114.60
18 Norway ............................42.36 18 Denmark........................114.48
19 Singapore ........................41.97 19 Sweden .........................113.73
20 Austria .............................40.75 20 Slovak Republic .............112.58
21 Japan ...............................40.04 21 Norway ..........................110.50
22 Finland .............................32.97 22 Hungary .........................109.97
23 Vietnam ...........................32.65 23 Switzerland....................109.69
303
24 Hungary ...........................32.41 24 Spain..............................109.36
25 United Arab Emirates ......31.63 25 Poland............................108.68
26 Russian Federation..........31.02 26 Belgium .........................102.68
27 Ukraine ............................27.83 27 Australia.........................102.49
28 China ...............................27.52 28 Argentina .......................102.20
29 Poland..............................27.14 29 Kuwait .............................97.28
30 Bahrain1 ...........................26.30 30 Korea, Rep.......................90.20
31 Turkey ..............................24.31 31 Panama............................90.05
32 Argentina .........................24.03 32 France..............................89.80
33 Czech Republic................23.59 33 Malaysia ..........................87.86
34 Slovak Republic ...............21.35 34 South Africa.....................87.08
35 Kazakhstan ......................20.99 35 Venezuela ........................86.13
36 Chile ................................20.74 36 Japan ...............................83.88
37 Brazil................................20.54 37 Chile ................................83.66
38 Kuwait1 ............................18.70 38 United States...................83.51
39 Mexico.............................18.54 39 Turkey ..............................82.77
40 Venezuela ........................18.38 40 Jordan..............................80.54
41 Colombia .........................17.19 41 Kazakhstan ......................79.90
42 Malaysia ..........................16.37 42 Colombia .........................73.54
43 Saudi Arabia.....................16.16 43 Brazil................................63.08
44 Egypt ...............................14.87 44 Mexico.............................62.48
45 Panama............................14.81 45 Canada.............................61.68
46 Thailand ...........................11.00 46 Philippines .......................58.88
47 Jordan................................9.88 47 Peru .................................55.25
48 Peru ...................................9.58 48 China ...............................41.19
49 South Africa.......................9.56 49 Egypt ...............................39.82
50 Indonesia ...........................7.70 50 Pakistan ...........................38.41
51 Philippines .........................4.48 51 Indonesia .........................35.33
52 India...................................3.37 52 Nigeria .............................27.28
53 Pakistan .............................2.93 53 Vietnam ...........................27.16
54 Nigeria ...............................1.07 54 Bangladesh......................21.66
55 Bangladesh........................0.75 55 India.................................19.98

SOURCE: International Telecommunication Union, World SOURCE: International Telecommunication Union, World
Telecommunication Indicators 2008; national sources Telecommunication Indicators 2008; national sources
1
2006
Part 2.r2 10/14/09 3:32 PM Page 304

3: Data Tables | Business environment


2.17 2.18
Cost of starting a business Cost of registering property
Cost of starting a business as a percentage of income per capita | Cost of registering property as a percentage of income per capita |
2008 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Denmark............................0.00 1 Saudi Arabia.......................0.00


2 Ireland................................0.30 2 Kazakhstan ........................0.10
3 Canada...............................0.50 2 Slovak Republic .................0.10
4 Bahrain ..............................0.60 4 Russian Federation............0.20
4 Sweden .............................0.60 5 Switzerland........................0.40
6 Singapore ..........................0.70 6 Kuwait ...............................0.50
6 United States.....................0.70 6 Poland................................0.50
8 Australia.............................0.80 6 United States.....................0.50
8 United Kingdom.................0.80 9 Denmark............................0.60
10 Finland ...............................1.00 9 Italy....................................0.60
10 France................................1.00 11 Bahrain ..............................0.90
12 Kuwait ...............................1.30 11 Egypt .................................0.90
13 Hong Kong SAR ................2.00 13 Thailand .............................1.10
14 Norway ..............................2.10 14 Vietnam .............................1.20
14 Switzerland........................2.10 15 Chile ..................................1.30
16 Russian Federation............2.60 16 Canada...............................1.80
17 Slovak Republic .................3.30 17 United Arab Emirates ........2.00
18 Israel..................................4.40 18 Venezuela ..........................2.20
19 Thailand .............................4.90 19 Colombia ...........................2.40
20 Austria ...............................5.10 19 Panama..............................2.40
21 Belgium .............................5.20 21 Malaysia ............................2.50
304 21 Kazakhstan ........................5.20 21 Norway ..............................2.50
23 Ukraine ..............................5.50 23 Brazil..................................2.70
24 Germany............................5.60 24 Singapore ..........................2.80
25 Netherlands .......................5.90 25 Ukraine ..............................2.90
26 South Africa.......................6.00 26 Czech Republic..................3.00
27 Chile ..................................7.50 26 Sweden .............................3.00
27 Japan .................................7.50 26 Turkey ................................3.00
29 Brazil..................................8.20 29 China .................................3.20
30 China .................................8.40 30 Peru ...................................3.30
30 Hungary .............................8.40 31 Finland ...............................4.00
32 Argentina ...........................9.00 32 United Kingdom.................4.10
33 Czech Republic..................9.60 33 Philippines .........................4.30
34 Mexico.............................12.50 34 Austria ...............................4.50
35 Pakistan ...........................12.60 35 Mexico...............................4.80
36 United Arab Emirates ......13.40 36 Australia.............................4.90
37 Colombia .........................14.10 37 Hong Kong SAR ................5.00
38 Malaysia ..........................14.70 37 Japan .................................5.00
39 Saudi Arabia.....................14.90 39 Korea, Rep.........................5.10
39 Spain................................14.90 40 Germany............................5.20
39 Turkey ..............................14.90 41 Pakistan .............................5.30
42 Vietnam ...........................16.80 42 Netherlands .......................6.10
43 Korea, Rep.......................16.90 43 France................................6.30
44 Italy..................................17.80 44 Spain..................................7.20
45 Egypt ...............................18.30 45 Argentina ...........................7.50
46 Poland..............................18.80 45 India...................................7.50
47 Panama............................19.60 45 Israel..................................7.50
48 Bangladesh......................25.70 48 South Africa.......................8.80
48 Peru .................................25.70 49 Ireland................................9.60
50 Venezuela ........................26.80 50 Jordan..............................10.00
51 Philippines .......................29.80 51 Bangladesh......................10.40
52 Jordan..............................60.40 52 Indonesia .........................10.70
53 India.................................70.10 53 Hungary ...........................11.00
54 Indonesia .........................77.90 54 Belgium ...........................12.70
55 Nigeria .............................90.10 55 Nigeria .............................21.90

SOURCE: The World Bank, Doing Business 2009 SOURCE: The World Bank, Doing Business 2009
Part 2.r2 10/14/09 3:32 PM Page 305

2.19 2.20

3: Data Tables | Business environment


Cost of closing a business Time to start a business
Cost of closing a business as a percentage of the estate | 2008 Time in days to start a business | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Colombia ...........................1.00 1 Australia.............................2.00


1 Kuwait ...............................1.00 2 Belgium .............................4.00
1 Norway ..............................1.00 2 Singapore ..........................4.00
1 Singapore ..........................1.00 4 Canada...............................5.00
5 Belgium .............................4.00 4 Hungary .............................5.00
5 Canada...............................4.00 6 Denmark............................6.00
5 Denmark............................4.00 6 Turkey ................................6.00
5 Finland ...............................4.00 6 United States.....................6.00
5 Japan .................................4.00 9 Egypt .................................7.00
5 Korea, Rep.........................4.00 9 France................................7.00
5 Netherlands .......................4.00 11 Bahrain ..............................9.00
5 Pakistan .............................4.00 12 Italy..................................10.00
5 Switzerland........................4.00 12 Netherlands .....................10.00
14 United Kingdom.................6.00 12 Norway ............................10.00
15 Peru ...................................7.00 15 Hong Kong SAR ..............11.00
15 United States.....................7.00 16 Saudi Arabia.....................12.00
17 Australia.............................8.00 17 Ireland..............................13.00
17 Bangladesh........................8.00 17 Malaysia ..........................13.00
17 Germany............................8.00 17 Panama............................13.00
20 France................................9.00 17 United Kingdom...............13.00
20 Hong Kong SAR ................9.00 21 Finland .............................14.00
20 India...................................9.00 21 Jordan..............................14.00
305
20 Ireland................................9.00 23 Czech Republic................15.00
20 Jordan................................9.00 23 Sweden ...........................15.00
20 Russian Federation............9.00 25 Slovak Republic ...............16.00
20 Sweden .............................9.00 26 Korea, Rep.......................17.00
27 Bahrain ............................10.00 26 United Arab Emirates ......17.00
28 Argentina .........................12.00 28 Germany..........................18.00
28 Brazil................................12.00 29 Switzerland......................20.00
30 Chile ................................15.00 30 Kazakhstan ......................21.00
30 Czech Republic................15.00 31 South Africa.....................22.00
30 Hungary ...........................15.00 32 Japan ...............................23.00
30 Malaysia ..........................15.00 33 Pakistan ...........................24.00
30 Spain................................15.00 34 Chile ................................27.00
30 Turkey ..............................15.00 34 Ukraine ............................27.00
30 Vietnam ...........................15.00 36 Austria .............................28.00
37 Austria .............................18.00 36 Mexico.............................28.00
37 Indonesia .........................18.00 38 Russian Federation..........29.00
37 Kazakhstan ......................18.00 39 India.................................30.00
37 Mexico.............................18.00 40 Nigeria .............................31.00
37 Panama............................18.00 40 Poland..............................31.00
37 Slovak Republic ...............18.00 42 Argentina .........................32.00
37 South Africa.....................18.00 43 Thailand ...........................33.00
44 Poland..............................20.00 44 Israel................................34.00
45 China ...............................22.00 45 Kuwait .............................35.00
45 Egypt ...............................22.00 46 Colombia .........................36.00
45 Italy..................................22.00 47 China ...............................40.00
45 Nigeria .............................22.00 48 Spain................................47.00
45 Saudi Arabia.....................22.00 49 Vietnam ...........................50.00
50 Israel................................23.00 50 Philippines .......................52.00
51 United Arab Emirates ......30.00 51 Peru .................................65.00
52 Thailand ...........................36.00 52 Bangladesh......................73.00
53 Philippines .......................38.00 53 Indonesia .........................76.00
53 Venezuela ........................38.00 54 Venezuela ......................141.00
55 Ukraine ............................42.00 55 Brazil..............................152.00

SOURCE: The World Bank, Doing Business 2009 SOURCE: The World Bank, Doing Business 2009
Part 2.r2 10/14/09 3:32 PM Page 306

3: Data Tables | Business environment


2.21 2.22
Time to register property Time to close a business
Time in days to register property | 2008 Time in years to close a business | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Saudi Arabia.......................2.00 1 Ireland................................0.40


1 Sweden .............................2.00 2 Japan .................................0.60
1 Thailand .............................2.00 3 Canada...............................0.80
4 Norway ..............................3.00 3 Singapore ..........................0.80
5 Australia.............................5.00 5 Belgium .............................0.90
5 Netherlands .......................5.00 5 Finland ...............................0.90
7 Turkey ................................6.00 5 Norway ..............................0.90
7 United Arab Emirates ........6.00 8 Australia.............................1.00
9 Singapore ..........................9.00 8 Spain..................................1.00
10 Korea, Rep.......................11.00 8 United Kingdom.................1.00
11 United States...................12.00 11 Austria ...............................1.10
12 Finland .............................14.00 11 Denmark............................1.10
12 Japan ...............................14.00 11 Hong Kong SAR ................1.10
14 Switzerland......................16.00 11 Netherlands .......................1.10
15 Canada.............................17.00 15 Germany............................1.20
15 Hungary ...........................17.00 16 Korea, Rep.........................1.50
15 Slovak Republic ...............17.00 16 Saudi Arabia.......................1.50
18 Spain................................18.00 16 United States.....................1.50
19 United Kingdom...............21.00 19 China .................................1.70
20 Jordan..............................22.00 20 Italy....................................1.80
21 Colombia .........................23.00 20 Mexico...............................1.80
306 22 South Africa.....................24.00 22 France................................1.90
23 Italy..................................27.00 23 Hungary .............................2.00
24 China ...............................29.00 23 Nigeria ...............................2.00
25 Bahrain ............................31.00 23 South Africa.......................2.00
25 Chile ................................31.00 23 Sweden .............................2.00
27 Austria .............................32.00 27 Malaysia ............................2.30
28 Peru .................................33.00 28 Bahrain ..............................2.50
28 Philippines .......................33.00 28 Panama..............................2.50
30 Ireland..............................38.00 30 Thailand .............................2.70
31 Indonesia .........................39.00 31 Argentina ...........................2.80
32 Germany..........................40.00 31 Pakistan .............................2.80
32 Kazakhstan ......................40.00 33 Ukraine ..............................2.90
34 Brazil................................42.00 34 Colombia ...........................3.00
34 Denmark..........................42.00 34 Poland................................3.00
36 Panama............................44.00 34 Switzerland........................3.00
37 India.................................45.00 37 Peru ...................................3.10
38 Venezuela ........................47.00 38 Kazakhstan ........................3.30
39 Pakistan ...........................50.00 38 Turkey ................................3.30
40 Argentina .........................51.00 40 Russian Federation............3.80
41 Russian Federation..........52.00 41 Bangladesh........................4.00
42 Hong Kong SAR ..............54.00 41 Brazil..................................4.00
43 Kuwait .............................55.00 41 Israel..................................4.00
44 Vietnam ...........................57.00 41 Slovak Republic .................4.00
45 Egypt ...............................72.00 41 Venezuela ..........................4.00
46 Mexico.............................74.00 46 Egypt .................................4.20
47 Nigeria .............................82.00 46 Kuwait ...............................4.20
48 Ukraine ............................93.00 48 Jordan................................4.30
49 France............................113.00 49 Chile ..................................4.50
50 Czech Republic..............123.00 50 Vietnam .............................5.00
51 Belgium .........................132.00 51 United Arab Emirates ........5.10
52 Israel..............................144.00 52 Indonesia ...........................5.50
52 Malaysia ........................144.00 53 Philippines .........................5.70
54 Poland............................197.00 54 Czech Republic..................6.50
55 Bangladesh....................245.00 55 India.................................10.00

SOURCE: The World Bank, Doing Business 2009 SOURCE: The World Bank, Doing Business 2009
Part 2.r2 10/14/09 3:32 PM Page 307

Data Tables

Section III
Financial stability

307
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3: Data Tables | Financial stability


3.01 3.02
Change in real effective exchange rate External vulnerability indicator
Average percentage change in real effective exchange rate from The external vulnerability indicator is the sum of several measures of
year to year over the period 2003–07. Higher REER represents appre- external exposure expressed as a percentage of foreign exchange
ciation | as of 2007 reserves | 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Brazil................................11.72 1 Egypt ...............................13.90


2 Russian Federation............7.36 2 China ...............................16.00
3 Australia.............................7.16 3 Malaysia ..........................21.10
4 Slovak Republic .................6.52 4 Vietnam ...........................27.30
5 Venezuela ..........................5.22 5 Pakistan ...........................28.10
6 Indonesia ...........................4.98 6 India.................................29.50
7 Chile ..................................4.84 7 Peru .................................31.60
7 Philippines .........................4.84 8 Russian Federation..........34.70
9 Italy....................................4.64 9 Thailand ...........................38.00
10 Turkey ................................4.62 10 Panama............................38.90
11 Korea, Rep.........................3.84 11 Saudi Arabia.....................39.20
12 Singapore ..........................3.74 12 Brazil................................42.10
13 Ireland................................3.66 13 Mexico.............................45.00
14 Canada...............................3.52 14 Philippines .......................47.10
15 Czech Republic..................3.32 15 Colombia .........................54.00
16 Spain..................................3.18 16 Indonesia .........................59.10
17 Thailand .............................3.16 17 Venezuela ........................70.40
18 Norway ..............................3.12 18 Korea, Rep.......................74.70
19 Colombia ...........................2.46 19 Ukraine ............................76.40
20 Belgium .............................2.28 20 Czech Republic................82.30
21 Poland................................1.94 21 South Africa.....................88.30
308 22 Finland ...............................1.84 22 Argentina .......................102.80
23 Netherlands .......................1.70 23 Slovak Republic .............105.80
24 India...................................1.62 24 Chile ..............................108.70
25 France................................1.46 25 Jordan............................112.90
26 Ukraine ..............................1.22 26 Turkey ............................125.00
27 Hungary .............................1.16 27 United Arab Emirates ....134.50
28 Sweden .............................1.08 28 Poland............................140.60
29 Pakistan .............................0.82 29 Israel..............................141.20
30 Austria ...............................0.72 30 Kuwait ...........................148.00
31 Switzerland........................0.56 31 Kazakhstan ....................201.80
32 Argentina ...........................0.44 32 Hungary .........................286.00
33 Denmark............................0.32 33 Bahrain ..........................523.50
34 United Kingdom.................0.30 n/a Australia...............................n/a
35 Mexico...............................0.00 n/a Austria .................................n/a
36 Egypt .................................0.00 n/a Bangladesh ..........................n/a
36 Jordan................................0.00 n/a Belgium ...............................n/a
36 Kazakhstan ........................0.00 n/a Canada.................................n/a
36 Kuwait ...............................0.00 n/a Denmark ..............................n/a
36 United Arab Emirates ........0.00 n/a Finland .................................n/a
41 China ................................-0.34 n/a France..................................n/a
41 Israel.................................-0.34 n/a Germany ..............................n/a
43 Germany...........................-0.44 n/a Hong Kong SAR...................n/a
44 Vietnam ............................-0.66 n/a Ireland..................................n/a
45 Peru ..................................-0.80 n/a Italy ......................................n/a
46 Malaysia ...........................-1.96 n/a Japan ...................................n/a
47 Panama.............................-2.22 n/a Netherlands .........................n/a
48 Japan ................................-4.22 n/a Nigeria .................................n/a
49 Saudi Arabia......................-4.24 n/a Norway ................................n/a
50 Hong Kong SAR ...............-4.54 n/a Singapore.............................n/a
51 United States....................-5.02 n/a Spain....................................n/a
52 Bahrain .............................-5.42 n/a Sweden ...............................n/a
53 South Africa....................-10.88 n/a Switzerland ..........................n/a
n/a Bangladesh ..........................n/a n/a United Kingdom...................n/a
n/a Nigeria .................................n/a n/a United States.......................n/a

SOURCE: Moody’s Statistical Handbook (November 2008) SOURCE: Moody’s Statistical Handbook (November 2008)
Part 2.r2 10/14/09 3:32 PM Page 309

3.03 3.04

3: Data Tables | Financial stability


Current account balance to GDP Dollarization vulnerability indicator
Current account balance to GDP provides an indicator of the difficul- This variable measures the risk of payment crisis and default origi-
ty a country might have in mobilizing the foreign exchange necessary nating from the presence of a large amount of dollarization in the
for debt service | 2008 domestic banking system | 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Kuwait .............................44.66 1 Australia.............................0.00


2 Saudi Arabia.....................28.87 1 Austria ...............................0.00
3 Norway ............................18.37 1 Belgium .............................0.00
4 Malaysia ..........................17.44 1 Brazil..................................0.00
5 United Arab Emirates ......15.80 1 Canada...............................0.00
6 Singapore ........................14.83 1 Colombia ...........................0.00
7 Hong Kong SAR ..............14.21 1 Denmark............................0.00
8 Venezuela ........................12.27 1 Finland ...............................0.00
9 Bahrain ............................10.62 1 France................................0.00
10 China ...............................10.00 1 Germany............................0.00
11 Switzerland........................9.10 1 Hong Kong SAR ................0.00
12 Sweden .............................8.34 1 Ireland................................0.00
13 Germany............................6.42 1 Italy....................................0.00
14 Russian Federation............6.10 1 Japan .................................0.00
15 Kazakhstan ........................5.28 1 Netherlands .......................0.00
16 Nigeria ...............................4.48 1 Norway ..............................0.00
17 Netherlands .......................4.41 1 Singapore ..........................0.00
18 Japan .................................3.19 1 Spain..................................0.00
19 Austria ...............................2.90 1 Sweden .............................0.00
20 Finland ...............................2.53 1 Switzerland........................0.00
21 Philippines .........................2.51 1 United Kingdom.................0.00
22 Argentina ...........................1.36 1 United States.....................0.00
309
23 Israel..................................1.15 23 Venezuela ..........................0.60
24 Bangladesh........................0.94 24 Thailand .............................2.30
25 Canada...............................0.64 25 Mexico...............................3.20
26 Egypt .................................0.55 26 India...................................4.70
27 Denmark............................0.54 27 Russian Federation............9.90
28 Indonesia ...........................0.10 28 South Africa.....................10.20
29 Thailand ...........................–0.07 29 Argentina .........................15.20
30 Korea, Rep. ......................–0.68 30 Pakistan ...........................18.70
31 Mexico.............................–1.43 31 Kazakhstan ......................26.70
32 France..............................–1.58 32 Indonesia .........................28.80
33 United Kingdom...............–1.70 33 Philippines .......................34.30
34 Brazil ................................–1.80 34 Peru .................................46.20
35 Chile.................................–2.03 35 Ukraine ............................47.00
36 Belgium ...........................–2.55 36 Vietnam ...........................47.90
37 India .................................–2.76 37 Egypt ...............................62.80
38 Colombia..........................–2.81 38 Turkey ..............................79.40
39 Czech Republic ................–3.07 n/a Bahrain.................................n/a
40 Italy ..................................–3.16 n/a Bangladesh ..........................n/a
41 Peru .................................–3.28 n/a Chile.....................................n/a
42 Australia...........................–4.24 n/a China....................................n/a
43 Ireland..............................–4.51 n/a Czech Republic ....................n/a
44 United States...................–4.72 n/a Hungary ...............................n/a
45 Poland..............................–5.52 n/a Israel ....................................n/a
46 Turkey ..............................–5.68 n/a Jordan..................................n/a
47 Slovak Republic ...............–6.31 n/a Korea, Rep. ..........................n/a
48 Ukraine ............................–7.20 n/a Kuwait..................................n/a
49 South Africa .....................–7.41 n/a Malaysia...............................n/a
50 Hungary ...........................–7.83 n/a Nigeria .................................n/a
51 Pakistan ...........................–8.37 n/a Panama................................n/a
52 Vietnam ...........................–9.38 n/a Poland..................................n/a
53 Spain................................–9.56 n/a Saudi Arabia.........................n/a
54 Panama..........................–12.40 n/a Slovak Republic ...................n/a
55 Jordan............................–12.69 n/a United Arab Emirates ..........n/a

SOURCE: IMF, World Economic Outlook Database (April 2009) SOURCE: Moody’s Statistical Handbook (November 2008)
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3: Data Tables | Financial stability


3.05 3.06
External debt to GDP (developing economies) Net international investment position to GDP
(advanced economies)
External debt as a percentage of GDP | 2007
Net international investment position as a percentage of GDP | 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 China ...............................10.90 1 Hong Kong SAR ............251.90


2 India.................................17.70 2 Switzerland....................138.50
3 Brazil................................18.30 3 Singapore ......................128.30
4 Mexico.............................21.60 4 Norway ............................64.80
5 Egypt ...............................23.40 5 Japan ...............................53.30
6 Venezuela ........................24.40 6 Slovak Republic ...............–0.05
7 Thailand ...........................25.10 7 Finland .............................–0.17
8 Colombia .........................26.00 8 Ireland..............................–0.18
9 South Africa.....................26.60 9 Austria .............................–0.26
10 Pakistan ...........................27.90 10 Belgium ...........................–0.32
11 Peru .................................28.70 11 Netherlands .....................–0.54
12 Malaysia ..........................30.20 12 Spain................................–1.00
13 Indonesia .........................31.50 13 Italy ..................................–1.46
14 Kuwait .............................31.60 14 France..............................–1.79
15 Chile ................................34.10 15 Germany ..........................–2.30
16 Russian Federation..........35.60 16 Denmark ..........................–4.00
17 Turkey ..............................38.30 17 Sweden ...........................–6.80
18 Vietnam ...........................39.60 18 Canada...........................–11.10
19 Korea, Rep.......................40.90 19 United States.................–17.60
20 Czech Republic................42.60 20 United Kingdom.............–27.20
21 Philippines .......................45.50 21 Australia.........................–71.60
310 22 Argentina .........................47.20 n/a Argentina .............................n/a
23 Poland..............................48.00 n/a Bahrain.................................n/a
24 Panama............................51.20 n/a Bangladesh ..........................n/a
25 Israel................................55.50 n/a Brazil ....................................n/a
26 Slovak Republic ...............58.90 n/a Chile.....................................n/a
27 Ukraine ............................59.90 n/a China....................................n/a
28 United Arab Emirates ......70.40 n/a Colombia..............................n/a
29 Jordan..............................90.00 n/a Czech Republic ....................n/a
30 Kazakhstan ......................93.50 n/a Egypt ...................................n/a
31 Hungary .........................104.40 n/a Hungary ...............................n/a
32 Bahrain ..........................167.20 n/a India .....................................n/a
n/a Australia...............................n/a n/a Indonesia .............................n/a
n/a Austria .................................n/a n/a Israel ....................................n/a
n/a Bangladesh ..........................n/a n/a Jordan..................................n/a
n/a Belgium ...............................n/a n/a Kazakhstan...........................n/a
n/a Canada.................................n/a n/a Korea, Rep. ..........................n/a
n/a Denmark ..............................n/a n/a Kuwait..................................n/a
n/a Finland .................................n/a n/a Malaysia...............................n/a
n/a France..................................n/a n/a Mexico.................................n/a
n/a Germany ..............................n/a n/a Nigeria .................................n/a
n/a Hong Kong SAR...................n/a n/a Pakistan ...............................n/a
n/a Ireland..................................n/a n/a Panama................................n/a
n/a Italy ......................................n/a n/a Peru .....................................n/a
n/a Japan ...................................n/a n/a Philippines ...........................n/a
n/a Netherlands .........................n/a n/a Poland..................................n/a
n/a Nigeria .................................n/a n/a Russian Federation ..............n/a
n/a Norway ................................n/a n/a Saudi Arabia.........................n/a
n/a Saudi Arabia.........................n/a n/a South Africa .........................n/a
n/a Singapore.............................n/a n/a Thailand ...............................n/a
n/a Spain....................................n/a n/a Turkey ..................................n/a
n/a Sweden ...............................n/a n/a Ukraine ................................n/a
n/a Switzerland ..........................n/a n/a United Arab Emirates ..........n/a
n/a United Kingdom...................n/a n/a Venezuela ............................n/a
n/a United States.......................n/a n/a Vietnam ...............................n/a

SOURCE: Moody’s Statistical Handbook (November 2008) SOURCE: Moody’s Statistical Handbook (November 2008)
Part 2.r2 10/14/09 3:32 PM Page 311

3.07 3.08

3: Data Tables | Financial stability


Frequency of banking crises Financial strengths indicator
This variable is calculated based on the number of banking crises Weighted average financial strength rating by bank assets | 2008
that countries experienced from 1970 to 2008. Recent crises are
weighted more heavily | 2008

RANK COUNTRY/ECONOMY HARD DATA


RANK COUNTRY/ECONOMY HARD DATA
1 Australia.............................0.00
1 Bahrain ..............................0.00 1 Australia.............................9.00
1 Canada...............................0.00 1 Canada...............................9.00
1 Denmark............................0.00 1 Denmark............................9.00
1 France................................0.00 1 Finland ...............................9.00
1 Germany............................0.00 1 Hong Kong SAR ................9.00
1 Hong Kong SAR ................0.00 1 Singapore ..........................9.00
1 Italy....................................0.00 1 United Arab Emirates ........9.00
1 Pakistan .............................0.00 1 United Kingdom.................9.00
1 Saudi Arabia.......................0.00 1 United States.....................9.00
1 Singapore ..........................0.00 10 Chile ..................................8.00
1 South Africa.......................0.00 10 France................................8.00
1 Switzerland........................0.00 10 Netherlands .......................8.00
1 United Arab Emirates ........0.00 10 Norway ..............................8.00
15 Israel..................................0.50 10 Spain..................................8.00
15 Spain..................................0.50 10 Sweden .............................8.00
17 Egypt .................................0.75 10 Switzerland........................8.00
17 Kuwait ...............................0.75 17 Germany............................7.00
17 Peru ...................................0.75 17 Italy....................................7.00
20 Bangladesh........................1.00 19 Austria ...............................6.00
20 Jordan................................1.00 19 Belgium .............................6.00
20 Panama..............................1.00 19 Brazil..................................6.00
23 Chile ..................................1.25 19 Czech Republic..................6.00
311
23 Finland ...............................1.25 19 Hungary .............................6.00
23 Hungary .............................1.25 19 Ireland................................6.00
23 India...................................1.25 19 Israel..................................6.00
23 Nigeria ...............................1.25 19 Japan .................................6.00
23 Norway ..............................1.25 19 Jordan................................6.00
23 Poland................................1.25 19 Kuwait ...............................6.00
23 Sweden .............................1.25 19 Mexico...............................6.00
23 Venezuela ..........................1.25 19 Saudi Arabia.......................6.00
32 China .................................1.50 19 South Africa.......................6.00
32 Czech Republic..................1.50 32 Bahrain ..............................5.00
32 Indonesia ...........................1.50 32 Korea, Rep.........................5.00
32 Japan .................................1.50 32 Malaysia ............................5.00
32 Korea, Rep.........................1.50 32 Panama..............................5.00
32 Malaysia ............................1.50 32 Poland................................5.00
32 Russian Federation............1.50 37 Colombia ...........................4.00
32 Slovak Republic .................1.50 37 India...................................4.00
32 Vietnam .............................1.50 37 Peru ...................................4.00
41 Austria ...............................2.00 37 Slovak Republic .................4.00
41 Belgium .............................2.00 37 Turkey ................................4.00
41 Ireland................................2.00 42 Argentina ...........................3.00
41 Kazakhstan ........................2.00 42 Egypt .................................3.00
41 Mexico...............................2.00 42 Indonesia ...........................3.00
41 Netherlands .......................2.00 42 Philippines .........................3.00
41 United Kingdom.................2.00 42 Thailand .............................3.00
48 Colombia ...........................2.25 47 China .................................2.00
48 Philippines .........................2.25 47 Kazakhstan ........................2.00
48 Thailand .............................2.25 47 Pakistan .............................2.00
51 Brazil..................................2.50 47 Russian Federation............2.00
51 Turkey ................................2.50 47 Ukraine ..............................2.00
53 United States.....................3.00 47 Venezuela ..........................2.00
54 Ukraine ..............................3.50 47 Vietnam .............................2.00
55 Argentina ...........................5.00 n/a Bangladesh ..........................n/a
n/a Nigeria .................................n/a
SOURCE: Data on crises up to 2007 from Luc Laeven and Fabian
Valencia. 2008. “Systemic Banking Crises: A New Database.” IMF SOURCE: Moody’s Statistical Handbook (November 2008)
Working Paper 08/224, Washington, DC; 2008 data and all weighting
based on provisional World Economic Forum analysis.
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3: Data Tables | Financial stability


3.09 3.10
Manageability of private debt Aggregate measure of real estate bubbles
This is the sum of domestic debt securities and international debt This is the aggregate measure of real estate bubbles based on price-
securities for financial institutions and corporate issuers as a per- to-income ratio and price-to-rent ratio | 2008
centage of GDP | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Nigeria ...............................0.30 1 Ireland................................6.71


2 Vietnam .............................0.30 2 Chile ..................................6.53
3 Pakistan .............................0.41 3 Vietnam .............................6.52
4 Poland................................0.59 4 Malaysia ............................6.42
5 Egypt .................................1.86 5 Egypt .................................6.40
6 Colombia ...........................1.87 6 Panama..............................6.31
7 Turkey ................................1.87 7 Peru ...................................6.30
8 Saudi Arabia.......................2.37 8 Jordan................................6.08
9 Kuwait ...............................2.58 9 Colombia ...........................6.08
10 Ukraine ..............................4.01 10 Argentina ...........................6.08
11 Venezuela ..........................4.53 11 Netherlands .......................5.99
12 Indonesia ...........................5.64 12 Canada...............................5.95
13 Israel..................................6.20 13 Hungary .............................5.86
14 Argentina ...........................6.47 14 Mexico...............................5.57
15 Peru ...................................6.63 15 Brazil..................................5.55
16 Slovak Republic .................6.99 16 Indonesia ...........................5.47
17 Russian Federation............7.19 17 Australia.............................5.47
18 Panama..............................7.31 18 United Arab Emirates ........5.33
19 India...................................7.83 19 Turkey ................................5.29
20 Philippines .......................11.67 20 Poland................................5.23
21 Czech Republic................17.67 21 Belgium .............................5.13
22 Hungary ...........................18.87 22 Germany............................5.06
312 23 Bahrain ............................20.00 23 Israel..................................5.03
24 Mexico.............................20.46 24 Switzerland........................5.00
25 Chile ................................24.19 25 Thailand .............................4.90
26 Brazil................................24.84 26 Denmark............................4.88
27 China ...............................27.97 27 Czech Republic..................4.86
28 South Africa.....................29.88 28 Ukraine ..............................4.85
29 Kazakhstan ......................32.74 29 Austria ...............................4.75
30 Canada.............................57.10 30 South Africa.......................4.54
31 Singapore ........................63.73 31 Japan .................................4.27
32 Finland .............................70.86 32 Philippines .........................4.24
33 Hong Kong SAR ..............72.66 33 Slovak Republic .................4.24
34 Norway ............................85.09 34 France................................4.23
35 Korea, Rep.......................86.34 35 United States.....................3.98
36 Malaysia ........................122.43 36 Finland ...............................3.84
37 Australia.........................142.36 37 Singapore ..........................3.74
38 Italy................................146.27 38 Italy....................................3.66
39 Sweden .........................148.50 39 United Kingdom.................3.44
40 United Kingdom.............152.41 40 Hong Kong SAR ................2.83
41 Switzerland....................176.14 41 Russian Federation............1.92
42 Netherlands ...................230.42 42 China .................................1.76
43 Denmark........................249.89 43 India...................................1.39
44 Ireland............................296.15 44 Spain..................................1.00
n/a Austria .................................n/a n/a Bahrain.................................n/a
n/a Bangladesh ..........................n/a n/a Bangladesh ..........................n/a
n/a Belgium ...............................n/a n/a Kazakhstan...........................n/a
n/a France..................................n/a n/a Korea, Rep. ..........................n/a
n/a Germany ..............................n/a n/a Kuwait..................................n/a
n/a Japan ...................................n/a n/a Nigeria .................................n/a
n/a Jordan..................................n/a n/a Norway ................................n/a
n/a Spain....................................n/a n/a Pakistan ...............................n/a
n/a Thailand ...............................n/a n/a Saudi Arabia.........................n/a
n/a United Arab Emirates ..........n/a n/a Sweden ...............................n/a
n/a United States.......................n/a n/a Venezuela ............................n/a

SOURCE: Bank of International Settlements, Quarterly Review, SOURCE: Global Property Guide website, www.globalpropertyguide.com
September 2009, http://www.bis.org/statistics/secstats.htm; GDP
and inflation data from IMF, World Economic Outlook Database (April
2009)
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3.11 3.12

3: Data Tables | Financial stability


Local currency sovereign rating Foreign currency sovereign rating
This variable measures the probability that a country will pay its local This variable measures the probability that a country will pay its
currency borrowing in a full and timely manner | 2009 foreign currency borrowing in a full and timely manner | 2009

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Australia...........................20.00 1 Australia...........................20.00
1 Austria .............................20.00 1 Austria .............................20.00
1 Canada.............................20.00 1 Canada.............................20.00
1 Denmark..........................20.00 1 Denmark..........................20.00
1 Finland .............................20.00 1 Finland .............................20.00
1 France..............................20.00 1 France..............................20.00
1 Germany..........................20.00 1 Germany..........................20.00
1 Netherlands .....................20.00 1 Netherlands .....................20.00
1 Norway ............................20.00 1 Norway ............................20.00
1 Singapore ........................20.00 1 Singapore ........................20.00
1 Sweden ...........................20.00 1 Sweden ...........................20.00
1 Switzerland......................20.00 1 Switzerland......................20.00
1 United States...................20.00 1 United States...................20.00
14 United Kingdom...............19.83 14 United Kingdom...............19.83
15 Spain................................19.08 15 Spain................................19.08
16 Belgium ...........................19.00 16 Belgium ...........................19.00
16 Hong Kong SAR ..............19.00 16 Hong Kong SAR ..............19.00
18 Ireland..............................18.37 18 Ireland..............................18.37
19 Chile ................................18.00 19 Japan ...............................18.00
19 Japan ...............................18.00 20 Kuwait .............................17.00
21 Israel................................17.00 20 Saudi Arabia.....................17.00
21 Kuwait .............................17.00 22 Chile ................................16.00
313
21 Saudi Arabia.....................17.00 22 China ...............................16.00
24 China ...............................16.00 22 Italy..................................16.00
24 Czech Republic................16.00 22 Slovak Republic ...............16.00
24 Italy..................................16.00 26 Bahrain ............................15.00
24 Korea, Rep.......................16.00 26 Czech Republic................15.00
24 Malaysia ..........................16.00 26 Israel................................15.00
24 Slovak Republic ...............16.00 26 Korea, Rep.......................15.00
30 Mexico.............................15.83 30 Malaysia ..........................14.00
31 South Africa.....................15.70 30 Poland..............................14.00
32 Bahrain ............................15.00 32 Mexico.............................12.83
32 Poland..............................15.00 33 South Africa.....................12.70
34 Thailand ...........................14.03 33 Thailand ...........................12.70
35 Brazil................................13.00 35 Russian Federation..........11.70
35 Colombia .........................13.00 36 Brazil................................11.00
35 Peru .................................13.00 36 Peru .................................11.00
38 Russian Federation..........12.70 38 Hungary ...........................10.95
39 Jordan..............................12.00 39 Kazakhstan ......................10.90
40 Kazakhstan ......................11.90 40 India.................................10.75
41 Egypt ...............................11.00 41 Colombia .........................10.00
42 Hungary ...........................10.95 41 Egypt ...............................10.00
43 India.................................10.75 41 Panama............................10.00
44 Indonesia .........................10.00 44 Jordan................................9.00
44 Panama............................10.00 45 Vietnam .............................8.70
44 Philippines .......................10.00 46 Indonesia ...........................8.00
47 Vietnam .............................9.70 46 Philippines .........................8.00
48 Turkey ................................8.70 48 Turkey ................................7.70
49 Nigeria ...............................8.21 48 Venezuela ..........................7.70
50 Venezuela ..........................7.70 50 Nigeria ...............................7.54
51 Ukraine ..............................5.28 51 Argentina ...........................5.00
52 Argentina ...........................5.00 51 Pakistan .............................5.00
52 Pakistan .............................5.00 53 Ukraine ..............................4.28
n/a Bangladesh ..........................n/a n/a Bangladesh ..........................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a

SOURCE: Standard and Poor’s, August 2009 SOURCE: Standard and Poor’s, August 2009
Part 2.r2 10/14/09 3:32 PM Page 314

3: Data Tables | Financial stability


3.13 3.14
Aggregate macroprudential indicator Manageability of public debt
This is the aggregate measure of macroprudential soundness based This index is based on total debt owed by government to domestic
on real GDP growth, deposit interest rate, inflation volatility, and residents, foreign nationals, and multilateral institutions as a
inflation level percentage of GDP | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Peru ...................................6.53 1 Chile ..................................5.21


2 Slovak Republic .................6.27 2 Russian Federation............6.70
3 Poland................................6.06 3 Kuwait ...............................7.50
4 Bahrain ..............................6.03 4 Kazakhstan ........................8.63
5 Israel..................................5.84 5 Ukraine ............................10.30
6 China .................................5.82 6 Venezuela ........................13.77
7 Panama..............................5.71 7 Hong Kong SAR ..............13.90
8 Switzerland........................5.70 8 Nigeria .............................14.70
9 France................................5.49 9 Australia...........................14.72
10 Netherlands .......................5.48 10 China ...............................15.60
11 Mexico...............................5.43 11 Saudi Arabia.....................19.00
12 Austria ...............................5.42 12 Peru .................................24.04
13 Canada...............................5.42 13 Korea, Rep.......................24.44
14 Czech Republic..................5.37 14 Czech Republic................26.70
15 Japan .................................5.36 15 Slovak Republic ...............28.69
16 Germany............................5.31 16 Indonesia .........................29.30
17 Argentina ...........................5.30 17 Bahrain ............................30.00
18 Kuwait ...............................5.25 18 South Africa.....................31.60
19 Hong Kong SAR ................5.24 19 Denmark..........................32.80
20 Korea, Rep.........................5.19 20 Finland .............................33.40
21 Malaysia ............................5.18 21 Ireland..............................34.85
22 Norway ..............................5.18 22 Mexico.............................35.80
314 23 Finland ...............................5.07 23 Sweden ...........................36.70
24 Saudi Arabia.......................5.05 24 Brazil................................36.90
25 United Kingdom.................5.01 25 United States...................37.54
26 Belgium .............................4.97 26 Thailand ...........................37.90
27 Thailand .............................4.96 27 Bangladesh......................39.40
28 Spain..................................4.95 28 Malaysia ..........................40.00
29 Philippines .........................4.91 29 Turkey ..............................40.03
30 Bangladesh........................4.87 30 Spain................................40.40
31 Australia.............................4.87 31 United Arab Emirates ......40.70
32 Russian Federation............4.87 32 Switzerland......................40.90
33 Sweden .............................4.85 33 Colombia .........................42.56
34 United States.....................4.81 34 Panama............................45.04
35 Brazil..................................4.78 35 Poland..............................45.22
36 Denmark............................4.77 36 Vietnam ...........................48.10
37 India...................................4.69 37 Argentina .........................48.60
38 Indonesia ...........................4.66 38 Pakistan ...........................51.20
39 Chile ..................................4.66 39 United Kingdom...............51.88
40 Singapore ..........................4.59 40 Norway ............................55.74
41 Colombia ...........................4.51 41 India.................................56.45
42 Italy....................................4.51 42 Philippines .......................56.86
43 Ireland................................4.46 43 Netherlands .....................58.07
44 Pakistan .............................4.46 44 Jordan..............................62.20
45 Hungary .............................4.41 45 Austria .............................62.57
46 Egypt .................................4.35 46 Canada.............................63.80
47 Kazakhstan ........................4.22 47 Germany..........................66.00
48 South Africa.......................3.94 48 Hungary ...........................67.70
49 United Arab Emirates ........3.89 49 France..............................68.10
50 Jordan................................3.52 50 Israel................................78.02
51 Venezuela ..........................3.18 51 Egypt ...............................86.50
52 Turkey ................................3.14 52 Belgium ...........................89.60
53 Vietnam .............................3.14 53 Singapore ........................99.24
54 Nigeria ...............................2.87 54 Italy................................105.83
55 Ukraine ..............................2.58 55 Japan .............................172.09

SOURCE: GDP and inflation level data from IMF, World Economic SOURCE: Economist Intelligence Unit CountryData Database, data
Outlook Database (April 2009); deposit interest rate data from World retrieved August 2009
Bank Financial Development Indicators, retrieved June 2009; inflation
volatility data from Bloomberg, retrieved June 2009.
Part 2.r2 10/14/09 3:32 PM Page 315

3.15

3: Data Tables | Financial stability


Credit default swap spreads
Spreads on sovereign credit default swaps | 2009

RANK COUNTRY/ECONOMY HARD DATA

1 Norway ............................32.50
2 Finland .............................37.50
3 Germany..........................37.79
4 France..............................40.00
5 United States...................44.50
6 Japan ...............................49.50
7 Australia...........................57.64
8 Netherlands .....................57.77
9 Denmark..........................62.14
10 Switzerland......................65.00
11 Belgium ...........................68.27
12 Hong Kong SAR ..............75.31
13 China ...............................87.65
14 Sweden ...........................88.25
15 United Kingdom...............90.43
16 Slovak Republic ...............91.75
17 Spain..............................104.33
18 Italy................................110.42
19 Malaysia ........................117.79
20 Austria ...........................119.47
21 Thailand .........................121.79
22 Chile ..............................127.85
315
23 Czech Republic..............127.95
24 Saudi Arabia...................150.84
25 Israel..............................175.00
26 Poland............................183.74
27 Brazil..............................189.83
28 Peru ...............................195.53
29 Korea, Rep.....................196.93
30 Colombia .......................224.65
31 South Africa...................225.45
32 Mexico...........................228.25
33 Panama..........................229.42
34 Ireland............................230.25
35 Philippines .....................240.00
36 Turkey ............................274.00
37 Russian Federation........319.59
38 Egypt .............................325.00
39 Vietnam .........................338.35
40 Indonesia .......................340.28
41 Bahrain ..........................356.54
42 Hungary .........................375.01
43 Kazakhstan ....................508.90
44 Ukraine .......................1,837.07
45 Argentina ....................2,135.89
n/a Bangladesh ..........................n/a
n/a Canada.................................n/a
n/a India .....................................n/a
n/a Jordan..................................n/a
n/a Kuwait..................................n/a
n/a Nigeria .................................n/a
n/a Pakistan ...............................n/a
n/a Singapore.............................n/a
n/a United Arab Emirates ..........n/a
n/a Venezuela ............................n/a

SOURCE: Bloomberg, data retrieved June 2009


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Part 2.r2 10/14/09 3:32 PM Page 317

Data Tables

Section IV
Banking financial services

317
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4.01 4.02
3: Data Tables | Banking financial services

Deposit money bank assets to GDP Central bank assets to GDP


Claims on domestic real nonfinancial sector by deposit money banks Claims on domestic real nonfinancial sector by the central bank as a
as a share of GDP | 2007 or most recent year available share of GDP | 2007 or most recent year available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Denmark........................199.30 1 Egypt ...............................27.94


2 Netherlands ...................188.85 2 Japan ...............................14.83
3 Ireland............................185.86 3 Brazil................................13.08
4 Switzerland....................181.42 4 Panama............................12.77
5 Spain..............................179.63 5 Indonesia ...........................7.69
6 United Kingdom.............175.89 6 Argentina ...........................7.01
7 Japan .............................153.29 7 Pakistan .............................6.74
8 Hong Kong SAR ............147.70 8 Bangladesh........................5.87
9 Canada...........................141.30 9 Jordan................................5.65
10 Germany........................126.67 10 United States.....................5.55
11 Sweden .........................124.47 11 Italy....................................4.82
12 Austria ...........................124.20 12 Philippines .........................4.63
13 France............................117.33 13 Australia.............................4.34
14 Jordan............................116.32 14 Canada...............................3.22
15 Italy................................116.15 15 Singapore ..........................2.68
16 Australia.........................114.30 16 Chile ..................................2.41
17 Singapore ......................110.82 17 Thailand .............................2.13
18 Belgium .........................108.67 18 India...................................2.13
19 Korea, Rep.....................107.61 19 Turkey ................................2.11
20 Malaysia ........................106.84 20 Nigeria ...............................1.90
21 Israel................................95.92 21 United Kingdom.................1.83
22 Thailand ...........................93.62 22 Vietnam .............................1.54
318 23 Vietnam ...........................85.16 23 Spain..................................1.47
24 South Africa.....................83.52 24 Switzerland........................1.39
25 Norway1 ...........................83.33 25 Korea, Rep.........................1.28
26 Finland .............................81.58 26 Austria ...............................1.16
27 Panama............................80.73 27 Israel2 .................................1.01
28 Brazil................................77.91 28 Malaysia ............................0.93
29 Hungary ...........................70.61 29 Russian Federation............0.92
30 Egypt ...............................68.85 30 Hungary .............................0.81
31 Chile ................................67.22 31 Mexico1 .............................0.72
32 United States...................65.94 32 South Africa.......................0.71
33 Kuwait .............................61.15 33 France................................0.61
34 India.................................61.08 34 Colombia ...........................0.59
35 Bahrain1 ...........................58.21 35 Denmark............................0.49
36 Czech Republic................55.53 36 Venezuela ..........................0.44
37 Slovak Republic ...............52.59 37 Belgium .............................0.44
38 Bangladesh......................51.65 38 Czech Republic..................0.25
39 Kazakhstan ......................49.57 39 Finland ...............................0.21
40 Saudi Arabia.....................48.45 40 Germany............................0.18
41 Poland..............................45.93 41 Kazakhstan ........................0.18
42 Turkey ..............................45.74 42 Netherlands .......................0.14
43 Colombia .........................44.02 43 Ireland................................0.04
44 Pakistan ...........................38.34 44 Slovak Republic .................0.02
45 Philippines .......................36.34 45 Poland................................0.01
46 Russian Federation..........34.94 46 Peru ...................................0.00
47 Indonesia .........................31.52 n/a Bahrain.................................n/a
48 Mexico.............................29.69 n/a China....................................n/a
49 Nigeria .............................23.86 n/a Hong Kong SAR...................n/a
50 Argentina .........................22.77 n/a Kuwait..................................n/a
51 Venezuela ........................22.59 n/a Norway ................................n/a
52 Peru .................................19.56 n/a Saudi Arabia.........................n/a
n/a China....................................n/a n/a Sweden ...............................n/a
n/a Ukraine ................................n/a n/a Ukraine ................................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a

SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000. SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000.
“A New Database on Financial Development and Structure.” World “A New Database on Financial Development and Structure.” World
Bank Economic Review 14: 597–605. Updated November 2008 Bank Economic Review 14: 597–605. Updated November 2008
1 1 2
2006 2005 2006
Part 2.r2 10/14/09 3:32 PM Page 319

4.03 4.04

3: Data Tables | Banking financial services


Financial system deposits to GDP M2 to GDP
Demand, time, and savings deposits in deposit money banks and Money and quasi-money supply as a percentage of GDP | 2008
other financial institutions as a share of GDP | 2007 or most recent
year available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Hong Kong SAR ............267.93 1 Hong Kong SAR ............312.75


2 Japan .............................186.17 2 China .............................163.09
3 Switzerland....................158.14 3 Spain..............................153.34
4 United Kingdom.............141.88 4 Switzerland....................145.34
5 Canada...........................132.38 5 Japan .............................144.71
6 Spain..............................121.48 6 United Kingdom.............135.19
7 Netherlands ...................115.85 7 Netherlands ...................132.58
8 Jordan............................111.67 8 Singapore ......................129.52
9 Singapore ......................111.40 9 Jordan............................126.32
10 Malaysia ........................109.79 10 Malaysia ........................120.68
11 Germany........................100.79 11 Germany........................118.82
12 Belgium ...........................98.65 12 Thailand .........................109.31
13 Ireland..............................93.13 13 Belgium .........................108.32
14 Thailand ...........................89.19 14 Australia.........................107.58
15 Israel................................86.53 15 Ireland............................101.03
16 Austria .............................86.16 16 Austria ...........................100.41
17 Australia...........................85.42 17 Bahrain ............................96.53
18 Panama............................77.60 18 Vietnam ...........................94.97
19 Egypt ...............................77.53 19 Panama............................91.54
20 Bahrain1 ...........................73.89 20 Egypt ...............................90.29
21 United States...................73.80 21 France..............................80.21
22 France..............................68.51 22 India.................................78.34
23 Korea, Rep.......................63.43 23 Italy..................................78.13 319
24 Denmark..........................62.31 24 Canada.............................75.83
25 South Africa.....................61.41 25 Czech Republic................75.79
26 Italy..................................60.70 26 United Arab Emirates ......73.76
27 Czech Republic................60.34 27 Denmark..........................72.70
28 Vietnam ...........................57.78 28 Brazil................................70.25
29 India.................................57.60 29 South Africa.....................66.76
30 Brazil................................56.08 30 Korea, Rep.......................66.76
31 Kuwait .............................52.44 31 Finland .............................64.02
32 Philippines .......................51.19 32 Bangladesh......................61.21
33 Norway1 ...........................50.60 33 Sweden ...........................59.34
34 Finland .............................49.65 34 Chile ................................59.34
35 Bangladesh......................49.50 35 Norway ............................58.91
36 Sweden ...........................49.24 36 Slovak Republic ...............58.26
37 Chile ................................49.09 37 United States...................57.16
38 Slovak Republic ...............48.22 38 Hungary ...........................56.97
39 Hungary ...........................44.69 39 Philippines .......................55.11
40 Poland..............................39.32 40 Kuwait .............................54.93
41 Saudi Arabia.....................38.52 41 Poland..............................52.13
42 Turkey ..............................37.55 42 Ukraine ............................52.01
43 Pakistan ...........................35.51 43 Saudi Arabia.....................51.41
44 Indonesia .........................34.10 44 Pakistan ...........................49.99
45 Russian Federation..........27.03 45 Israel................................48.99
46 Kazakhstan ......................26.82 46 Turkey ..............................44.65
47 Venezuela ........................24.66 47 Russian Federation..........40.38
48 Peru .................................22.49 48 Kazakhstan ......................40.04
49 Mexico.............................21.15 49 Indonesia .........................38.20
50 Argentina .........................20.46 50 Nigeria .............................37.33
51 Colombia .........................20.13 51 Peru .................................34.30
52 Nigeria .............................16.58 52 Argentina .........................31.37
n/a China....................................n/a 53 Venezuela ........................28.44
n/a Ukraine ................................n/a 54 Mexico.............................26.85
n/a United Arab Emirates ..........n/a 55 Colombia .........................22.32

SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000. SOURCE: Economist Intelligence Unit CountryData Database, data
“A New Database on Financial Development and Structure.” World retrieved April 2009
Bank Economic Review 14: 597–605. Updated November 2008
1
2006
Part 2.r2 10/14/09 3:32 PM Page 320

4.05 4.06
3: Data Tables | Banking financial services

Private credit to GDP Bank deposits to GDP


Private credit by deposit-money banks and other financial institutions This variable shows the demand, time, and savings deposits in
as a percentage of GDP | 2007 or most recent year available deposit money banks as a share of GDP | 2007 or most recent year
available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United States.................202.42 1 Hong Kong SAR ............267.93


2 Denmark........................190.90 2 Japan .............................186.17
3 Ireland............................184.30 3 China1 ............................147.12
4 Netherlands ...................179.11 4 United Kingdom.............141.88
5 United Kingdom.............176.33 5 Switzerland....................135.95
6 Switzerland....................170.38 6 Canada...........................132.38
7 Spain..............................168.65 7 Spain..............................121.48
8 Canada...........................157.10 8 Netherlands ...................115.85
9 South Africa...................155.44 9 Jordan............................111.67
10 Hong Kong SAR ............132.41 10 Malaysia ........................109.79
11 Sweden .........................115.72 11 Singapore ......................107.89
12 Australia.........................113.88 12 Germany........................100.79
13 Austria ...........................111.15 13 Belgium ...........................98.65
14 Germany........................104.91 14 Ireland..............................93.13
15 Norway1 .........................101.96 15 Thailand ...........................89.19
16 Korea, Rep.....................100.89 16 Israel................................86.53
17 Malaysia ........................100.69 17 Austria .............................86.16
18 France............................100.56 18 Australia...........................85.42
19 Japan ...............................96.76 19 Panama............................77.60
20 Italy..................................96.46 20 Egypt ...............................77.53
21 Jordan..............................92.50 21 United States...................73.80
22 Singapore ........................91.91 22 France..............................68.51
320 23 Israel................................86.58 23 Korea, Rep.......................63.43
24 Belgium ...........................85.45 24 Denmark..........................62.31
25 Thailand ...........................82.71 25 South Africa.....................61.41
26 Chile ................................80.21 26 Italy..................................60.70
27 Finland .............................77.75 27 Czech Republic................60.34
28 Panama............................77.49 28 Bahrain1 ...........................59.43
29 Vietnam ...........................76.72 29 Vietnam ...........................57.78
30 Bahrain1 ...........................66.23 30 India.................................57.60
31 Kuwait .............................61.53 31 Brazil................................56.08
32 Hungary ...........................57.19 32 Kuwait .............................52.44
33 Kazakhstan ......................48.17 33 Norway1 ...........................50.60
34 Egypt ...............................43.89 34 Finland .............................49.65
35 Brazil................................43.63 35 Bangladesh......................49.50
36 India.................................43.41 36 Sweden ...........................49.24
37 Saudi Arabia.....................43.31 37 Chile ................................49.09
38 Czech Republic................42.43 38 Slovak Republic ...............48.22
39 Slovak Republic ...............38.59 39 Philippines .......................46.19
40 Colombia .........................36.14 40 Hungary ...........................44.69
41 Poland..............................35.15 41 Poland..............................39.32
42 Bangladesh......................34.44 42 Saudi Arabia.....................38.52
43 Russian Federation..........31.64 43 Turkey ..............................37.55
44 Philippines .......................27.99 44 Pakistan ...........................34.86
45 Pakistan ...........................27.18 45 Indonesia .........................34.10
46 Turkey ..............................26.02 46 Ukraine1 ...........................33.86
47 Indonesia .........................22.67 47 Russian Federation..........27.03
48 Mexico.............................20.04 48 Kazakhstan ......................26.82
49 Venezuela ........................18.34 49 Venezuela ........................24.52
50 Peru .................................18.24 50 Peru .................................22.48
51 Nigeria .............................17.26 51 Mexico.............................21.15
52 Argentina .........................12.51 52 Argentina .........................20.38
n/a China....................................n/a 53 Colombia .........................20.13
n/a Ukraine ................................n/a 54 Nigeria .............................16.58
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a

SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000. SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000.
“A New Database on Financial Development and Structure.” World “A New Database on Financial Development and Structure.” World
Bank Economic Review 14: 597–605. Updated November 2008 Bank Economic Review 14: 597–605. Updated November 2008
1 1
2006 2006
Part 2.r2 10/14/09 3:32 PM Page 321

4.07 4.08

3: Data Tables | Banking financial services


Money market instruments to GDP Aggregate profitability indicator
Total money market instruments (US$ billions) as a percentage of Based on a three-year average of three measures of profitability: net
GDP | 2008 interest margin, bank return on assets, and bank return on equity |
2005–07 average

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Ireland..............................45.04 1 Saudi Arabia.......................6.38


2 United Kingdom...............11.60 2 United Arab Emirates ........6.33
3 Netherlands .....................10.62 3 Bahrain ..............................6.08
4 Sweden .............................7.49 4 Kuwait ...............................5.97
5 Austria ...............................6.89 5 Netherlands .......................5.68
6 Denmark............................5.48 6 Australia.............................5.20
7 Belgium .............................5.15 7 Bangladesh........................5.03
8 Australia.............................4.15 8 Venezuela ..........................4.85
9 Finland ...............................3.69 9 Belgium .............................4.77
10 Germany............................3.38 10 Singapore ..........................4.76
11 Norway ..............................3.02 11 Slovak Republic .................4.74
12 France................................2.85 12 Jordan................................4.66
13 Spain..................................2.00 13 Turkey ................................4.65
14 Hong Kong SAR ................1.48 14 Panama..............................4.58
15 Singapore ..........................1.15 15 Nigeria ...............................4.53
16 United States.....................0.61 16 Denmark............................4.47
17 United Arab Emirates ........0.50 17 Switzerland........................4.47
18 Canada...............................0.20 18 Vietnam .............................4.46
19 Switzerland........................0.12 19 Kazakhstan ........................4.42
20 Brazil..................................0.08 20 Hong Kong SAR ................4.41
21 Philippines .........................0.06 21 Malaysia ............................4.23
22 Japan .................................0.04 22 Colombia ...........................4.22
23 Thailand .............................0.04 23 Austria ...............................4.22 321
24 Argentina ...........................0.03 24 South Africa.......................4.18
25 Mexico...............................0.01 25 Spain..................................4.13
26 Italy....................................0.01 26 Czech Republic..................4.09
27 Chile ..................................0.00 27 India...................................4.07
27 China .................................0.00 28 Poland................................4.00
27 Colombia ...........................0.00 29 Finland ...............................3.95
27 Hungary .............................0.00 30 Israel..................................3.93
27 India...................................0.00 31 France................................3.93
27 Indonesia ...........................0.00 32 Korea, Rep.........................3.82
27 Israel..................................0.00 33 Sweden .............................3.79
27 Malaysia ............................0.00 34 China .................................3.78
27 Panama..............................0.00 35 Egypt .................................3.75
27 Peru ...................................0.00 36 Canada...............................3.67
27 Poland................................0.00 37 Brazil..................................3.67
27 South Africa.......................0.00 38 Norway ..............................3.65
27 Turkey ................................0.00 39 Indonesia ...........................3.63
27 Venezuela ..........................0.00 40 Ireland................................3.62
n/a Bahrain.................................n/a 41 Pakistan .............................3.56
n/a Bangladesh ..........................n/a 42 Peru ...................................3.51
n/a Czech Republic ....................n/a 43 United Kingdom.................3.42
n/a Egypt ...................................n/a 44 Italy....................................3.40
n/a Jordan..................................n/a 45 Ukraine ..............................3.28
n/a Kazakhstan...........................n/a 46 Russian Federation............3.26
n/a Korea, Rep. ..........................n/a 47 United States.....................3.24
n/a Kuwait..................................n/a 48 Germany............................3.23
n/a Nigeria .................................n/a 49 Japan .................................2.99
n/a Pakistan ...............................n/a 50 Hungary .............................2.76
n/a Russian Federation ..............n/a 51 Chile ..................................2.54
n/a Saudi Arabia.........................n/a 52 Argentina ...........................2.52
n/a Slovak Republic ...................n/a 53 Philippines .........................2.48
n/a Ukraine ................................n/a 54 Thailand .............................2.40
n/a Vietnam ...............................n/a 55 Mexico...............................1.00

SOURCE: Bank of International Settlements, Quarterly Review March SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000.
2009; GDP data from IMF, World Economic Outlook Database (April “A New Database on Financial Development and Structure.” World
2009) Bank Economic Review 14: 597–605. Updated November 2008
Part 2.r2 10/14/09 3:32 PM Page 322

4.09 4.10
3: Data Tables | Banking financial services

Bank overhead costs Public ownership of banks


Bank overhead costs as a percentage of total assets | 2007 Percentage of assets held by the 10 largest banks that is located in
banks that are 25 percent or more government owned | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Singapore ..........................1.00 1 Belgium .............................0.00


2 Vietnam .............................1.05 1 Czech Republic..................0.00
3 China .................................1.05 1 Denmark............................0.00
4 Norway ..............................1.23 1 France................................0.00
5 Hong Kong SAR ................1.27 1 Hong Kong SAR ................0.00
6 United Arab Emirates ........1.41 1 Jordan................................0.00
7 Spain..................................1.42 1 Nigeria ...............................0.00
8 Japan .................................1.44 1 Panama..............................0.00
9 Saudi Arabia.......................1.54 1 Singapore ..........................0.00
10 Kuwait ...............................1.56 1 Slovak Republic .................0.00
11 Australia.............................1.64 1 United States.....................0.00
12 Korea, Rep.........................1.69 12 Finland ...............................0.58
13 Malaysia ............................1.73 13 Canada...............................1.17
14 India...................................1.77 14 South Africa.......................1.88
15 Finland ...............................1.88 15 Spain..................................2.00
16 Ireland................................1.97 16 Australia.............................2.27
17 Jordan................................2.02 17 Colombia ...........................4.08
18 Czech Republic..................2.06 18 Hungary .............................4.21
19 Egypt .................................2.15 19 Venezuela ..........................5.49
20 Thailand .............................2.23 20 Japan .................................5.92
21 Sweden .............................2.23 21 Poland................................6.08
322 22 Israel..................................2.37 22 Mexico...............................6.50
23 United Kingdom.................2.40 23 Peru ...................................6.51
24 Bangladesh........................2.41 24 Thailand .............................6.69
25 Slovak Republic .................2.46 25 Sweden .............................6.79
26 Pakistan .............................2.53 26 Italy....................................8.15
27 Canada...............................2.59 27 Norway ..............................8.18
28 Denmark............................2.59 28 Switzerland........................8.23
29 Italy....................................2.67 29 Austria ...............................8.84
30 Poland................................2.92 30 Brazil..................................9.14
31 Indonesia ...........................2.95 31 Korea, Rep.........................9.30
32 Belgium .............................2.96 32 Ukraine ............................10.40
33 Bahrain ..............................3.02 33 Kuwait .............................13.99
34 France................................3.03 34 Saudi Arabia.....................14.76
35 Kazakhstan ........................3.06 35 Bahrain ............................16.61
36 Chile ..................................3.35 36 Chile ................................16.66
37 Panama..............................3.35 37 Ireland..............................16.69
38 United States.....................3.50 38 Philippines .......................17.64
39 Philippines .........................3.72 39 Israel................................18.35
40 Ukraine ..............................3.83 40 United Kingdom...............27.53
41 Turkey ................................4.06 41 Germany..........................27.55
42 Austria ...............................4.12 42 Pakistan ...........................30.79
43 Switzerland........................4.35 43 Turkey ..............................32.08
44 Nigeria ...............................4.38 44 Kazakhstan ......................36.36
45 Venezuela ..........................4.39 45 Netherlands .....................38.60
46 South Africa.......................4.58 46 India.................................40.71
47 Colombia ...........................5.26 47 Argentina .........................46.21
48 Germany............................5.48 48 China ...............................49.04
49 Peru ...................................5.70 49 Malaysia ..........................50.35
50 Netherlands .......................5.74 50 United Arab Emirates ......57.37
51 Russian Federation............7.66 51 Russian Federation..........58.32
52 Argentina ...........................7.97 52 Indonesia .........................61.33
53 Brazil..................................9.23 53 Bangladesh......................65.91
54 Hungary ...........................10.91 54 Egypt ...............................68.28
55 Mexico.............................12.09 55 Vietnam ...........................73.73

SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000. SOURCE: BankScope database, data retrieved June 2009
“A New Database on Financial Development and Structure.” World
Bank Economic Review 14: 597–605. Updated November 2008
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4.11 4.12

3: Data Tables | Banking financial services


Bank operating costs to assets Non-performing bank loans to total loans
Non interest expense as a percentage of average assets in last Percentage of non-performing bank loans relative to total number of
reported year | 2008 loans outstanding | 2008 or most recent year available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Japan .................................0.76 1 Denmark1 ...........................0.30


2 Finland ...............................0.88 2 Finland ...............................0.40
3 Sweden .............................0.91 3 Australia.............................0.50
4 Germany............................0.96 4 Norway ..............................0.80
5 Denmark............................1.04 5 Chile ..................................0.90
6 Ireland................................1.05 5 United Kingdom1 ...............0.90
7 Norway ..............................1.13 7 Hong Kong SAR ................1.00
8 France................................1.16 7 Sweden .............................1.00
9 Belgium .............................1.19 9 Canada...............................1.10
10 Netherlands .......................1.21 9 Korea, Rep.........................1.10
11 Singapore ..........................1.31 11 Panama..............................1.40
12 United Kingdom.................1.37 11 Singapore ..........................1.40
13 Hong Kong SAR ................1.39 13 Belgium .............................1.50
14 Switzerland........................1.58 13 Japan .................................1.50
15 Australia.............................1.59 15 Austria1 ..............................1.70
16 China .................................1.78 15 Israel1 .................................1.70
17 Saudi Arabia.......................1.79 17 Saudi Arabia1 .....................2.10
18 Malaysia ............................1.82 18 Peru ...................................2.20
19 United Arab Emirates ........1.84 19 India...................................2.30
20 Austria ...............................1.99 19 United States.....................2.30
21 Jordan................................2.03 19 Venezuela ..........................2.30
22 Spain..................................2.04 22 Argentina ...........................2.50
323
23 Italy....................................2.21 22 China .................................2.50
24 Canada...............................2.28 22 Mexico...............................2.50
25 Czech Republic..................2.29 22 Russian Federation............2.50
26 Kuwait ...............................2.64 22 United Arab Emirates ........2.50
27 Vietnam .............................2.80 27 South Africa.......................2.60
28 United States.....................2.86 28 France1 ..............................2.70
29 Israel..................................3.05 28 Germany1 ...........................2.70
30 Egypt .................................3.08 30 Brazil..................................2.90
31 Poland................................3.09 30 Hungary .............................2.90
32 Thailand .............................3.18 30 Slovak Republic .................2.90
33 India...................................3.22 33 Czech Republic..................3.10
34 Slovak Republic .................3.28 33 Kuwait ...............................3.10
35 Philippines .........................3.50 35 Spain..................................3.20
36 Korea, Rep.........................3.58 36 Turkey ................................3.30
37 South Africa.......................3.79 37 Indonesia ...........................3.50
38 Chile ..................................3.84 38 Colombia ...........................4.00
39 Turkey ................................3.95 38 Jordan................................4.00
40 Pakistan .............................4.04 40 Poland................................4.40
41 Indonesia ...........................4.95 41 Italy1 ...................................4.60
42 Panama..............................4.99 42 Malaysia ............................5.10
43 Peru ...................................5.09 43 Philippines .........................5.20
44 Kazakhstan ........................5.45 44 Nigeria ...............................6.10
45 Argentina ...........................5.54 45 Kazakhstan ........................6.50
46 Nigeria ...............................5.57 45 Thailand .............................6.50
47 Brazil..................................5.64 47 Pakistan .............................8.40
48 Bangladesh........................5.78 48 Bangladesh......................13.00
49 Mexico...............................6.13 49 Ukraine ............................14.50
50 Hungary .............................6.57 50 Egypt ...............................16.50
51 Venezuela ..........................6.76 n/a Bahrain.................................n/a
52 Ukraine ..............................7.14 n/a Ireland..................................n/a
53 Colombia ...........................7.22 n/a Netherlands .........................n/a
54 Bahrain ..............................7.56 n/a Switzerland ..........................n/a
55 Russian Federation..........11.23 n/a Vietnam ...............................n/a

SOURCE: BankScope database, data retrieved June 2009 SOURCE: IMF, Global Financial Stability Report, April 2009
1
2007
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4.13 4.14
3: Data Tables | Banking financial services

Private credit bureau coverage Public credit registry coverage


Percentage of adults covered by a private credit registry | 2008 Percentage of adults covered by a public credit registry | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Argentina .......................100.00 1 China ...............................58.80


1 Australia.........................100.00 2 Belgium ...........................57.70
1 Canada...........................100.00 3 Malaysia ..........................52.90
1 Ireland............................100.00 4 Spain................................45.80
1 Norway ..........................100.00 5 Argentina .........................31.20
1 Sweden .........................100.00 6 France..............................28.30
1 United Kingdom.............100.00 7 Chile ................................28.10
1 United States.................100.00 8 Indonesia .........................26.10
9 Germany..........................98.40 9 Peru .................................23.70
10 Israel................................91.00 10 Brazil................................20.20
11 Korea, Rep.......................90.40 11 Vietnam ...........................13.40
12 Netherlands .....................81.00 12 Turkey ..............................12.70
13 Japan ...............................76.20 13 Italy..................................11.80
14 Italy..................................74.90 14 United Arab Emirates ........6.50
15 Mexico.............................70.80 15 Pakistan .............................4.90
16 Hong Kong SAR ..............69.90 16 Czech Republic..................4.60
17 Czech Republic................65.20 17 Egypt .................................2.20
18 South Africa.....................64.80 18 Slovak Republic .................1.40
19 Brazil................................62.20 19 Austria ...............................1.30
20 Poland..............................50.00 20 Jordan................................1.00
21 Singapore ........................48.30 21 Bangladesh........................0.90
324 22 Panama............................43.70 22 Germany............................0.70
23 Colombia .........................42.50 23 Nigeria ...............................0.10
24 Austria .............................40.90 24 Australia.............................0.00
25 Slovak Republic ...............39.90 24 Bahrain ..............................0.00
26 Bahrain ............................35.80 24 Canada...............................0.00
27 Chile ................................34.50 24 Colombia ...........................0.00
28 Peru .................................33.20 24 Denmark............................0.00
29 Thailand ...........................31.80 24 Finland ...............................0.00
30 Kuwait .............................31.20 24 Hong Kong SAR ................0.00
31 Turkey ..............................26.30 24 Hungary .............................0.00
32 Kazakhstan ......................25.60 24 India...................................0.00
33 Switzerland......................22.50 24 Ireland................................0.00
34 Finland .............................14.80 24 Israel..................................0.00
35 Saudi Arabia.....................14.10 24 Japan .................................0.00
36 India.................................10.50 24 Kazakhstan ........................0.00
37 Hungary ...........................10.00 24 Korea, Rep.........................0.00
37 Russian Federation..........10.00 24 Kuwait ...............................0.00
39 Spain..................................8.10 24 Mexico...............................0.00
40 United Arab Emirates ........7.70 24 Netherlands .......................0.00
41 Philippines .........................5.40 24 Norway ..............................0.00
42 Denmark............................5.00 24 Panama..............................0.00
43 Egypt .................................4.70 24 Philippines .........................0.00
44 Ukraine ..............................3.00 24 Poland................................0.00
45 Pakistan .............................1.50 24 Russian Federation............0.00
46 Bangladesh........................0.00 24 Saudi Arabia.......................0.00
46 Belgium .............................0.00 24 Singapore ..........................0.00
46 China .................................0.00 24 South Africa.......................0.00
46 France................................0.00 24 Sweden .............................0.00
46 Indonesia ...........................0.00 24 Switzerland........................0.00
46 Jordan................................0.00 24 Thailand .............................0.00
46 Nigeria ...............................0.00 24 Ukraine ..............................0.00
46 Venezuela ..........................0.00 24 United Kingdom.................0.00
46 Vietnam .............................0.00 24 United States.....................0.00
n/a Malaysia...............................n/a 24 Venezuela ..........................0.00

SOURCE: The World Bank, Doing Business 2009 SOURCE: The World Bank, Doing Business 2009
Part 2.r2 10/14/09 3:32 PM Page 325

Data Tables

Section V
Non-banking financial services

325
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5.01 5.02
3: Data Tables | Non-banking financial services

IPO market share IPO proceeds amount


Three-year average of percentage of world IPOs (initial public offer- Three-year average of total IPO (initial public offering) proceeds as a
ings) issued in a given country as measured by US dollars | 2006–08 percentage of GDP | 2006–08 average
average

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 China ...............................19.33 1 Hong Kong SAR ................2.80


2 United States...................16.90 2 United Arab Emirates ........1.57
3 Russian Federation............8.90 3 Russian Federation............1.45
4 Brazil..................................6.57 4 Bahrain ..............................1.42
5 United Kingdom.................5.66 5 Kazakhstan ........................1.35
6 Japan .................................3.94 6 Saudi Arabia.......................1.30
7 Germany............................3.24 7 Jordan................................1.21
8 Spain..................................3.08 8 China .................................1.20
9 India...................................2.71 9 Singapore ..........................1.07
10 Hong Kong SAR ................2.65 10 Brazil..................................1.06
11 Saudi Arabia.......................2.46 11 Vietnam .............................0.92
12 Australia.............................2.08 12 Ireland................................0.63
13 Italy....................................1.97 13 India...................................0.55
14 France................................1.92 14 Israel..................................0.51
15 United Arab Emirates ........1.46 15 Australia.............................0.50
16 Korea, Rep.........................1.41 16 Colombia ...........................0.49
17 Netherlands .......................1.37 17 Philippines .........................0.48
18 Canada...............................1.30 18 Spain..................................0.46
19 Mexico...............................0.94 19 United Kingdom.................0.46
20 Switzerland........................0.89 20 Austria ...............................0.45
21 Turkey ................................0.88 21 Switzerland........................0.44
326 22 Singapore ..........................0.80 22 Thailand .............................0.42
23 Austria ...............................0.78 23 Norway ..............................0.39
24 Ireland................................0.73 24 Netherlands .......................0.38
25 Indonesia ...........................0.73 25 Egypt .................................0.38
26 Norway ..............................0.71 26 Pakistan .............................0.38
27 Kazakhstan ........................0.66 27 Indonesia ...........................0.36
28 Poland................................0.52 28 Nigeria ...............................0.34
29 Sweden .............................0.50 29 Korea, Rep.........................0.31
30 Thailand .............................0.47 30 Turkey ................................0.30
31 Colombia ...........................0.47 31 Argentina ...........................0.30
32 Israel..................................0.41 32 Malaysia ............................0.28
33 Belgium .............................0.40 33 United States.....................0.27
34 Argentina ...........................0.37 34 Poland................................0.26
35 Philippines .........................0.32 35 Sweden .............................0.24
36 Vietnam .............................0.32 36 Finland ...............................0.23
37 Nigeria ...............................0.28 37 Germany............................0.21
38 Pakistan .............................0.26 38 Ukraine ..............................0.20
39 Finland ...............................0.25 39 Italy....................................0.20
40 Malaysia ............................0.24 40 Canada...............................0.20
41 Egypt .................................0.23 41 Mexico...............................0.20
42 South Africa.......................0.21 42 Belgium .............................0.19
43 Ukraine ..............................0.14 43 Japan .................................0.19
44 Bahrain ..............................0.12 44 South Africa.......................0.16
45 Denmark............................0.10 45 France................................0.16
46 Jordan................................0.10 46 Peru ...................................0.11
47 Czech Republic..................0.06 47 Chile ..................................0.08
48 Chile ..................................0.06 48 Czech Republic..................0.07
49 Peru ...................................0.05 49 Denmark............................0.07
50 Hungary .............................0.03 50 Hungary .............................0.05
51 Kuwait ...............................0.02 51 Kuwait ...............................0.04
52 Slovak Republic .................0.00 52 Slovak Republic .................0.01
53 Panama..............................0.00 53 Bangladesh........................0.00
53 Venezuela ..........................0.00 53 Panama..............................0.00
n/a Bangladesh ..........................n/a 53 Venezuela ..........................0.00

SOURCE: Thomson Financial SDC Platinum, retrieved April 2009 SOURCE: IPO information from Thomson Financial SDC Platinum,
retrieved April 2009; GDP data from IMF, World Economic Outlook
Database (April 2009)
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5.03 5.04

3: Data Tables | Non-banking financial services


Share of world IPOs M&A market share
Three-year average of number of IPO (initial public offering) issues Three-year average of dollar value of M&A (mergers and
as a percentage of total global number of issues | 2006–08 average acquisitions) occurring in a given country as a percentage of total
global value | 2006–08 average

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 China ...............................12.92 1 United States...................41.73


2 United States...................11.74 2 United Kingdom...............10.04
3 Japan ...............................10.62 3 Canada...............................4.68
4 Australia.............................7.59 4 France................................4.32
5 United Kingdom.................7.22 5 Germany............................3.54
6 India...................................5.72 6 Netherlands .......................3.49
7 Korea, Rep.........................5.55 7 Australia.............................3.25
8 France................................4.40 8 Japan .................................3.20
9 Canada...............................2.96 9 Italy....................................3.01
10 Hong Kong SAR ................2.91 10 Spain..................................2.70
11 Brazil..................................2.70 11 Switzerland........................2.11
12 Germany............................2.59 12 Russian Federation............2.07
13 Malaysia ............................2.53 13 Sweden .............................1.33
14 Poland................................2.07 14 Korea, Rep.........................1.22
15 Singapore ..........................1.96 15 China .................................1.21
16 Italy....................................1.75 16 Brazil..................................1.17
17 Russian Federation............1.12 17 Hong Kong SAR ................1.07
18 Saudi Arabia.......................1.09 18 India...................................0.92
19 Norway ..............................1.06 19 Norway ..............................0.91
20 Belgium .............................0.95 20 Mexico...............................0.85
20 Indonesia ...........................0.95 21 Belgium .............................0.76
22 Sweden .............................0.75 22 Malaysia ............................0.63
327
23 Netherlands .......................0.72 23 Turkey ................................0.60
24 Switzerland........................0.66 24 Singapore ..........................0.59
25 Spain..................................0.60 25 South Africa.......................0.47
25 Thailand .............................0.60 26 Denmark............................0.43
27 Philippines .........................0.52 27 Austria ...............................0.32
28 United Arab Emirates ........0.49 28 Finland ...............................0.32
29 Israel..................................0.46 29 Ireland................................0.27
30 Denmark............................0.43 30 Egypt .................................0.26
30 Ireland................................0.43 31 Indonesia ...........................0.22
32 Turkey ................................0.40 32 Thailand .............................0.22
33 Austria ...............................0.37 33 Israel..................................0.19
34 Jordan................................0.35 34 Chile ..................................0.19
34 Mexico...............................0.35 35 Philippines .........................0.18
34 Vietnam .............................0.35 36 Poland................................0.17
37 Argentina ...........................0.26 37 Colombia ...........................0.17
37 Finland ...............................0.26 38 Hungary .............................0.15
39 South Africa.......................0.23 39 Argentina ...........................0.14
40 Kazakhstan ........................0.20 40 United Arab Emirates ........0.13
41 Nigeria ...............................0.17 41 Ukraine ..............................0.11
42 Pakistan .............................0.14 42 Czech Republic..................0.10
42 Ukraine ..............................0.14 43 Kazakhstan ........................0.09
44 Bahrain ..............................0.12 44 Nigeria ...............................0.09
44 Czech Republic..................0.12 45 Pakistan .............................0.07
44 Egypt .................................0.12 46 Peru ...................................0.06
47 Chile ..................................0.09 47 Kuwait ...............................0.06
47 Colombia ...........................0.09 48 Venezuela ..........................0.04
47 Peru ...................................0.09 49 Panama..............................0.03
50 Hungary .............................0.03 50 Jordan................................0.03
50 Kuwait ...............................0.03 51 Vietnam .............................0.02
50 Slovak Republic .................0.03 52 Slovak Republic .................0.02
53 Bangladesh........................0.00 53 Bahrain ..............................0.02
53 Panama..............................0.00 54 Saudi Arabia.......................0.02
53 Venezuela ..........................0.00 55 Bangladesh........................0.01

SOURCE: Thomson Financial SDC Platinum, retrieved April 2009 SOURCE: Thomson Financial SDC Platinum, retrieved April 2009
Part 2.r2 10/14/09 3:32 PM Page 328

5.05 5.06
3: Data Tables | Non-banking financial services

M&A transaction value to GDP Share of total number of M&A deals


This variable is the rank value of the three-year average of Three-year average of percentage of world M&A (mergers and
transactions in US dollars (including the net debt of the target) as a acquisitions) deals occurring in a given country as measured by the
percentage of GDP | 2006–08 average share of total number of global M&A deals | 2006–08 average

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Hong Kong SAR ..............16.76 1 United States...................30.16


2 Switzerland......................15.40 2 United Kingdom.................8.82
3 Netherlands .....................14.38 3 Japan .................................6.78
4 United Kingdom...............12.14 4 Canada...............................5.31
5 Australia...........................11.61 5 Australia.............................5.23
6 Singapore ........................11.49 6 Germany............................4.29
7 Malaysia ..........................10.63 7 France................................3.88
8 Canada.............................10.58 8 China .................................2.83
9 United States.....................9.67 9 Spain..................................2.55
10 Sweden .............................9.58 10 India...................................2.42
11 Norway ..............................7.36 11 Russian Federation............2.37
12 Egypt .................................6.23 12 Malaysia ............................2.17
13 Spain..................................6.03 13 Italy....................................2.02
14 South Africa.......................5.44 14 Sweden .............................1.96
15 France................................5.34 15 Korea, Rep.........................1.92
16 Belgium .............................5.29 16 Netherlands .......................1.65
17 Russian Federation............5.00 17 Brazil..................................1.55
18 Jordan................................4.66 18 Hong Kong SAR ................1.51
19 Italy....................................4.58 19 Switzerland........................1.10
20 Denmark............................4.42 20 Singapore ..........................1.05
21 Panama..............................4.16 21 Norway ..............................0.90
328 22 Finland ...............................4.14 22 Finland ...............................0.79
23 Philippines .........................4.11 23 Denmark............................0.79
24 Korea, Rep.........................3.95 24 Belgium .............................0.74
25 Bahrain ..............................3.81 25 Poland................................0.62
26 Chile ..................................3.71 26 Thailand .............................0.56
27 Israel..................................3.53 27 Ireland................................0.50
28 Hungary .............................3.49 28 Austria ...............................0.47
29 Ireland................................3.47 29 South Africa.......................0.46
30 Germany............................3.42 30 Mexico...............................0.43
31 Turkey ................................2.99 31 Czech Republic..................0.41
32 Thailand .............................2.85 32 Turkey ................................0.38
33 Kazakhstan ........................2.82 33 Ukraine ..............................0.34
34 Brazil..................................2.81 34 Indonesia ...........................0.34
35 India...................................2.77 35 Argentina ...........................0.32
36 Austria ...............................2.75 36 Israel..................................0.28
37 Mexico...............................2.64 37 Philippines .........................0.27
38 Colombia ...........................2.63 38 Hungary .............................0.25
39 Ukraine ..............................2.45 39 Chile ..................................0.21
40 Japan .................................2.24 40 Vietnam .............................0.19
41 United Arab Emirates ........2.08 41 United Arab Emirates ........0.18
42 Peru ...................................1.89 42 Colombia ...........................0.16
43 Czech Republic..................1.79 43 Peru ...................................0.14
44 Argentina ...........................1.70 44 Egypt .................................0.11
45 Nigeria ...............................1.67 45 Slovak Republic .................0.08
46 Indonesia ...........................1.59 46 Nigeria ...............................0.07
47 Pakistan .............................1.55 47 Kuwait ...............................0.07
48 Kuwait ...............................1.55 47 Saudi Arabia.......................0.07
49 Poland................................1.25 49 Kazakhstan ........................0.06
50 China .................................1.11 50 Jordan................................0.06
51 Vietnam .............................1.00 51 Pakistan .............................0.06
52 Slovak Republic .................0.95 52 Venezuela ..........................0.05
53 Venezuela ..........................0.56 53 Bahrain ..............................0.04
54 Bangladesh........................0.36 53 Panama..............................0.04
55 Saudi Arabia.......................0.15 55 Bangladesh........................0.01

SOURCE: Thomson Financial SDC Platinum, retrieved April 2009; GDP SOURCE: Thomson Financial SDC Platinum, retrieved April 2009
data from IMF, World Economic Outlook Database (April 2009)
Part 2.r2 10/14/09 3:32 PM Page 329

5.07 5.08

3: Data Tables | Non-banking financial services


Insurance premiums, direct Insurance density
Direct insurance premiums (life and non-life), including commissions Direct life insurance premiums (life and non-life) per capita from
and other charges, prior to cession to a reinsurance company (US$ domestic sources (US dollars) | 2007
millions) | 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United States.......1,230,526.00 1 United Kingdom..........8,326.00


2 United Kingdom......539,468.00 2 Ireland.........................7,262.00
3 Japan ......................424,755.00 3 Netherlands ................6,262.90
4 France.....................272,732.00 4 Switzerland.................5,705.50
5 Germany.................223,429.00 5 Denmark.....................5,103.10
6 Italy.........................142,328.00 6 France.........................4,169.70
7 Korea, Rep..............116,384.00 7 United States..............4,089.30
8 Netherlands ............102,831.00 8 Belgium ......................4,022.70
9 Canada....................100,148.00 9 Finland ........................3,923.80
10 China ........................92,483.00 10 Norway .......................3,768.50
11 Spain.........................74,696.00 11 Sweden ......................3,730.20
12 Ireland.......................63,064.00 12 Hong Kong SAR .........3,421.80
13 Australia....................62,240.00 13 Japan ..........................3,319.30
14 India..........................58,725.00 14 Canada........................3,046.20
15 Belgium ....................44,897.00 15 Australia......................3,000.50
16 Switzerland...............43,313.00 16 Singapore ...................2,790.90
17 South Africa..............42,775.00 17 Germany.....................2,666.60
18 Brazil.........................39,251.00 18 Austria ........................2,619.70
19 Sweden ....................33,874.00 19 Korea, Rep..................2,372.60
20 Russian Federation...29,846.00 20 Italy.............................2,322.00
21 Denmark...................28,435.00 21 Spain...........................1,699.90
22 Hong Kong SAR .......24,657.00 22 Israel...........................1,278.50
329
23 Austria ......................21,741.00 23 United Arab Emirates ....907.10
24 Finland ......................20,630.00 24 South Africa...................880.60
25 Norway .....................19,451.00 25 Czech Republic..............643.90
26 Mexico......................17,856.00 26 Hungary .........................489.80
27 Poland.......................15,625.00 27 Slovak Republic .............432.90
28 Singapore .................14,245.00 28 Poland............................411.00
29 Israel...........................8,857.00 29 Chile ..............................370.90
30 Malaysia .....................8,512.00 30 Malaysia ........................320.30
31 Thailand ......................8,285.00 31 Venezuela ......................259.30
32 Turkey .........................8,221.00 32 Kuwait ...........................245.80
33 Venezuela ...................7,172.00 33 Russian Federation........209.40
34 Indonesia ....................6,938.00 34 Brazil..............................204.70
35 Czech Republic...........6,548.00 35 Panama..........................181.50
36 Argentina ....................6,315.00 36 Mexico...........................167.60
37 Chile ...........................6,169.00 37 Argentina .......................159.80
38 Hungary ......................4,924.00 38 Thailand .........................129.70
39 Colombia ....................4,103.00 39 Turkey ............................109.80
40 United Arab Emirates .3,973.00 40 Saudi Arabia.....................92.60
41 Ukraine .......................3,566.00 41 Colombia .........................88.90
42 Slovak Republic ..........2,323.00 42 Kazakhstan ......................78.00
43 Saudi Arabia................2,291.00 43 Ukraine ............................77.20
44 Philippines ..................2,105.00 44 China ...............................69.60
45 Kazakhstan .................1,202.00 45 India.................................50.30
46 Peru ............................1,187.00 46 Peru .................................42.50
47 Pakistan ......................1,094.00 47 Indonesia .........................30.00
48 Egypt ..........................1,090.00 48 Philippines .......................23.90
49 Vietnam ......................1,082.00 49 Egypt ...............................14.40
50 Nigeria ...........................814.00 50 Vietnam ...........................12.40
51 Kuwait ...........................701.00 51 Pakistan .............................6.70
52 Panama..........................607.00 52 Nigeria ...............................5.50
53 Bangladesh....................456.00 53 Bangladesh........................2.90
n/a Bahrain.................................n/a n/a Bahrain.................................n/a
n/a Jordan..................................n/a n/a Jordan..................................n/a

SOURCE: Swiss Re, World Insurance in 2007: Emerging Markets SOURCE: Swiss Re, World Insurance in 2007: Emerging Markets
Leading the Way Leading the Way
Part 2.r2 10/14/09 3:32 PM Page 330

5.09 5.10
3: Data Tables | Non-banking financial services

Real growth of direct insurance premiums Insurance penetration


Annual real rate of growth (%) of direct premiums (life and non-life) Direct domestic premiums (life and non-life) as a percentage of GDP
based on local currency prices | 2007 | 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United Arab Emirates ........0.28 1 United Kingdom.................0.18


2 Hong Kong SAR ................0.25 2 South Africa.......................0.15
3 Venezuela ..........................0.24 3 Netherlands .......................0.13
4 United Kingdom.................0.23 4 Hong Kong SAR ................0.12
5 Indonesia ...........................0.21 5 Ireland................................0.12
6 India...................................0.21 6 Korea, Rep.........................0.12
7 China .................................0.19 7 France................................0.10
8 Saudi Arabia.......................0.19 8 Switzerland........................0.10
9 Panama..............................0.17 9 Japan .................................0.10
10 Ireland................................0.17 10 Belgium .............................0.09
10 Russian Federation............0.17 11 Denmark............................0.09
12 Singapore ..........................0.15 12 United States.....................0.09
12 Ukraine ..............................0.15 13 Finland ...............................0.08
14 Egypt .................................0.15 14 Singapore ..........................0.08
15 Chile ..................................0.15 15 Sweden .............................0.07
16 Poland................................0.14 16 Canada...............................0.07
17 Mexico...............................0.14 17 Australia.............................0.07
18 Brazil..................................0.11 18 Germany............................0.07
19 Kazakhstan ........................0.11 19 Italy....................................0.06
20 Korea, Rep.........................0.11 20 Austria ...............................0.06
21 Denmark............................0.10 21 Israel..................................0.05
330 22 Pakistan .............................0.10 22 Spain..................................0.05
23 Vietnam .............................0.09 23 India...................................0.05
24 Colombia ...........................0.07 24 Norway ..............................0.05
25 Sweden .............................0.06 25 Malaysia ............................0.04
26 Czech Republic..................0.06 26 Czech Republic..................0.04
26 Norway ..............................0.06 27 Poland................................0.04
28 Hungary .............................0.05 28 Chile ..................................0.04
29 Philippines .........................0.05 29 Hungary .............................0.04
30 Israel..................................0.05 30 Thailand .............................0.03
31 Argentina ...........................0.04 31 Venezuela ..........................0.03
31 Australia.............................0.04 32 Panama..............................0.03
33 Slovak Republic .................0.04 32 Slovak Republic .................0.03
33 Turkey ................................0.04 34 Brazil..................................0.03
35 Belgium .............................0.04 35 China .................................0.03
36 Thailand .............................0.04 36 Ukraine ..............................0.03
37 Peru ...................................0.03 37 Argentina ...........................0.02
38 Canada...............................0.02 38 Russian Federation............0.02
39 United States.....................0.02 39 Colombia ...........................0.02
40 Spain..................................0.01 40 United Arab Emirates ........0.02
41 Netherlands .......................0.01 41 Mexico...............................0.02
42 Switzerland........................0.01 42 Indonesia ...........................0.02
43 Malaysia ............................0.01 43 Vietnam .............................0.02
44 Austria ...............................0.00 44 Philippines .........................0.01
45 South Africa.......................0.00 45 Kazakhstan ........................0.01
46 Germany...........................-0.01 46 Turkey ................................0.01
47 France...............................-0.02 47 Peru ...................................0.01
48 Finland ..............................-0.02 48 Egypt .................................0.01
49 Japan ................................-0.03 49 Pakistan .............................0.01
50 Italy...................................-0.09 50 Bangladesh........................0.01
n/a Bahrain.................................n/a 51 Nigeria ...............................0.01
n/a Bangladesh ..........................n/a 52 Saudi Arabia.......................0.01
n/a Jordan..................................n/a 53 Kuwait ...............................0.01
n/a Kuwait..................................n/a n/a Bahrain.................................n/a
n/a Nigeria .................................n/a n/a Jordan..................................n/a

SOURCE: Swiss Re, World Insurance in 2007: Emerging Markets SOURCE: Swiss Re, World Insurance in 2007: Emerging Markets
Leading the Way Leading the Way
Part 2.r2 10/14/09 3:32 PM Page 331

5.11 5.12

3: Data Tables | Non-banking financial services


Relative value-added of insurance to GDP Securitization to GDP
The value added by insurance services to the economy after costs Three-year average of the sum of asset-backed securities (ABS),
are subtracted, as a percentage of GDP | 2008 mortgage-backed securities (MBS), high-yield bonds, and highly
leveraged loans’ deal value as a percentage of GDP | 2006–08
average

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Hong Kong SAR ................3.94 1 United States...................16.30


2 Singapore ..........................3.59 2 United Kingdom...............10.11
3 Egypt .................................3.32 3 Denmark............................8.54
4 Switzerland........................3.22 4 Kazakhstan ........................8.37
5 Ireland................................3.02 5 Netherlands .......................8.20
6 Korea, Rep.........................2.59 6 Jordan................................6.52
7 Israel..................................2.57 7 Ireland................................6.43
8 United Kingdom.................2.51 8 Spain..................................5.50
9 United States.....................2.42 9 Finland ...............................5.34
10 Australia.............................2.27 10 Australia.............................5.06
11 Japan .................................2.03 11 Ukraine ..............................4.66
12 Jordan................................1.93 12 Singapore ..........................3.99
13 Netherlands .......................1.85 13 Russian Federation............3.69
14 South Africa.......................1.79 14 Belgium .............................3.68
15 Brazil..................................1.69 15 Canada...............................3.32
16 Chile ..................................1.61 16 Malaysia ............................2.94
17 Austria ...............................1.56 17 Egypt .................................2.91
18 Ukraine ..............................1.48 18 France................................2.80
19 Argentina ...........................1.32 19 Sweden .............................2.70
20 Belgium .............................1.28 20 Germany............................2.67
21 Poland................................1.26 21 United Arab Emirates ........2.33
22 Russian Federation............1.16 22 Turkey ................................2.33
331
23 Turkey ................................1.10 23 Bahrain ..............................2.32
24 Malaysia ............................1.09 24 South Africa.......................2.23
25 Philippines .........................1.07 25 Chile ..................................2.23
26 Sweden .............................1.02 26 Philippines .........................2.18
27 India...................................1.01 27 Switzerland........................2.12
28 Denmark............................0.98 28 Italy....................................1.98
29 Peru ...................................0.95 29 Argentina ...........................1.81
30 France................................0.90 30 Peru ...................................1.79
31 Mexico...............................0.83 31 Norway ..............................1.77
32 Hungary .............................0.76 32 Venezuela ..........................1.66
33 Slovak Republic .................0.72 33 Vietnam .............................1.63
34 Saudi Arabia.......................0.72 34 Panama..............................1.53
35 Indonesia ...........................0.71 35 Indonesia ...........................1.53
36 Germany............................0.70 36 Colombia ...........................1.32
37 Canada...............................0.69 37 Brazil..................................1.31
38 Italy....................................0.69 38 India...................................1.23
39 Panama..............................0.64 39 Hungary .............................1.14
40 Pakistan .............................0.64 40 Mexico...............................1.03
41 China .................................0.59 41 Czech Republic..................0.97
42 Thailand .............................0.57 42 Japan .................................0.97
43 Spain..................................0.53 43 Kuwait ...............................0.93
44 Bangladesh........................0.53 44 Austria ...............................0.88
45 Colombia ...........................0.52 45 Nigeria ...............................0.86
46 Finland ...............................0.50 46 Saudi Arabia.......................0.68
47 Norway ..............................0.38 47 Thailand .............................0.48
48 Venezuela ..........................0.27 48 Pakistan .............................0.33
49 Kuwait ...............................0.24 49 Israel..................................0.30
50 Czech Republic..................0.22 50 Slovak Republic .................0.27
n/a Bahrain.................................n/a 51 Poland................................0.23
n/a Kazakhstan...........................n/a 52 China .................................0.17
n/a Nigeria .................................n/a 53 Bangladesh........................0.12
n/a United Arab Emirates ..........n/a n/a Hong Kong SAR...................n/a
n/a Vietnam ...............................n/a n/a Korea, Rep. ..........................n/a

SOURCE: Global Insight, World Industry Monitor, April 2009 Source: Dealogic Analytics, data retrieved April 2009; GDP data from
IMF, World Economic Outlook Database (April 2009)
Part 2.r2 10/14/09 3:32 PM Page 332

5.13
3: Data Tables | Non-banking financial services

Share of total number of securitization deals


Three-year average of the sum of asset-backed securities (ABS),
mortgage-backed securities (MBS), high-yield bonds, and highly
leveraged loans as a percentage of total deals | 2006–08 average

RANK COUNTRY/ECONOMY HARD DATA

1 United States...................60.29
2 Russian Federation............4.55
3 United Kingdom.................3.27
4 Argentina ...........................2.58
5 France................................1.98
6 Canada...............................1.95
7 Germany............................1.67
8 India...................................1.57
9 Ukraine ..............................1.56
10 Brazil..................................1.46
11 Japan .................................1.32
12 Spain..................................1.16
13 Mexico...............................1.11
14 Italy....................................0.99
15 Australia.............................0.98
16 Kazakhstan ........................0.90
17 Peru ...................................0.86
18 Netherlands .......................0.73
19 Indonesia ...........................0.72
20 Korea, Rep.........................0.38
20 Turkey ................................0.38
332 22 Chile ..................................0.35
23 China .................................0.34
24 Colombia ...........................0.32
25 Philippines .........................0.28
26 Belgium .............................0.28
27 Singapore ..........................0.24
28 Switzerland........................0.23
29 Malaysia ............................0.22
30 Ireland................................0.21
31 Sweden .............................0.21
32 South Africa.......................0.19
33 Vietnam .............................0.16
34 Pakistan .............................0.16
35 Denmark............................0.16
36 Norway ..............................0.15
37 Hong Kong SAR ................0.15
38 Thailand .............................0.13
39 Czech Republic..................0.13
40 United Arab Emirates ........0.12
41 Finland ...............................0.11
41 Slovak Republic .................0.11
43 Nigeria ...............................0.09
44 Austria ...............................0.08
45 Saudi Arabia.......................0.07
46 Hungary .............................0.07
47 Poland................................0.07
48 Egypt .................................0.06
49 Kuwait ...............................0.06
50 Bahrain ..............................0.05
50 Bangladesh........................0.05
52 Venezuela ..........................0.04
53 Panama..............................0.03
54 Jordan................................0.02
55 Israel..................................0.02

SOURCE: Dealogic Analytics, data retrieved April 2009


Part 2.r2 10/14/09 3:32 PM Page 333

Data Tables

Section VI
Financial markets

333
Part 2.r2 10/14/09 3:32 PM Page 334

3: Data Tables | Financial markets


6.01 6.02
Spot foreign exchange turnover Outright forward foreign exchange turnover
Percentage share of world total of spot foreign exchange turnover | Percentage share of world total of outright forward foreign exchange
April 2007 turnover | April 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United Kingdom...............26.31 1 United Kingdom...............29.22


2 United States...................24.42 2 United States...................26.73
3 Switzerland........................8.51 3 Japan .................................6.03
4 Japan .................................7.91 4 Singapore ..........................5.93
5 Singapore ..........................7.00 5 Germany............................5.32
6 Australia.............................3.47 6 Switzerland........................3.96
7 Hong Kong SAR ................2.97 7 Hong Kong SAR ................3.46
8 Russian Federation............2.67 8 Australia.............................3.41
9 France................................1.96 9 Denmark............................2.35
10 Germany............................1.92 10 France................................1.76
11 Korea, Rep.........................1.37 11 Belgium .............................1.71
12 Denmark............................1.18 12 India...................................1.48
13 Belgium .............................1.15 13 Netherlands .......................1.34
14 India...................................1.13 14 Korea, Rep.........................1.21
15 Canada...............................1.07 15 Canada...............................1.01
16 Italy....................................0.88 16 Italy....................................0.60
17 China .................................0.65 17 Norway ..............................0.57
18 Sweden .............................0.61 18 Spain..................................0.48
19 Spain..................................0.48 19 Austria ...............................0.45
20 Austria ...............................0.43 20 Sweden .............................0.37
21 Brazil..................................0.40 21 Chile ..................................0.35
334 22 Mexico...............................0.35 22 Russian Federation............0.26
23 Ireland................................0.31 23 South Africa.......................0.22
24 Israel..................................0.28 24 Czech Republic..................0.21
25 Norway ..............................0.27 25 Ireland................................0.21
26 South Africa.......................0.27 26 Bahrain ..............................0.17
27 Netherlands .......................0.24 27 Thailand .............................0.16
28 Saudi Arabia.......................0.21 28 Turkey ................................0.15
29 Poland................................0.19 29 Poland................................0.12
30 Hungary .............................0.17 30 Indonesia ...........................0.12
31 Chile ..................................0.16 31 Colombia ...........................0.11
32 Indonesia ...........................0.13 32 Mexico...............................0.10
33 Malaysia ............................0.13 33 Finland ...............................0.09
34 Bahrain ..............................0.12 34 Malaysia ............................0.08
35 Czech Republic..................0.11 35 Brazil..................................0.08
36 Thailand .............................0.11 36 Peru ...................................0.05
37 Colombia ...........................0.10 37 Philippines .........................0.05
38 Argentina ...........................0.09 38 Hungary .............................0.04
39 Philippines .........................0.08 39 Saudi Arabia.......................0.03
40 Turkey ................................0.06 40 China .................................0.01
41 Finland ...............................0.05 41 Argentina ...........................0.00
42 Peru ...................................0.05 42 Slovak Republic .................0.00
43 Slovak Republic .................0.02 n/a Bangladesh ..........................n/a
n/a Bangladesh ..........................n/a n/a Egypt ...................................n/a
n/a Egypt ...................................n/a n/a Israel ....................................n/a
n/a Jordan..................................n/a n/a Jordan..................................n/a
n/a Kazakhstan...........................n/a n/a Kazakhstan...........................n/a
n/a Kuwait..................................n/a n/a Kuwait..................................n/a
n/a Nigeria .................................n/a n/a Nigeria .................................n/a
n/a Pakistan ...............................n/a n/a Pakistan ...............................n/a
n/a Panama................................n/a n/a Panama................................n/a
n/a Ukraine ................................n/a n/a Ukraine ................................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a
n/a Venezuela ............................n/a n/a Venezuela ............................n/a
n/a Vietnam ...............................n/a n/a Vietnam ...............................n/a

SOURCE: Bank of International Settlements, Triennial Central Bank SOURCE: Bank of International Settlements, Triennial Central Bank
Survey, December 2007 Survey, December 2007
Part 2.r2 10/14/09 3:32 PM Page 335

6.03 6.04

3: Data Tables | Financial markets


Foreign exchange swap turnover Interest rate derivatives turnover: Forward rate
agreements
Percentage share of world total of foreign exchange swap turnover |
April 2007 Percentage share of world total of over-the-counter single currency
forward interest rate agreements turnover | April 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United Kingdom...............40.84 1 United Kingdom...............45.11


2 United States...................10.84 2 United States...................26.90
3 Hong Kong SAR ................5.54 3 Germany............................7.27
4 Switzerland........................5.29 4 France................................5.58
5 Singapore ..........................5.27 5 Sweden .............................2.58
6 Japan .................................5.08 6 Switzerland........................1.83
7 Australia.............................5.03 7 Canada...............................1.81
8 France................................3.96 8 Norway ..............................1.56
9 Denmark............................2.77 9 Denmark............................1.09
10 Germany............................2.34 10 Australia.............................1.05
11 Canada...............................1.90 11 Japan .................................1.00
12 Sweden .............................1.49 12 Italy....................................0.74
13 Belgium .............................1.19 13 South Africa.......................0.68
14 Norway ..............................1.18 14 Belgium .............................0.49
15 Italy....................................0.99 15 Singapore ..........................0.47
16 Russian Federation............0.68 16 Poland................................0.42
17 Netherlands .......................0.68 17 Netherlands .......................0.28
18 India...................................0.61 18 Hong Kong SAR ................0.21
19 Korea, Rep.........................0.49 19 Hungary .............................0.17
20 Austria ...............................0.47 20 Austria ...............................0.16
21 Mexico...............................0.46 21 Spain..................................0.16
22 South Africa.......................0.43 22 Czech Republic..................0.14
335
23 Spain..................................0.36 23 Korea, Rep.........................0.13
24 Finland ...............................0.32 24 Mexico...............................0.09
25 Poland................................0.27 25 Finland ...............................0.05
26 Ireland................................0.26 26 Ireland................................0.03
27 Israel..................................0.20 27 Thailand .............................0.00
28 Hungary .............................0.20 28 Malaysia ............................0.00
29 Thailand .............................0.19 29 Turkey ................................0.00
30 Slovak Republic .................0.15 30 Colombia ...........................0.00
31 Czech Republic..................0.12 31 Indonesia ...........................0.00
32 Turkey ................................0.09 31 Philippines .........................0.00
33 Malaysia ............................0.06 31 Saudi Arabia.......................0.00
34 Saudi Arabia.......................0.06 34 Chile ..................................0.00
35 Philippines .........................0.05 n/a Argentina .............................n/a
36 China .................................0.04 n/a Bahrain.................................n/a
37 Bahrain ..............................0.03 n/a Bangladesh ..........................n/a
38 Indonesia ...........................0.03 n/a Brazil ....................................n/a
39 Chile ..................................0.02 n/a China....................................n/a
40 Colombia ...........................0.00 n/a Egypt ...................................n/a
41 Brazil..................................0.00 n/a India .....................................n/a
n/a Argentina .............................n/a n/a Israel ....................................n/a
n/a Bangladesh ..........................n/a n/a Jordan..................................n/a
n/a Egypt ...................................n/a n/a Kazakhstan...........................n/a
n/a Jordan..................................n/a n/a Kuwait..................................n/a
n/a Kazakhstan...........................n/a n/a Nigeria .................................n/a
n/a Kuwait..................................n/a n/a Pakistan ...............................n/a
n/a Nigeria .................................n/a n/a Panama................................n/a
n/a Pakistan ...............................n/a n/a Peru .....................................n/a
n/a Panama................................n/a n/a Russian Federation ..............n/a
n/a Peru .....................................n/a n/a Slovak Republic ...................n/a
n/a Ukraine ................................n/a n/a Ukraine ................................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a
n/a Venezuela ............................n/a n/a Venezuela ............................n/a
n/a Vietnam ...............................n/a n/a Vietnam ...............................n/a

SOURCE: Bank of International Settlements, Triennial Central Bank SOURCE: Bank of International Settlements, Triennial Central Bank
Survey, December 2007 Survey, December 2007
Part 2.r2 10/14/09 3:32 PM Page 336

3: Data Tables | Financial markets


6.05 6.06
Interest rate derivatives turnover: Swaps Interest rate derivatives turnover: Options
Percentage share of world total of over-the-counter single currency Percentage share of world total of over-the-counter interest rate
interest rate swaps turnover | April 2007 options turnover | April 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United Kingdom...............45.84 1 United States...................42.38


2 United States...................20.52 2 United Kingdom...............34.08
3 France................................8.97 3 Japan .................................8.79
4 Germany............................4.09 4 France................................6.03
5 Switzerland........................3.51 5 Belgium .............................1.52
6 Singapore ..........................3.50 6 Canada...............................1.33
7 Japan .................................3.17 7 Italy....................................1.00
8 Netherlands .......................1.64 8 Germany............................0.73
9 Italy....................................1.59 9 Singapore ..........................0.57
10 Australia.............................1.15 10 Sweden .............................0.55
11 Hong Kong SAR ................1.03 11 Denmark............................0.53
12 Belgium .............................1.02 12 Australia.............................0.49
13 Spain..................................1.00 13 Finland ...............................0.33
14 Canada...............................0.70 14 South Africa.......................0.31
15 Ireland................................0.45 15 Spain..................................0.25
16 Denmark............................0.31 16 Netherlands .......................0.22
17 Korea, Rep.........................0.29 17 Hong Kong SAR ................0.21
18 Austria ...............................0.26 18 Korea, Rep.........................0.16
19 India...................................0.22 19 Thailand .............................0.15
20 Mexico...............................0.15 20 Austria ...............................0.09
21 Sweden .............................0.13 21 Mexico...............................0.09
336 22 Finland ...............................0.13 22 Saudi Arabia.......................0.06
23 South Africa.......................0.09 23 Ireland................................0.06
24 Poland................................0.08 24 Turkey ................................0.03
25 Norway ..............................0.08 25 Norway ..............................0.03
26 Thailand .............................0.02 26 Switzerland........................0.02
27 Hungary .............................0.02 27 Poland................................0.00
28 Czech Republic..................0.01 28 Czech Republic..................0.00
29 Bahrain ..............................0.01 29 Indonesia ...........................0.00
30 Brazil..................................0.01 29 Malaysia ............................0.00
31 Malaysia ............................0.01 31 Brazil..................................0.00
32 Saudi Arabia.......................0.01 n/a Argentina .............................n/a
33 Indonesia ...........................0.00 n/a Bahrain.................................n/a
34 Turkey ................................0.00 n/a Bangladesh ..........................n/a
35 Peru ...................................0.00 n/a Chile.....................................n/a
36 Chile ..................................0.00 n/a China....................................n/a
37 Philippines .........................0.00 n/a Colombia..............................n/a
38 Colombia ...........................0.00 n/a Egypt ...................................n/a
n/a Argentina .............................n/a n/a Hungary ...............................n/a
n/a Bangladesh ..........................n/a n/a India .....................................n/a
n/a China....................................n/a n/a Israel ....................................n/a
n/a Egypt ...................................n/a n/a Jordan..................................n/a
n/a Israel ....................................n/a n/a Kazakhstan...........................n/a
n/a Jordan..................................n/a n/a Kuwait..................................n/a
n/a Kazakhstan...........................n/a n/a Nigeria .................................n/a
n/a Kuwait..................................n/a n/a Pakistan ...............................n/a
n/a Nigeria .................................n/a n/a Panama................................n/a
n/a Pakistan ...............................n/a n/a Peru .....................................n/a
n/a Panama................................n/a n/a Philippines ...........................n/a
n/a Russian Federation ..............n/a n/a Russian Federation ..............n/a
n/a Slovak Republic ...................n/a n/a Slovak Republic ...................n/a
n/a Ukraine ................................n/a n/a Ukraine ................................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a
n/a Venezuela ............................n/a n/a Venezuela ............................n/a
n/a Vietnam ...............................n/a n/a Vietnam ...............................n/a

SOURCE: Bank of International Settlements, Triennial Central Bank SOURCE: Bank of International Settlements, Triennial Central Bank
Survey, December 2007 Survey, December 2007
Part 2.r2 10/14/09 3:32 PM Page 337

6.07 6.08

3: Data Tables | Financial markets


Foreign exchange derivatives turnover: Foreign exchange derivatives turnover: Options
Currency swaps
Percentage share of world total of over-the-counter foreign
Percentage share of world total of over-the-counter foreign exchange options turnover | April 2007
exchange currency swaps turnover | April 2007

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United Kingdom...............46.65 1 United Kingdom...............42.39


2 United States...................16.98 2 United States...................29.95
3 Australia.............................5.55 3 Switzerland........................4.73
4 Canada...............................4.20 4 Japan .................................4.29
5 France................................3.64 5 Singapore ..........................4.01
6 Korea, Rep.........................3.15 6 Hong Kong SAR ................2.28
7 Singapore ..........................3.05 7 France................................2.21
8 Japan .................................2.71 8 Australia.............................1.85
9 Denmark............................1.92 9 India...................................1.52
10 Hong Kong SAR ................1.64 10 Canada...............................1.04
11 Turkey ................................1.46 11 Germany............................0.99
12 India...................................1.25 12 Italy....................................0.74
13 Netherlands .......................1.03 13 Sweden .............................0.69
14 Ireland................................1.03 14 Belgium .............................0.60
15 Belgium .............................0.94 15 Denmark............................0.55
16 Brazil..................................0.70 16 Austria ...............................0.31
17 Saudi Arabia.......................0.69 17 Spain..................................0.29
18 Austria ...............................0.49 18 Netherlands .......................0.26
19 Germany............................0.48 19 Korea, Rep.........................0.25
20 Spain..................................0.34 20 Ireland................................0.18
21 Italy....................................0.33 21 Israel..................................0.16
22 Indonesia ...........................0.28 22 Poland................................0.14
337
23 Thailand .............................0.28 23 Turkey ................................0.07
24 Switzerland........................0.20 24 Bahrain ..............................0.06
25 Poland................................0.18 25 Hungary .............................0.06
26 Norway ..............................0.14 26 Mexico...............................0.05
27 Bahrain ..............................0.13 27 Finland ...............................0.05
28 Finland ...............................0.12 28 Indonesia ...........................0.05
29 South Africa.......................0.10 29 Norway ..............................0.04
30 Malaysia ............................0.10 30 Saudi Arabia.......................0.04
31 Chile ..................................0.07 31 South Africa.......................0.03
32 Sweden .............................0.05 32 Czech Republic..................0.03
33 Philippines .........................0.04 33 Slovak Republic .................0.02
34 Mexico...............................0.03 34 Brazil..................................0.02
35 Colombia ...........................0.02 35 Thailand .............................0.01
35 Czech Republic..................0.02 36 Malaysia ............................0.01
37 Hungary .............................0.00 37 Russian Federation............0.01
n/a Argentina .............................n/a 38 Colombia ...........................0.00
n/a Bangladesh ..........................n/a 39 Philippines .........................0.00
n/a China....................................n/a 40 Chile ..................................0.00
n/a Egypt ...................................n/a n/a Argentina .............................n/a
n/a Israel ....................................n/a n/a Bangladesh ..........................n/a
n/a Jordan..................................n/a n/a China....................................n/a
n/a Kazakhstan...........................n/a n/a Egypt ...................................n/a
n/a Kuwait..................................n/a n/a Jordan..................................n/a
n/a Nigeria .................................n/a n/a Kazakhstan...........................n/a
n/a Pakistan ...............................n/a n/a Kuwait..................................n/a
n/a Panama................................n/a n/a Nigeria .................................n/a
n/a Peru .....................................n/a n/a Pakistan ...............................n/a
n/a Russian Federation ..............n/a n/a Panama................................n/a
n/a Slovak Republic ...................n/a n/a Peru .....................................n/a
n/a Ukraine ................................n/a n/a Ukraine ................................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a
n/a Venezuela ............................n/a n/a Venezuela ............................n/a
n/a Vietnam ...............................n/a n/a Vietnam ...............................n/a

SOURCE: Bank of International Settlements, Triennial Central Bank SOURCE: Bank of International Settlements, Triennial Central Bank
Survey, December 2007 Survey, December 2007
Part 2.r2 10/14/09 3:32 PM Page 338

3: Data Tables | Financial markets


6.09 6.10
Stock market turnover ratio Stock market capitalization to GDP
Ratio of the value of total shares traded to average real market capi- This indicator is the value of listed shares as a percentage of GDP |
talization | 2007 2007 or most recent year available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 United Kingdom.............267.70 1 Hong Kong SAR ............500.53


2 Italy................................218.73 2 Switzerland....................301.54
3 United States.................214.78 3 South Africa...................280.78
4 Netherlands ...................206.50 4 Jordan............................225.16
5 Korea, Rep.....................200.51 5 Singapore ......................196.29
6 Spain..............................188.72 6 Malaysia ........................155.99
7 China .............................180.18 7 Canada...........................147.36
8 Germany........................178.68 8 Australia.........................146.63
9 Pakistan .........................172.84 9 United States.................143.65
10 Finland ...........................170.39 10 United Kingdom.............141.38
11 Sweden .........................162.21 11 Sweden .........................134.39
12 Saudi Arabia...................160.88 12 China .............................131.84
13 Norway ..........................146.96 13 Finland ...........................129.61
14 Switzerland....................141.89 14 Kuwait2 ..........................128.34
15 Japan .............................140.34 15 Israel..............................127.22
16 Turkey ............................134.35 16 United Arab Emirates1 ...122.99
17 France............................130.61 17 Bahrain1 .........................120.04
18 Singapore ......................121.32 18 Chile ..............................118.92
19 Australia.........................109.79 19 Netherlands ...................115.80
20 Hungary .........................105.32 20 India...............................112.72
21 Denmark..........................94.60 21 Saudi Arabia...................110.71
338 22 Bangladesh......................92.09 22 Spain..............................109.82
23 Hong Kong SAR ..............88.62 23 Japan .............................105.78
24 Ireland..............................88.07 24 France............................102.16
25 Vietnam ...........................87.80 25 Korea, Rep.....................101.52
26 Canada.............................84.18 26 Russian Federation..........99.62
27 India.................................83.91 27 Egypt ...............................91.24
28 United Arab Emirates ......82.50 28 Belgium ...........................87.96
29 Kuwait .............................75.82 29 Norway ............................84.07
30 Czech Republic................68.45 30 Denmark..........................83.09
31 Belgium ...........................64.81 31 Brazil................................79.35
32 Indonesia .........................64.12 32 Peru .................................76.11
33 Thailand ...........................63.88 33 Thailand ...........................68.91
34 Russian Federation..........58.67 34 Ireland..............................60.84
35 Austria .............................57.45 35 Philippines .......................59.78
36 Brazil................................56.10 36 Germany..........................57.09
37 Israel................................55.11 37 Austria .............................56.05
38 South Africa.....................54.63 38 Ukraine ............................55.00
39 Malaysia ..........................53.21 39 Italy..................................50.19
40 Jordan..............................48.89 40 Colombia .........................46.10
41 Poland..............................47.23 41 Poland..............................42.60
42 Egypt ...............................45.42 42 Mexico.............................42.04
43 Philippines .......................33.95 43 Kazakhstan ......................41.31
44 Mexico.............................30.78 44 Indonesia .........................40.66
45 Nigeria .............................28.17 45 Pakistan ...........................40.47
46 Chile ................................22.82 46 Czech Republic................36.44
47 Kazakhstan ......................20.75 47 Nigeria .............................35.94
48 Colombia .........................13.04 48 Turkey ..............................34.26
49 Venezuela ..........................9.98 49 Hungary ...........................32.64
50 Argentina ...........................9.85 50 Argentina .........................31.95
51 Peru ...................................8.75 51 Panama............................30.45
52 Bahrain ..............................6.57 52 Vietnam ...........................20.12
53 Ukraine ..............................2.61 53 Slovak Republic .................8.42
54 Panama..............................1.96 54 Bangladesh........................7.70
55 Slovak Republic .................0.48 55 Venezuela2 .........................3.67

SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000. SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000.
“A New Database on Financial Development and Structure.” World “A New Database on Financial Development and Structure.” World
Bank Economic Review 14: 597–605. Updated November 2008 Bank Economic Review 14: 597–605. Updated November 2008
1 2
2005 2006
Part 2.r2 10/14/09 3:32 PM Page 339

6.11 6.12

3: Data Tables | Financial markets


Stock market value traded to GDP Number of listed companies per 10,000 people
Total value of shares traded on stock market exchanges as a Number of publicly listed companies per 10,000 people | 2007
percentage of GDP | 2007 or most recent year available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Hong Kong SAR ............443.57 1 Hong Kong SAR ................1.49


2 Switzerland....................427.85 2 Canada...............................1.18
3 United Kingdom.............378.49 3 Singapore ..........................1.03
4 United States.................308.54 4 Israel..................................0.91
5 Netherlands ...................239.12 5 Australia.............................0.91
6 Singapore ......................238.14 6 Spain..................................0.78
7 China .............................237.55 7 Kuwait ...............................0.68
8 Finland ...........................220.85 8 Bahrain ..............................0.57
9 Sweden .........................217.99 9 Jordan................................0.43
10 Spain..............................207.25 10 United Kingdom.................0.42
11 Korea, Rep.....................203.55 11 Malaysia ............................0.39
12 Saudi Arabia...................178.12 12 Korea, Rep.........................0.36
13 Australia.........................160.98 13 Switzerland........................0.34
14 South Africa...................153.38 14 Japan .................................0.30
15 Japan .............................148.45 15 Sweden .............................0.30
16 France............................133.43 16 Slovak Republic .................0.28
17 Canada...........................124.06 17 United Arab Emirates ........0.21
18 Norway ..........................123.55 18 United States.....................0.17
19 United Arab Emirates1 ...110.35 19 Chile ..................................0.14
20 Jordan............................110.08 20 France................................0.11
21 Italy................................109.77 21 South Africa.......................0.09
22 Germany........................102.00 22 Poland................................0.09
339
23 India.................................94.58 23 Germany............................0.08
24 Malaysia ..........................83.01 24 Thailand .............................0.07
25 Denmark..........................78.60 25 Peru ...................................0.07
26 Israel................................70.11 26 Panama..............................0.07
27 Pakistan ...........................69.95 27 Ukraine ..............................0.06
28 Russian Federation..........58.45 28 Kazakhstan ........................0.06
29 Belgium ...........................57.00 29 Egypt .................................0.06
30 Kuwait2 ............................54.74 30 Italy....................................0.05
31 Ireland..............................53.58 31 Saudi Arabia.......................0.05
32 Turkey ..............................46.02 32 India...................................0.04
33 Brazil................................44.51 33 Turkey ................................0.04
34 Thailand ...........................44.02 34 Hungary .............................0.04
35 Egypt ...............................41.44 35 Pakistan .............................0.04
36 Hungary ...........................34.37 36 Czech Republic..................0.03
37 Austria .............................32.21 37 Philippines .........................0.03
38 Chile ................................27.13 38 Argentina ...........................0.03
39 Indonesia .........................26.07 39 Russian Federation............0.02
40 Czech Republic................24.94 40 Brazil..................................0.02
41 Philippines .......................20.30 41 Venezuela ..........................0.02
42 Poland..............................20.12 42 Colombia ...........................0.02
43 Vietnam ...........................17.67 43 Bangladesh........................0.02
44 Mexico.............................12.94 44 Indonesia ...........................0.02
45 Nigeria .............................10.12 45 Nigeria ...............................0.01
46 Kazakhstan ........................8.57 46 Vietnam .............................0.01
47 Bangladesh........................7.09 47 Mexico...............................0.01
48 Peru ...................................6.66 48 China .................................0.01
49 Colombia ...........................6.01 n/a Austria .................................n/a
50 Bahrain1 .............................5.51 n/a Belgium ...............................n/a
51 Argentina ...........................3.15 n/a Denmark ..............................n/a
52 Ukraine ..............................1.44 n/a Finland .................................n/a
53 Panama..............................0.60 n/a Ireland..................................n/a
54 Venezuela2 .........................0.37 n/a Netherlands .........................n/a
55 Slovak Republic .................0.04 n/a Norway ................................n/a

SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000. SOURCE: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000.
“A New Database on Financial Development and Structure.” World “A New Database on Financial Development and Structure.” World
Bank Economic Review 14 597–605. Updated November 2008 Bank Economic Review 14: 597–605. Updated May 2009
1 2
2005 2006
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3: Data Tables | Financial markets


6.13 6.14
Private domestic bond market capitalization to Public domestic bond market capitalization to
GDP GDP
Domestic debt securities issued by financial institutions and corpo- Domestic debt securities issued by government as a share of GDP |
rations as a share of GDP | 2008 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Denmark........................202.67 1 Japan .............................198.55


2 Malaysia ..........................98.04 2 France..............................82.60
3 Italy..................................85.71 3 United States...................66.08
4 Australia...........................81.33 4 Germany..........................60.39
5 Netherlands .....................80.16 5 Singapore ........................55.32
6 Korea, Rep.......................73.15 6 India.................................54.95
7 Sweden ...........................70.14 7 Czech Republic................53.24
8 Switzerland......................44.76 8 Netherlands .....................52.25
9 Finland .............................38.36 9 Canada.............................51.13
10 Ireland..............................35.88 10 Hungary ...........................50.30
11 Norway ............................31.01 11 China ...............................49.01
12 Canada.............................29.96 12 Finland .............................48.75
13 China ...............................26.58 13 Thailand ...........................48.41
14 Singapore ........................23.03 14 Korea, Rep.......................47.69
15 Hong Kong SAR ..............22.87 15 United Kingdom...............46.66
16 United Kingdom...............22.15 16 Venezuela ........................46.07
17 Brazil................................20.03 17 Brazil................................44.75
18 South Africa.....................19.17 18 Philippines .......................44.10
19 Chile ................................18.73 19 Austria .............................42.47
20 Mexico.............................15.37 20 Poland..............................39.99
21 Czech Republic................13.11 21 Malaysia ..........................39.65
22 Hungary .............................7.93 22 Spain................................36.53
340 23 Slovak Republic .................6.16 23 Sweden ...........................35.93
24 Peru ...................................4.21 24 Slovak Republic ...............33.62
25 Argentina ...........................4.10 25 Pakistan ...........................29.13
26 India...................................3.99 26 Ireland..............................28.50
27 Indonesia ...........................2.23 27 Denmark..........................24.61
28 Philippines .........................1.64 28 Colombia .........................22.79
29 Venezuela ..........................1.02 29 Argentina .........................19.68
30 Colombia ...........................0.36 30 Mexico.............................19.56
31 Turkey ................................0.07 31 Norway ............................18.72
n/a Austria .................................n/a 32 Peru .................................17.74
n/a Bahrain.................................n/a 33 Indonesia .........................16.46
n/a Bangladesh ..........................n/a 34 Australia...........................14.83
n/a Belgium ...............................n/a 35 Hong Kong SAR ..............11.96
n/a Egypt ...................................n/a 36 Chile ................................10.51
n/a France..................................n/a 37 Russian Federation............3.03
n/a Germany ..............................n/a n/a Bahrain.................................n/a
n/a Israel ....................................n/a n/a Bangladesh ..........................n/a
n/a Japan ...................................n/a n/a Belgium ...............................n/a
n/a Jordan..................................n/a n/a Egypt ...................................n/a
n/a Kazakhstan...........................n/a n/a Israel ....................................n/a
n/a Kuwait..................................n/a n/a Italy ......................................n/a
n/a Nigeria .................................n/a n/a Jordan..................................n/a
n/a Pakistan ...............................n/a n/a Kazakhstan...........................n/a
n/a Panama................................n/a n/a Kuwait..................................n/a
n/a Poland..................................n/a n/a Nigeria .................................n/a
n/a Russian Federation ..............n/a n/a Panama................................n/a
n/a Saudi Arabia.........................n/a n/a Saudi Arabia.........................n/a
n/a Spain....................................n/a n/a South Africa .........................n/a
n/a Thailand ...............................n/a n/a Switzerland ..........................n/a
n/a Ukraine ................................n/a n/a Turkey ..................................n/a
n/a United Arab Emirates ..........n/a n/a Ukraine ................................n/a
n/a United States.......................n/a n/a United Arab Emirates ..........n/a
n/a Vietnam ...............................n/a n/a Vietnam ...............................n/a

SOURCE: Bank of International Settlements, Quarterly Review, SOURCE: Bank of International Settlements, Quarterly Review
September 2009, http://www.bis.org/statistics/secstats.htm; GDP September 2009, http://www.bis.org/statistics/secstats.htm; GDP
and inflation data from IMF, World Economic Outlook Database and inflation data from IMF, World Economic Outlook Database
(April 2009) (April 2009)
Part 2.r2 10/14/09 3:32 PM Page 341

6.15 6.16

3: Data Tables | Financial markets


Private international bonds to GDP Public international bonds to GDP
International debt securities issued by financial institutions and International debt securities issued by government as a share of GDP
corporations as a share of GDP | 2008 | 2008

RANK COUNTRY/ECONOMY HARD DATA [D3H]RANK COUNTRY/ECONOMY HARD DATA

1 Ireland............................279.13 1 Panama............................46.89
2 Spain..............................171.71 2 Austria .............................39.45
3 Netherlands ...................151.09 3 Belgium ...........................36.80
4 United Kingdom.............131.63 4 Finland .............................32.70
5 Switzerland....................130.16 5 Ireland..............................27.89
6 Belgium .........................125.16 6 Philippines .......................24.09
7 United States.................122.67 7 Hungary ...........................17.86
8 Germany........................118.06 8 Argentina .........................17.27
9 France............................102.11 9 Italy..................................15.01
10 Austria .............................93.20 10 Germany..........................12.68
11 Sweden ...........................77.95 11 Spain................................11.51
12 Australia...........................61.31 12 Poland................................9.21
13 Italy..................................60.48 13 Peru ...................................8.61
14 Norway ............................54.02 14 Venezuela ..........................8.13
15 Hong Kong SAR ..............50.39 15 Colombia ...........................7.16
16 Denmark..........................47.26 16 Slovak Republic .................7.03
17 Singapore ........................40.65 17 Turkey ................................6.25
18 Finland .............................32.53 18 Canada...............................6.07
19 Canada.............................27.38 19 Sweden .............................6.01
20 Thailand ...........................25.69 20 Denmark............................5.53
21 Malaysia ..........................24.21 21 Israel..................................4.91
22 Japan ...............................21.33 22 Mexico...............................4.04
23 Korea, Rep.......................13.30 23 South Africa.......................3.64 341
24 South Africa.....................12.83 24 Brazil..................................3.64
25 Hungary ...........................10.91 25 Malaysia ............................3.09
26 Philippines .......................10.03 26 France................................2.81
27 Panama..............................7.23 27 Indonesia ...........................2.46
28 Russian Federation............7.17 28 Netherlands .......................2.42
29 Israel..................................6.19 29 Thailand .............................2.15
30 Chile ..................................5.48 30 Russian Federation............1.87
31 Mexico...............................5.12 31 Chile ..................................1.81
32 Brazil..................................4.65 32 Australia.............................1.71
33 India...................................3.84 33 Hong Kong SAR ................1.26
34 Venezuela ..........................3.49 34 Korea, Rep.........................0.75
35 Indonesia ...........................3.43 35 United Kingdom.................0.54
36 Peru ...................................2.39 36 Switzerland........................0.37
37 Argentina ...........................2.37 37 Singapore ..........................0.24
38 Turkey ................................1.80 38 China .................................0.17
39 Colombia ...........................1.51 39 Japan .................................0.15
40 China .................................1.40 40 United States.....................0.08
41 Slovak Republic .................0.84 n/a Bahrain.................................n/a
42 Poland................................0.59 n/a Bangladesh ..........................n/a
n/a Bahrain.................................n/a n/a Czech Republic ....................n/a
n/a Bangladesh ..........................n/a n/a Egypt ...................................n/a
n/a Czech Republic ....................n/a n/a India .....................................n/a
n/a Egypt ...................................n/a n/a Jordan..................................n/a
n/a Jordan..................................n/a n/a Kazakhstan...........................n/a
n/a Kazakhstan...........................n/a n/a Kuwait..................................n/a
n/a Kuwait..................................n/a n/a Nigeria .................................n/a
n/a Nigeria .................................n/a n/a Norway ................................n/a
n/a Pakistan ...............................n/a n/a Pakistan ...............................n/a
n/a Saudi Arabia.........................n/a n/a Saudi Arabia.........................n/a
n/a Ukraine ................................n/a n/a Ukraine ................................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a
n/a Vietnam ...............................n/a n/a Vietnam ...............................n/a

SOURCE: Bank of International Settlements, Quarterly Review SOURCE: Bank of International Settlements, Quarterly Review
March 2009; GDP data from IMF, World Economic Outlook Database March 2009; GDP data from IMF, World Economic Outlook Database
(April 2009) (April 2009)
Part 2.r2 10/14/09 3:32 PM Page 342
Part 2.r2 10/14/09 3:32 PM Page 343

Data Tables

Section VII
Financial access

343
Part 2.r2 10/14/09 3:32 PM Page 344

3: Data Tables | Financial access


7.01 7.02
Financial market sophistication Venture capital availability
The level of sophistication of financial markets in your country is In your country, how difficult is it for entrepreneurs with innovative
(1 = lower than international norms; 7 = higher than international but risky projects to find venture capital? (1 = impossible; 7 = very
norms) easy)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 5.08 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 3.26 7

1 Switzerland .....................6.62 1 Hong Kong SAR ..............4.61


2 Canada ............................6.45 2 Norway............................4.42
3 Sweden...........................6.44 3 Singapore ........................4.33
4 Hong Kong SAR ..............6.42 4 Sweden...........................4.29
5 South Africa ....................6.32 5 Finland.............................4.27
6 United Kingdom ..............6.28 6 United States ..................4.17
7 Singapore ........................6.24 7 Netherlands.....................4.10
8 Netherlands.....................6.24 8 Australia ..........................3.97
9 France .............................6.22 9 Bahrain ............................3.89
10 United States ..................6.22 10 Malaysia ..........................3.88
11 Australia ..........................6.20 11 United Arab Emirates......3.88
12 Brazil ...............................6.05 12 Israel ...............................3.86
13 Finland.............................6.01 13 Indonesia.........................3.84
14 Denmark .........................6.00 14 Panama ...........................3.80
15 Norway............................6.00 15 Denmark .........................3.78
16 Germany .........................5.98 16 Canada ............................3.77
17 Austria.............................5.95 17 India ................................3.62
18 Belgium...........................5.93 18 Switzerland .....................3.59
19 Chile ................................5.86 19 United Kingdom ..............3.51
20 Israel ...............................5.69 20 Saudi Arabia ....................3.51
21 Spain ...............................5.64 21 Belgium...........................3.48
344 22 Panama ...........................5.64 22 Chile ................................3.47
23 Bahrain ............................5.52 23 France .............................3.46
24 Ireland .............................5.47 24 Kuwait .............................3.39
25 United Arab Emirates......5.43 25 South Africa ....................3.37
26 Malaysia ..........................5.38 26 Egypt...............................3.37
27 India ................................5.31 27 Austria.............................3.25
28 Thailand...........................5.14 28 China ...............................3.22
29 Turkey..............................4.98 29 Ireland .............................3.21
30 Slovak Republic...............4.97 30 Slovak Republic...............3.19
31 Japan...............................4.88 31 Poland .............................3.13
32 Czech Republic ...............4.80 32 Jordan .............................3.10
33 Jordan .............................4.78 33 Spain ...............................3.09
34 Peru.................................4.66 34 Thailand...........................3.05
35 Saudi Arabia ....................4.61 35 Vietnam ...........................3.04
36 Mexico ............................4.55 36 Peru.................................3.02
37 Kuwait .............................4.52 37 Germany .........................3.01
38 Indonesia.........................4.50 38 Japan...............................2.97
39 Korea, Rep. .....................4.49 39 Czech Republic ...............2.92
40 Hungary...........................4.34 40 Kazakhstan ......................2.86
41 Colombia .........................4.32 41 Korea, Rep. .....................2.78
42 Italy .................................4.25 42 Pakistan...........................2.76
43 Poland .............................4.23 43 Brazil ...............................2.73
44 Philippines.......................4.20 44 Colombia .........................2.63
45 Nigeria.............................4.13 45 Russian Federation .........2.52
46 China ...............................3.98 46 Philippines.......................2.50
47 Pakistan...........................3.97 47 Ukraine............................2.48
48 Egypt...............................3.78 48 Hungary...........................2.41
49 Venezuela........................3.70 49 Nigeria.............................2.41
50 Russian Federation .........3.59 50 Mexico ............................2.39
51 Kazakhstan ......................3.50 51 Italy .................................2.28
52 Argentina.........................3.45 52 Turkey..............................2.27
53 Vietnam ...........................3.41 53 Venezuela........................2.23
54 Ukraine............................3.37 54 Argentina.........................2.13
55 Bangladesh .....................2.88 55 Bangladesh .....................2.02

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 345

7.03 7.04

3: Data Tables | Financial access


Ease of access to credit Financing through local equity market
During the past year, obtaining credit for your company has become Raising money by issuing shares on the stock market in your country
(1 = more difficult; 7 = easier) is (1 = impossible; 7 = very easy)

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 3.54 7 RANK COUNTRY/ECONOMY SCORE 1 MEAN: 4.18 7

1 Panama ...........................5.16 1 Hong Kong SAR ................5.31


2 Brazil ...............................4.98 2 India...................................5.04
3 Bahrain ............................4.62 3 South Africa.......................4.93
4 Egypt...............................4.60 4 Jordan................................4.87
5 Peru.................................4.59 5 France................................4.79
6 Slovak Republic...............4.58 6 Singapore ..........................4.76
7 Czech Republic ...............4.45 7 United Arab Emirates ........4.75
8 Indonesia.........................4.41 8 Vietnam .............................4.75
9 Malaysia ..........................4.25 9 Indonesia ...........................4.71
10 Saudi Arabia ....................4.23 10 Chile ..................................4.71
11 Jordan .............................4.16 11 Malaysia ............................4.70
12 United Arab Emirates......4.14 2 Canada...............................4.69
13 Vietnam ...........................4.09 13 Sweden .............................4.68
14 India ................................4.04 14 Saudi Arabia.......................4.64
15 Philippines.......................4.02 15 Egypt .................................4.63
16 Korea, Rep. .....................4.02 16 Nigeria ...............................4.63
17 China ...............................3.97 17 Switzerland........................4.62
18 Thailand...........................3.93 18 Australia.............................4.60
19 Chile ................................3.93 19 Norway ..............................4.58
20 Colombia .........................3.88 20 Japan .................................4.55
21 Singapore ........................3.79 21 Panama..............................4.52
22 Finland.............................3.73 22 Thailand .............................4.50
345
23 Bangladesh .....................3.70 23 Bangladesh........................4.47
24 Nigeria.............................3.63 24 United States.....................4.38
25 Japan...............................3.61 25 Finland ...............................4.38
26 Turkey..............................3.57 26 Czech Republic..................4.37
27 Poland .............................3.52 27 Korea, Rep.........................4.34
28 Pakistan...........................3.51 28 Israel..................................4.30
29 Kuwait .............................3.49 29 Austria ...............................4.29
30 Switzerland .....................3.45 30 Brazil..................................4.24
31 Hong Kong SAR ..............3.45 31 Pakistan .............................4.22
32 Mexico ............................3.44 32 Netherlands .......................4.22
33 Israel ...............................3.43 33 United Kingdom.................4.19
34 Venezuela........................3.41 34 Belgium .............................4.17
35 Italy .................................3.25 35 Philippines .........................4.10
36 Russian Federation .........3.19 36 Kuwait ...............................4.09
37 South Africa ....................3.01 37 Denmark............................4.09
38 France .............................2.97 38 Germany............................4.02
39 Norway............................2.96 39 Poland................................4.00
40 Hungary...........................2.95 40 Bahrain ..............................3.90
41 Ukraine............................2.90 41 Turkey ................................3.89
42 Canada ............................2.89 42 China .................................3.89
43 Denmark .........................2.89 43 Peru ...................................3.87
44 Sweden...........................2.88 44 Spain..................................3.80
45 Belgium...........................2.87 45 Italy....................................3.69
46 Kazakhstan ......................2.87 46 Colombia ...........................3.64
47 Australia ..........................2.86 47 Ireland................................3.43
48 Austria.............................2.83 48 Mexico...............................3.31
49 United States ..................2.75 49 Slovak Republic .................3.15
50 Netherlands.....................2.71 50 Russian Federation............3.08
51 Argentina.........................2.69 51 Kazakhstan ........................3.07
52 Germany .........................2.57 52 Hungary .............................3.02
53 Spain ...............................2.49 53 Ukraine ..............................2.80
54 Ireland .............................2.26 54 Venezuela ..........................2.71
55 United Kingdom ..............1.94 55 Argentina ...........................2.66

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009
Part 2.r2 10/14/09 3:32 PM Page 346

3: Data Tables | Financial access


7.05 7.06
Ease of access to loans Foreign direct investment to GDP
How easy is it to obtain a bank loan in your country with only a good Comprised of equity capital, reinvested earnings, and intra-company
business plan and no collateral? (1 = impossible; 7 = very easy) loans | 2007

RANK COUNTRY/ECONOMY SCORE 1 MEAN: 3.44 7 RANK COUNTRY/ECONOMY HARD DATA

1 Finland.............................4.73 1 Hong Kong SAR ..............28.93


2 Bahrain ............................4.73 2 Singapore ........................14.46
3 Singapore ........................4.62 3 Netherlands .....................12.79
4 Norway............................4.60 4 Ireland..............................11.71
5 United Arab Emirates......4.49 5 Jordan..............................11.10
6 Hong Kong SAR ..............4.45 6 Kazakhstan ........................9.78
7 Australia ..........................4.40 7 Bahrain ..............................9.52
8 Sweden...........................4.37 8 Vietnam .............................9.47
9 Denmark .........................4.34 9 Switzerland........................9.46
10 Malaysia ..........................4.34 10 Panama..............................9.37
11 Panama ...........................4.28 11 Egypt .................................8.88
12 Netherlands.....................4.23 12 Belgium .............................8.85
13 Saudi Arabia ....................4.18 13 Chile ..................................8.82
14 Indonesia.........................3.99 14 Austria ...............................8.26
15 Slovak Republic...............3.97 15 United Kingdom.................7.99
16 Belgium...........................3.95 16 Canada...............................7.57
17 Canada ............................3.92 17 Nigeria ...............................7.44
18 Chile ................................3.87 18 United Arab Emirates ........7.36
19 Kuwait .............................3.78 19 Ukraine ..............................6.91
20 South Africa ....................3.73 20 Saudi Arabia.......................6.37
21 Switzerland .....................3.68 21 Israel..................................6.09
346 22 United States ..................3.66 22 France................................6.09
23 India ................................3.60 23 Czech Republic..................5.24
24 Thailand...........................3.59 24 Peru ...................................4.97
25 Czech Republic ...............3.54 25 Sweden .............................4.62
26 Austria.............................3.51 26 Malaysia ............................4.50
27 France .............................3.47 27 Slovak Republic .................4.34
28 Peru.................................3.40 28 Colombia ...........................4.34
29 Egypt...............................3.35 29 Poland................................4.14
30 Jordan .............................3.35 30 Russian Federation............4.05
31 United Kingdom ..............3.25 31 Hungary .............................4.02
32 Pakistan...........................3.18 32 Thailand .............................3.89
33 Japan...............................3.18 33 Spain..................................3.71
34 Israel ...............................3.13 34 Pakistan .............................3.70
35 Colombia .........................3.08 35 Denmark............................3.61
36 Poland .............................3.06 36 Finland ...............................3.44
37 Brazil ...............................3.04 37 Turkey ................................3.39
38 Ireland .............................2.99 38 Brazil..................................2.59
39 Germany .........................2.99 39 China .................................2.47
40 Vietnam ...........................2.93 40 Australia.............................2.45
41 Spain ...............................2.89 41 Mexico...............................2.41
42 Turkey..............................2.82 42 Argentina ...........................2.20
43 Hungary...........................2.77 43 India...................................2.08
44 Korea, Rep. .....................2.77 44 Philippines .........................2.03
45 Mexico ............................2.70 45 South Africa.......................2.01
46 Kazakhstan ......................2.68 46 Italy....................................1.90
47 Ukraine............................2.68 47 United States.....................1.69
48 Philippines.......................2.67 48 Indonesia ...........................1.60
49 China ...............................2.67 49 Germany............................1.53
50 Russian Federation .........2.56 50 Bangladesh........................0.90
51 Bangladesh .....................2.37 51 Japan .................................0.51
52 Venezuela........................2.37 52 Venezuela ..........................0.28
53 Italy .................................2.25 53 Norway ..............................0.15
54 Nigeria.............................2.10 54 Kuwait ...............................0.11
55 Argentina.........................2.01 55 Korea, Rep.........................0.01

SOURCE: World Economic Forum, Executive Opinion Survey 2008, 2009 SOURCE: United Nations Conference on Trade and Development, 2008;
GDP data from IMF, World Economic Outlook Database (April 2009)
Part 2.r2 10/14/09 3:32 PM Page 347

7.07 7.08

3: Data Tables | Financial access


Market penetration of bank accounts Commercial bank branches
Number of commercial bank accounts per 100,000 adults | 2008 or Number of commercial bank branches per 100,000 adults | 2008
most recent year available

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Ukraine ...................375,499.30 1 Italy..................................52.96


2 Belgium ..................372,457.00 2 Belgium ...........................50.02
3 Denmark1 ................270,610.00 3 Denmark..........................46.66
4 Austria ....................244,180.80 4 Spain................................40.47
5 Singapore ...............230,508.80 5 United States...................35.43
6 Israel.......................225,362.10 6 Norway ............................34.97
7 Malaysia .................222,673.90 7 Ireland..............................34.05
8 Russian Federation1189,220.00 8 Poland..............................32.58
9 Turkey .....................185,115.00 9 Australia...........................31.75
10 France1 ...................180,080.00 10 Netherlands .....................26.15
11 Netherlands ............177,209.40 11 Slovak Republic ...............25.66
12 United States..........176,077.50 12 Hong Kong SAR ..............24.37
13 Czech Republic.......167,955.30 13 Canada.............................23.72
14 Norway1 ..................161,080.00 14 France..............................23.01
15 Hungary ..................157,082.20 15 Sweden ...........................22.79
16 Poland.....................152,738.70 16 Czech Republic................22.40
17 Thailand ..................149,800.90 17 Kazakhstan ......................21.57
18 Colombia ................115,135.30 18 Israel................................19.80
19 Mexico....................101,362.80 19 Panama............................18.89
20 Argentina ..................87,527.40 20 Venezuela ........................18.50
21 Jordan.......................81,422.97 21 Finland .............................18.46
22 South Africa..............78,812.95 22 Turkey ..............................17.32
23 Italy...........................76,320.49 23 Hungary ...........................17.14 347
24 Panama.....................75,717.04 24 Germany..........................16.33
25 Chile .........................74,632.10 25 Jordan..............................16.17
26 Spain.........................74,140.12 26 Kuwait .............................15.11
27 Peru ..........................71,642.69 27 Chile ................................14.95
28 India..........................68,047.05 28 Mexico.............................13.97
29 Brazil1 ........................63,980.00 29 Colombia .........................13.75
30 Venezuela .................51,840.05 30 Argentina .........................13.32
31 Philippines ................51,694.37 31 Korea, Rep.......................12.59
32 Indonesia ..................48,425.49 32 Japan ...............................12.52
33 Bangladesh...............31,868.15 33 Brazil................................12.19
34 Pakistan ....................22,607.03 34 Malaysia ..........................11.57
35 Nigeria1 .....................18,500.00 35 Singapore ........................10.97
36 Vietnam1 .....................8,300.00 36 Thailand ...........................10.92
n/a Australia...............................n/a 37 Philippines .......................10.53
n/a Bahrain.................................n/a 38 India...................................9.27
n/a Canada.................................n/a 39 South Africa.......................8.03
n/a China....................................n/a 40 Pakistan .............................7.50
n/a Egypt ...................................n/a 41 Peru ...................................7.48
n/a Finland .................................n/a 42 Indonesia ...........................6.67
n/a Germany ..............................n/a 43 Bangladesh........................5.21
n/a Hong Kong SAR...................n/a 44 Vietnam .............................3.29
n/a Ireland..................................n/a 45 Ukraine ..............................3.28
n/a Japan ...................................n/a 46 Russian Federation............2.86
n/a Kazakhstan...........................n/a n/a Austria .................................n/a
n/a Korea, Rep. ..........................n/a n/a Bahrain.................................n/a
n/a Kuwait..................................n/a n/a China....................................n/a
n/a Saudi Arabia.........................n/a n/a Egypt ...................................n/a
n/a Slovak Republic ...................n/a n/a Nigeria .................................n/a
n/a Sweden ...............................n/a n/a Saudi Arabia.........................n/a
n/a Switzerland ..........................n/a n/a Switzerland ..........................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a
n/a United Kingdom...................n/a n/a United Kingdom...................n/a

SOURCE: CGAP. 2009. “Financial Access 2009” (forthcoming), SOURCE: CGAP. 2009. “Financial Access 2009” (forthcoming),
Washington, DC: CGAP 2009. Full results to be released by CGAP in Washington, DC: CGAP 2009. Full results to be released by CGAP in
October 2009. October 2009.
1
2007
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3: Data Tables | Financial access


7.09 7.10
Total number of ATMs Total number of point of sale (POS) devices
Total number of ATMs per 100,000 adults | 2008 Total number of POSs per 100,000 adults | 2008

RANK COUNTRY/ECONOMY HARD DATA RANK COUNTRY/ECONOMY HARD DATA

1 Canada...........................202.78 1 Austria ........................4,889.60


2 United States.................169.23 2 Australia......................3,938.82
3 Australia.........................159.30 3 Panama.......................3,915.87
4 Spain..............................157.10 4 Pakistan ......................2,285.55
5 United Kingdom.............127.07 5 Canada........................2,201.64
6 Austria ...........................118.37 6 Switzerland.................2,182.73
7 Brazil..............................110.19 7 Denmark.....................2,022.78
8 France............................102.55 8 Thailand ......................2,003.94
9 Italy..................................93.93 9 Brazil...........................1,471.05
10 Switzerland......................93.70 10 Malaysia .....................1,412.90
11 Belgium ...........................85.96 11 Singapore ...................1,397.77
12 Germany..........................79.74 12 Japan ..........................1,353.14
13 Denmark..........................70.42 13 Turkey .........................1,101.47
14 Ukraine ............................70.09 14 Belgium ......................1,086.15
15 Russian Federation..........65.60 15 Netherlands ................1,030.37
16 Thailand ...........................65.48 16 Spain..............................959.25
17 Netherlands .....................63.78 17 Hong Kong SAR ............880.32
18 Norway ............................59.73 18 Korea, Rep.....................673.75
19 Chile ................................55.56 19 Czech Republic..............651.08
20 South Africa.....................54.85 20 Israel..............................584.69
21 Hungary ...........................54.24 21 Hungary .........................485.83
22 Kazakhstan ......................52.80 22 Slovak Republic .............460.31
348 23 Singapore ........................50.64 23 Chile ..............................450.13
24 Kuwait .............................50.05 24 Poland............................426.52
25 Slovak Republic ...............47.76 25 Vietnam .........................292.60
26 Israel................................47.38 26 France............................249.59
27 Malaysia ..........................43.25 27 Norway ..........................216.58
28 Poland..............................42.16 28 Kazakhstan ....................173.23
29 Turkey ..............................40.99 29 United States.................171.85
30 Mexico.............................40.15 30 India.................................77.81
31 Finland .............................38.74 31 Germany..........................65.78
32 Czech Republic................38.40 32 Philippines .......................47.06
33 Sweden ...........................36.94 33 Ukraine ............................10.75
34 Panama............................36.94 34 Venezuela ..........................3.03
35 Argentina .........................33.04 35 Mexico...............................1.85
36 Venezuela ........................27.99 36 South Africa.......................1.03
37 Colombia .........................26.31 n/a Argentina .............................n/a
38 Peru .................................17.67 n/a Bahrain.................................n/a
39 Indonesia .........................13.44 n/a Bangladesh ..........................n/a
40 Philippines .......................13.33 n/a China....................................n/a
41 India...................................3.55 n/a Colombia..............................n/a
42 Pakistan .............................3.39 n/a Egypt ...................................n/a
n/a Bahrain.................................n/a n/a Finland .................................n/a
n/a Bangladesh ..........................n/a n/a Indonesia .............................n/a
n/a China....................................n/a n/a Ireland..................................n/a
n/a Egypt ...................................n/a n/a Italy ......................................n/a
n/a Hong Kong SAR...................n/a n/a Jordan..................................n/a
n/a Ireland..................................n/a n/a Kuwait..................................n/a
n/a Japan ...................................n/a n/a Nigeria .................................n/a
n/a Jordan..................................n/a n/a Peru .....................................n/a
n/a Korea, Rep. ..........................n/a n/a Russian Federation ..............n/a
n/a Nigeria .................................n/a n/a Saudi Arabia.........................n/a
n/a Saudi Arabia.........................n/a n/a Sweden ...............................n/a
n/a United Arab Emirates ..........n/a n/a United Arab Emirates ..........n/a
n/a Vietnam ...............................n/a n/a United Kingdom...................n/a

SOURCE: CGAP. 2009. “Financial Access 2009” (forthcoming), SOURCE: CGAP. 2009. “Financial Access 2009” (forthcoming),
Washington, DC: CGAP 2009. Full results to be released by CGAP in Washington, DC: CGAP 2009. Full results to be released by CGAP in
October 2009. October 2009.
Part 2.r2 10/14/09 3:32 PM Page 349

7.11

3: Data Tables | Financial access


MFI borrowers’ penetration rate
Total number of borrowers from microfinance institutions as a
percentage of country’s poor population | 2007

RANK COUNTRY/ECONOMY HARD DATA

1 Bangladesh......................41.22
2 Vietnam ...........................29.03
3 Mexico.............................20.96
4 Indonesia .........................19.66
5 Peru .................................17.60
6 Chile ................................15.34
7 Jordan..............................12.45
8 Philippines .......................11.03
9 Malaysia ............................7.77
10 Egypt .................................7.16
11 Colombia ...........................6.46
12 India...................................4.80
13 South Africa.......................4.10
14 Kazakhstan ........................3.37
15 Nigeria ...............................3.00
16 Pakistan .............................2.61
17 Brazil..................................1.62
18 Panama..............................1.56
19 Argentina ...........................0.81
20 Ukraine ..............................0.64
21 Venezuela ..........................0.62
22 Russian Federation............0.54
23 Poland................................0.25 349
24 China .................................0.19
25 Korea, Rep.........................0.07
26 Thailand .............................0.06
27 Turkey ................................0.03
n/a Australia...............................n/a
n/a Austria .................................n/a
n/a Bahrain.................................n/a
n/a Belgium ...............................n/a
n/a Canada.................................n/a
n/a Czech Republic ....................n/a
n/a Denmark ..............................n/a
n/a Finland .................................n/a
n/a France..................................n/a
n/a Germany ..............................n/a
n/a Hong Kong SAR...................n/a
n/a Hungary ...............................n/a
n/a Ireland..................................n/a
n/a Israel ....................................n/a
n/a Italy ......................................n/a
n/a Japan ...................................n/a
n/a Kuwait..................................n/a
n/a Netherlands .........................n/a
n/a Norway ................................n/a
n/a Saudi Arabia.........................n/a
n/a Singapore.............................n/a
n/a Slovak Republic ...................n/a
n/a Spain....................................n/a
n/a Sweden ...............................n/a
n/a Switzerland ..........................n/a
n/a United Arab Emirates ..........n/a
n/a United Kingdom...................n/a
n/a United States.......................n/a

SOURCE: Microfinance Information Exchange, Inc. (MIX). September


2007
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Technical Notes and Sources


Technical Notes and Sources

The following section complements the Data Tables by 1.03 Domestic financial sector liberalization
providing additional information and definitions for the This index measures the degree of domestic financial sector
liberalization within a country, standardized on a 1–7 scale |
hard data indicators that enter the composition of the 2009 or most recent year available
Financial Development Index 2009. In the following This index was calculated on the basis of whether or not
controls (ceilings and floors) on interest rates and credit exist,
pages, the number next to the variable corresponds to and whether or not deposits in foreign currency are allowed.
the number of the Data Table that shows the ranks and Schmukler and Kaminsky updated their results up to 2005 for
a subset of the sample countries. The World Economic Forum
scores for all countries on this particular indicator. used their methodology to update all of the countries for the
The data used in this Report represent the best avail- purposes of the calculations in this Report. National sources,
able estimates from various international agencies, private central banks, and IMF reports were the main sources of these
updates. The World Economic Forum then created an interaction
sources, and national authorities at the time the Report term among these data, the Legal and regulatory issues subpillar,
was prepared. It is possible that some data will have been and the Bond market development subpillar of the Financial
Development Index, and standardized the scores on a scale
updated or revised after publication. from 1 to 7.

Source: Graciela Kaminsky and Sergio Schmukler, 2003. “Short-


Run Pain, Long-Run Gain: The Effects of Financial
Section I: Institutional environment Liberalization.” IMF Working Paper 03/34 Washington, DC:
International Monetary Fund; updated as of 2009 based on
World Economic Forum analysis
1.01 Capital account liberalization
This index measures the degree of capital account liberal-
351
ization within a country, standardized on a 1–7 scale | 1.11 Official supervisory power
2007 This index measures the extent to which official supervisory
This variable measures specifically the level of capital controls authorities have the authority to take specific actions to
based on information from the IMF’s Annual Report on prevent and correct problems | 2006
Exchange Arrangements and Exchange Restrictions (AREAER). Possible actions include restructuring power, declaring insolvency
The World Economic Forum then created an interaction term power, and prompt corrective power that force automatic
among these data, the Legal and regulatory issues subpillar, enforcement actions such as intervention.
and the Bond market development subpillar of the Financial
Source: James Barth, Gerard Caprio, and Ross Levine. 2007.
Development Index, and standardized the scores on a scale
“Bank Regulations Are Changing: But for Better or Worse?”
from 1 to 7.
World Bank Discussion Paper No. 4646, Washington, DC
Source: Menzie Chinn and Hiro Ito. 2009. “Financial Openness
Index.” Dataset available at http://www.ssc.wisc.edu/~mchinn/
research.html; interaction results from World Economic Forum 1.12 Private monitoring of the banking industry
analysis This index measures the degree to which the private sector
monitors the banking industry (higher percentage values
indicate greater transparency) | 2006
1.02 Commitments to WTO agreement on trade in services Indicators included in assessment of private monitoring
This index measures the extent of commitments to the include the requirement of certified auditing, percentage of 10
WTO’s General Agreement on Trade in Services (GATS) biggest banks rated by international rating agencies, and bank
within the financial services sector, standardized on a 1–7 accounting.
(most liberalized) scale | 2008
Source: James Barth, Gerard Caprio, and Ross Levine. 2007.
Each entry is assigned a standardized score on a 0–100 (most
“Bank Regulations Are Changing: But for Better or Worse?”
liberalized) scale based on its relative restrictiveness. This is
World Bank Discussion Paper No. 4646, Washington, DC
done using a criteria set out by Bernard Hoekman’s methodology.
The World Economic Forum then created an interaction term
among these data, the Legal and regulatory issues subpillar, 1.20 Corruption perceptions index
and the Bond market development subpillar of this Financial
This is a composite index measuring the perceived levels
Development Index, and standardized the scores on a scale
of corruption in a given country as determined by expert
from 1 to 7.
assessments and opinion surveys. Higher scores indicate
Source: The World Bank, World Trade Indicators 2008 less extensive corruption | 2008
The index measures the overall extent of corruption (frequency
and/or size of bribes) in the public and political sectors as
calculated based on data from 13 sources originating from
11 independent institutions. All sources provide a ranking of
countries.

Source: Transparency International, Corruption Perceptions


Index 2008
Part 2.r2 10/14/09 3:32 PM Page 352

Technical Notes and Sources

1.21 Strength of legal rights index Section II: Business environment


This index measures the degree to which collateral and
bankruptcy laws protect the rights of borrowers and lenders
and thus facilitate lending. The index ranges from 0 to 10, 2.09 Marginal tax variation
with higher scores indicating that collateral and bankruptcy Variation between the top tax rate on corporate income
laws are better designed to expand access to credit | 2008 and the taxes and mandatory contributions paid by a
The index includes eight aspects related to legal rights in prototypical business as a percentage of commercial
collateral law and two aspects in bankruptcy law. profits | 2009
The top tax rate on corporate income in a country is compiled
Source: The World Bank, Doing Business 2009 by the Heritage Foundation from Ernst &Young, Deloitte, IMF,
investment agencies, and government sources. The profit tax
rate is based on the taxes and mandatory contributions that a
1.25 Time to enforce a contract
medium-sized company must pay or withhold in a given year.
Time in days to resolve a dispute related to a contract | To make the data comparable across countries, several assump-
2008 tions about the business are used. These include that the busi-
Time is counted from the moment the plaintiff files the lawsuit ness is a limited liability, that it is a taxable company with a
in court until payment. This includes both the days when actions gross margin (pretax) of 20 percent, and that it has a turnover
take place and the waiting periods between. The respondents of 1,050 times income per capita.
make separate estimates of the average duration of different
stages of dispute resolution: the completion of service of Source: Top tax rate data from Heritage Foundation, 2009 Index
process (time to file the case), the issuance of judgment (time of Economic Freedom; profit tax data from The World Bank,
for the trial and obtaining the judgment), and the moment of Doing Business 2009
payment (time for enforcement).

Source: The World Bank, Doing Business 2009 2.10 Time to pay taxes
Time to prepare, file, and pay or withhold the corporate
income tax, the value-added tax, and social security
1.26 Number of procedures to enforce a contract
contributions (hours per year) | 2009
Number of procedures from the moment the plaintiff files Preparation time includes the time to collect all information nec-
a lawsuit in court until the moment of payment | 2008 essary to compute the tax payable. If separate accounting
A procedure is defined as any interaction between the parties, books must be kept for tax purposes, or separate calculations
or between them and the judge or court officer. This includes made, the time associated with these processes is included.
steps to file the case, steps for trial and judgment, and steps Filing time includes the time to complete all necessary tax
necessary to enforce the judgment. This year the Survey forms and make all necessary calculations. Payment time is the
allowed respondents to record procedures that exist in civil law hours needed to make the payment online or at the tax office.
but not common law jurisdictions, and vice versa. To indicate Where taxes and contributions are paid in person, the time
the overall efficiency of court procedures, one procedure is now includes delays while waiting.
subtracted for countries that have specialized commercial
352 courts and one procedure for countries that allow electronic Source: The World Bank, Doing Business 2009
filing of court cases.

Source: The World Bank, Doing Business 2009 2.13 Internet users
Internet users per 100 inhabitants | 2007
Internet users are people with access to the worldwide net-
1.27 Strength of investor protection
work.
This index assesses the strength of investor protection on a
0-to-10 (best) scale | 2008 Source: International Telecommunication Union, World
The Strength of Investor Protection Index is the average of the Telecommunication Indicators 2008; national sources
extent of disclosure index, the extent of director liability index,
and the ease of shareholder suits index. The index ranges from
0 to 10, with higher values indicating more investor protection. 2.14 Broadband Internet subscribers
Total broadband Internet subscribers per 100 inhabitants |
Source: The World Bank, Doing Business 2009 2007 or most recent year available
The International Telecommunication Union considers
broadband to be any dedicated connection to the Internet of
1.28 Cost of enforcing contracts
256 kilobits per second (kb/s) or faster, in both directions.
Cost of enforcing contracts as a percentage of claim | 2008 Broadband subscribers refers to the sum of DSL, cable modem,
This variable is recorded as a percentage of the claim, assumed and other broadband (for example, fiber optic, fixed wireless,
to be equivalent to 200 percent of income per capita. Only apartment LANs, satellite connections) subscribers.
official costs required by law are recorded, including court and
enforcement costs and average attorney fees where the use of Source: International Telecommunication Union, World
attorneys is mandatory or common. Telecommunication Indicators 2008; national sources

Source: The World Bank, Doing Business 2009


2.15 Telephone lines
Main telephone lines per 100 inhabitants | 2007 or most
2.06 Tertiary enrollment
recent year available
Gross tertiary enrollment rate | 2007 or most recent year A main telephone line is a telephone line connecting the
available subscriber’s terminal equipment to the public switched tele-
According to the World Bank’s World Development Indicators, phone network and that has a dedicated port in the telephone
this corresponds to the ratio of total enrollment, regardless of exchange equipment.
age, to the population of the age group that officially corre-
sponds to the tertiary education level. Tertiary education, Source: International Telecommunication Union, World
whether or not leading to an advanced research qualification, Telecommunication Indicators 2008; national sources
normally requires, as a minimum condition of admission, the
successful completion of education at the secondary level.

Source: UNESCO Institute for Statistics (June 2009); The World


Bank, World Development Indicators 2009; national sources
Part 2.r2 10/14/09 3:32 PM Page 353

Technical Notes and Sources


2.16 Mobile telephone subscribers 2.21 Time to register property
Mobile cellular telephone subscribers per 100 inhabitants | Time in days to register property | 2008
2007 The measure captures the median duration that property
The term subscribers refers to users of mobile telephones lawyers, notaries or registry officials indicate is necessary
subscribing to an automatic public mobile telephone service to complete a procedure. It is assumed that the buyer does
that provides access to the public switched telephone network not waste time and commits to completing each remaining
using cellular technology. This can include analogue and digital procedure without delay. If a procedure can be accelerated
cellular systems but should not include noncellular systems. for an additional cost, the fastest legal procedure available
Subscribers to fixed wireless, public mobile data services, or and used by the majority of property owners is chosen. If
radio paging services are not included. procedures can be undertaken simultaneously, it is assumed
that they are. It is assumed that the parties involved are aware
Source: International Telecommunication Union, World of all regulations and their sequence from the beginning.
Telecommunication Indicators 2008; national sources
Source: The World Bank, Doing Business 2009

2.17 Cost of starting a business


Cost of starting a business as a percentage of income per 2.22 Time to close a business
capita | 2008 Time in years to close a business | 2008
This variable measures the official fees and fees for legal or Information is collected on the sequence of procedures and
professional services if such services are required by law to start on whether any procedures can be carried out simultaneously.
a new business. Fees for purchasing and legalizing company Potential delay tactics by the parties, such as the filing of dilatory
books are included if these transactions are required by law. appeals or requests for extension, are taken into consideration.
The company law, the commercial code, and specific regulations
and fee schedules are used as sources for calculating costs. In Source: The World Bank, Doing Business 2009
the absence of fee schedules, a government officer’s estimate
is taken as an official source. In the absence of a government
officer’s estimate, estimates of incorporation lawyers are used.
If several incorporation lawyers provide different estimates, the Section III: Financial stability
median reported value is applied. In all cases the cost excludes
bribes.

Source: The World Bank, Doing Business 2009 3.01 Change in real effective exchange rate
Average percentage change in real effective exchange rate
from year to year over the period 2003—07. Higher REER
2.18 Cost of registering property represents appreciation | as of 2007
Cost of registering property as a percentage of income per Real effective exchange rates (REERs) are available only for a
capita | 2008 subgroup of rated countries and come from two main sources:
This variable is a percentage of the property value, assumed to JP Morgan and the IMF. The JP Morgan REER index relies
be equivalent to 50 times income per capita. Only official costs on available measures of the prices of domestically produced 353
required by law are recorded; these include fees, transfer taxes, finished manufactured goods (excluding primary food and
stamp duties, and any other payment to the property registry, energy), while the IMF index is based on consumer prices.
notaries, public agencies, or lawyers. Other taxes, such as Cross-country comparisons are therefore difficult, but changes
capital gains tax or value-added tax, are excluded from the cost over time for individual countries still give a rough indication of
measure. Both costs borne by the buyer and those borne by the evolution of relative costs. This variable relies on available
the seller are included. If cost estimates differ among sources, measures of the prices of domestically produced finished
the median reported value is used. manufactured goods and consumer prices.
Source: The World Bank, Doing Business 2009 Source: Moody’s Statistical Handbook (November 2008)

2.19 Cost of closing a business 3.02 External vulnerability indicator


Cost of closing a business as a percentage of the estate | The external vulnerability indicator is the sum of several
2008 measures of external exposure as a percentage of foreign
The cost of the proceedings is recorded as a percentage of the exchange reserves | 2007
estate’s value. The cost is calculated on the basis of survey This variable is the short-term external debt + currently maturing
responses by insolvency practitioners and includes court fees as long-term external debt + total nonresident deposits over one
well as fees of insolvency practitioners, independent assessors, year / official foreign exchange reserves (%).
lawyers, and accountants. Respondents provide cost estimates
from among the following options: less than 2%, 2–5%, 5–8%, Source: Moody’s Statistical Handbook (November 2008)
8–11%, 11–18%, 18–25%, 25–33%, 33–50%, 50–75%, and
more than 75% of the value of the business estate.
3.03 Current account balance to GDP
Source: The World Bank, Doing Business 2009 Current account balance to GDP provides an indicator of
the difficulty a country might have in mobilizing the foreign
exchange necessary for debt service | 2008
2.20 Time to start a business
Balance of payments data are based upon the methodology of
Time in days to start a business | 2008 the 5th edition of the International Monetary Fund’s Balance of
The measure captures the median duration that property Payments Manual (1993).
lawyers, notaries, or registry officials indicate is necessary
to complete a procedure. It is assumed that the buyer does Source: IMF, World Economic Outlook Database (April 2009)
not waste time and commits to completing each remaining
procedure without delay. If a procedure can be accelerated for
3.04 Dollarization vulnerability indicator
an additional cost, the fastest legal procedure that is available
and used by the majority of property owners is chosen. If This variable measures the risk of payment crisis and
procedures can be undertaken simultaneously, it is assumed default originating from the presence of a large amount
that they are. It is assumed that the parties involved are aware of dollarization in the domestic banking system | 2007
of all regulations and their sequence from the beginning. This variable is foreign-currency deposits in domestic banks /
official foreign-exchange reserves + foreign assets of domestic
Source: The World Bank, Doing Business 2009 banks (%).

Source: Moody’s Statistical Handbook (November 2008)


Part 2.r2 10/14/09 3:32 PM Page 354

Technical Notes and Sources

3.05 External debt to GDP (developing economies) 3.11 Local currency sovereign rating
External debt as a percentage of GDP | 2007 This variable measures the probability that a country will
This variable measures the total debt held by nonresidents, pay its local currency borrowing in a full and timely manner
regardless of the currency in which the debt is denominated, | 2009
as a share of GDP for emerging markets only. Local currency sovereign credit ratings of Standard and Poor’s
were converted on a linear numerical scale from 0 (reflecting
Source: Moody’s Statistical Handbook (November 2008) SD) to 20 (reflecting AAA). Credit outlooks were given either a
positive 0.3 or a negative 0.3 to be added or taken off of the
actual rating of a country. Given that ratings action does not
3.06 Net international investment position to GDP
take place at regular intervals, calculating the ratings for one
(advanced economies) year would take into account the number of months that a
Net international investment position as a percentage of country was rated before a change in the rating. For instance,
GDP | 2007 if a country was upgraded one notch on February first, from a
For advanced economies only, this variable measures the role 16 to a 17, then a weighted average would be calculated (11
these countries play in the international movement of capital. months based on the new rating of 17 and 1 month based on
The estimate is based on the difference between the market the rating of 16). The same thing occurred for downgrades, and
value of a country’s foreign assets and that of its liabilities for credit outlook changes.
relative to GDP.
Source: Standard and Poor’s, August 2009
Source: Moody’s Statistical Handbook (November 2008)

3.12 Foreign currency sovereign rating


3.07 Frequency of banking crises This variable measures the probability that a country will
This variable is calculated based on the number of banking pay its foreign currency borrowing in a full and timely
crises that countries experienced from 1970 to 2008. Recent manner | 2009
crises are weighted more heavily | as of 2008 Foreign currency sovereign credit ratings of Standard and Poor’s
The crisis count includes systemic banking crises (defined as were converted on a linear numerical scale from 0 (reflecting
much or all of bank capital being exhausted), excluding banking SD) to 20 (reflecting AAA). Credit outlooks were given either a
system distress events that affected isolated banks and were positive 0.3 or a negative 0.3 to be added or taken off of the
not systemic in nature. World Economic Forum adjustments actual rating of a country. Given that ratings action does not
were made to account for 2008 crises in Austria, Belgium, take place at regular intervals, calculating the ratings for one
Ireland, Kazakhstan, Netherlands, and Ukraine. year would take into account the number of months that a
country was rated before a change in the rating. For instance,
Source: Data on crises up to 2007 from Luc Laeven and Fabian if a country was upgraded one notch on February first, from a
Valencia. 2008. “Systemic Banking Crises: A New Database.” 16 to a 17, then a weighted average would be calculated (11
IMF Working Paper 08/224, Washington, DC. 2008 data and months based on the new rating of 17 and 1 month based on
all weighting based on provisional World Economic Forum the rating of 16). The same thing occurred for downgrades, and
analysis. for credit outlook changes.
354
Source: Standard and Poor’s, August 2009
3.08 Financial strengths indicator
Weighted average financial strength rating by bank assets |
3.13 Aggregate macroprudential indicator
2008
This indicator is a measure of a bank’s ability to meet obligations This is the aggregate measure of macroprudential
to depositors and other creditors as viewed by specialized soundness based on real GDP growth, deposit interest rate,
analysts, and incorporates quantitative and qualitative information inflation volatility, and inflation level | 2008 or most recent
on a bank’s operating environment. Sample is restricted to larger year available
banks in each country. This measure is calculated as the mean of four normalized
variables: year-over-year growth of real GDP, deposit interest
Source: Moody’s Statistical Handbook (November 2008) rate, standard deviation of month-over-month change in
consumer price index during a one-year period, and annual
percentage change in average consumer prices. All data as of
3.09 Manageability of private debt 2008 except deposit interest rates, for which the latest available
This is the sum of domestic debt securities and international data are as of 2007.
debt securities for financial institutions and corporate
issuers as a percentage of GDP | 2008 Source: GDP and inflation level data from IMF, World Economic
The ratio is calculated using the following deflation method: Outlook Database (April 2009); deposit interest rate data from
World Bank, Financial Development Indicators, retrieved June
2009; inflation volatility data from Bloomberg, retrieved June
(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
2009

GDPt 3.14 Manageability of public debt


P_at This index is based on total debt owed by government to
domestic residents, foreign nationals, and multilateral
where F is debt securities, P_e is end-of-period CPI, and P_a
institutions as a percentage of GDP | 2008
is average annual CPI.
The total debt includes both local and foreign currency owed
Source: Bank of International Settlements, Quarterly Review, by government to domestic residents, foreign nationals, and
September 2009, http://www.bis.org/statistics/secstats.htm; multilateral institutions such as the IMF, and is expressed as a
GDP and inflation data from IMF, World Economic Outlook percentage of GDP. The values are standardized on a 1–7 scale.
Database (April 2009)
Source: Economist Intelligence Unit CountryData Database,
data retrieved September 2009
3.10 Aggregate measure of real estate bubbles
This is the aggregate measure of real estate bubbles based
3.15 Credit default swap spreads
on price-to-income ratio and price-to-rent ratio | 2008
Spreads on sovereign credit default swaps | 2009
Price-to-income ratio calculated as (price per square meter /
GDP per capita) x 100. Price-to-rent ratio is annual rental income Reflects pricing of credit default swaps for government sector
expressed as a percentage of property purchase price. Source: Bloomberg, data retrieved June 2009
Source: Global Property Guide website,
www.globalpropertyguide.com
Part 2.r2 10/14/09 3:32 PM Page 355

Technical Notes and Sources


Section IV: Banking financial services 4.05 Private credit to GDP
Private credit by deposit-money banks and other financial
institutions as a percentage of GDP | 2007 or most recent
4.01 Deposit money bank assets to GDP year available
Claims on domestic real nonfinancial sector by deposit The ratio is calculated using the following deflation method:
money banks as a share of GDP | 2007 or most recent year
available
The ratio is calculated using the following deflation method: (0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
GDPt
P_at

GDPt where F is credit to the private sector, P_e is end-of-period CPI,


P_at and P_a is average annual CPI.

where F is deposit money bank claims, P_e is end-of-period Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine.
CPI, and P_a is average annual CPI. 2000. “A New Database on Financial Development and
Structure.” World Bank Economic Review 14: 597–605.
Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. Updated November 2008
2000. “A New Database on Financial Development and
Structure.” World Bank Economic Review 14: 597–605.
Updated November 2008 4.06 Bank deposits to GDP
This variable shows the demand, time, and savings deposits
in deposit money banks as a share of GDP | 2007 or most
4.02 Central bank assets to GDP recent year available
Claims on domestic real nonfinancial sector by the central The ratio is calculated using the following deflation method:
bank as a share of GDP | 2007 or most recent year
available
The ratio is calculated using the following deflation method: (0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
GDPt
P_at

GDPt where F is demand and time and savings deposits, P_e is


P_at end-of period CPI, and P_a is average annual CPI.

where F is central bank claims, P_e is end-of-period CPI, and Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine.
P_a is average annual CPI. 2000. “A New Database on Financial Development and
Structure.” World Bank Economic Review 14: 597–605. 355
Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. Updated November 2008
2000. “A New Database on Financial Development and
Structure.” World Bank Economic Review 14: 597–605.
Updated November 2008 4.07 Money market instruments to GDP
Total money market instruments ($US billions) as a
percentage of GDP | 2008
4.03 Financial system deposits to GDP Figures are based on residence of issuer.
Demand, time, and savings deposits in deposit money
banks and other financial institutions as a share of GDP | Source: Bank of International Settlements, Quarterly Review
2007 or most recent year available March 2009; GDP data from IMF, World Economic Outlook
The ratio is calculated using the following deflation method: Database (April 2009)

(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
4.08 Aggregate profitability indicator
Based on a three-year average of three measures of
profitability: net interest margin, bank return on assets,
GDPt
and bank return on equity | 2005–07 average
P_at
Net interest margin is the accounting value of bank’s net
where F is demand and time and savings deposits, P_e is interest revenue as a share of its interest-bearing (total earning)
end-of-period CPI, and P_a is average annual CPI. assets. Bank return on assets is calculated as net income as a
percentage of total assets. Bank return on equity is calculated
Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. as net income as a percentage of total shareholders’ equity.
2000. “A New Database on Financial Development and
Structure.” World Bank Economic Review 14: 597–605. Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine.
Updated November 2008 2000. “A New Database on Financial Development and
Structure.” World Bank Economic Review 14: 597–605.
Updated November 2008
4.04 M2 to GDP
Money and quasi-money supply as a percentage of GDP |
4.09 Bank overhead costs
2008
Bank overhead costs as a percentage of total assets | 2007
This variables shows money and quasi-money as a percentage
of GDP, calculated using the following deflation method: This is calculated as an average for each country in 2007.
Approximately 90 percent of the banking sector assets in a
given country and year are covered in the sourced database.
(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine.
2000. “A New Database on Financial Development and
GDPt Structure.” World Bank Economic Review 14: 597–605.
P_at Updated November 2008

where F is money and quasi-money, P_e is end-of-period CPI,


and P_a is average annual CPI.

Source: Economist Intelligence Unit CountryData Database,


data retrieved April 2009
Part 2.r2 10/14/09 3:32 PM Page 356

Technical Notes and Sources

4.10 Public ownership of banks 5.03 Share of world IPOs


Percentage of assets held by the 10 largest banks that is Three-year average of number of IPO (initial public offering)
located in banks that are 25 percent or more government issues as a percentage of total global number of issues |
owned | 2008 2006–08 average
This figure is based on commercial banks and governmental This variable counts the number of IPO issues as defined in the
credit institutions in each country. Banks owned by public “IPO proceeds amount” variable and shows the percentage of
authorities in foreign countries are not included in measure. the total global issuance in number of issues attributable to that
country. Share calculation based on IPOs in 55 economies
Source: BankScope database, data retrieved June 2009 included in Index.

Source: Thomson Financial SDC Platinum, retrieved April 2009


4.11 Bank operating costs to assets
Non interest expense as a percentage of average assets in
last reported year | 2008 5.04 M&A market share
This ratio is calculated based on the weighted average of Three-year average of dollar value of M&A (mergers and
assets held by top 10 commercial banks and governmental acquisitions) occurring in a given country as a percentage
credit institutions in each country. of total global value | 2006–08 average
Percentage of the total world rank value of the transaction in US
Source: BankScope database, data retrieved June 2009 dollars (including the net debt of the target) attributable to a given
country. The rank value is calculated by subtracting the value
of any liabilities assumed in a transaction from the transaction
4.12 Non-performing bank loans to total loans
value and by adding the target’s net debt (US$ millions). Net
Percentage of non-performing bank loans relative to total debt is straight debt + short-term debt + preferred equity –
number of loans outstanding | 2008 cash and marketable securities as of the date of the most
Figures are sourced from national authorities and IMF staff current financial information prior to the announcement of the
estimates. Due to differences in national accounting, taxation, transaction. Preferred equity is not included if the cost to
and supervisory regimes, IMF Financial Soundness Indicators acquire preferred shares (CSTPFD) is filled in. Market share
are not strictly comparable across countries. calculation based on M&A transactions in 55 economies included
in Index.
Source: IMF, Global Financial Stability Report, April 2009
Source: Thomson Financial SDC Platinum, retrieved April 2009

4.13 Private credit bureau coverage


Percentage of adults covered by a private credit registry | 5.05 M&A transaction value to GDP
2008 This variable is the rank value of the three-year average
This figure includes information on repayment history, unpaid of transactions in US dollars (including the net debt of the
debts, or credit outstanding. target) as a percentage of GDP | 2006–08 average
The rank value is calculated by subtracting the value of any
Source: The World Bank, Doing Business 2009
356 liabilities assumed in a transaction from the transaction value
and by adding the target’s net debt (US$ millions). Net debt
4.14 Public credit registry coverage is straight debt + short-term debt + preferred equity – cash and
marketable securities as of the date of the most current financial
Percentage of adults covered by a public credit registry |
information prior to the announcement of the transaction.
2008
Preferred equity is not included if the cost to acquire preferred
This figure includes information on repayment history, unpaid
shares (CSTPFD) is filled in.
debts, or credit outstanding.
Source: Thomson Financial SDC Platinum, retrieved April 2009;
Source: The World Bank, Doing Business 2009
GDP data from IMF, World Economic Outlook Database (April
2009)

V: Non-banking financial services 5.06 Share of total number of M&A deals


Three-year average of percentage of world M&A (mergers
and acquisitions) deals occurring in a given country as
5.01 IPO market share
measured by the share of total number of global M&A deals
Three-year average of percentage of world IPOs (initial | 2006–08 average
public offerings) issued in a given country as measured by
This is the percentage of total world rank value of transactions
US dollars | 2006–08 average
in US dollars (including the net debt of the target) attributable to
IPOs are issues where the common stock has never traded a particular country. The rank value is calculated by subtracting
publicly in any market and is offered in its initial public offering. the value of any liabilities assumed in a transaction from the
Annual volumes accumulate the proceeds amount + over transaction value and by adding the target’s net debt (US$
allotment sold (US$ millions) [amount of the issue in this millions). Net debt is straight debt + short-term debt + preferred
market plus the over allotment amount (a.k.a. green shoe) sold equity – cash and marketable securities as of the date of the
in this market] for all issues based on the issue/announcement most current financial information prior to the announcement of
date. Market share calculation is based on IPOs in 55 the transaction. Preferred equity is not included if the cost to
economies included in Index. acquire preferred shares (CSTPFD) is filled in. Share calculation
Source: Thomson Financial SDC Platinum, retrieved April 2009 based on M&A transactions in 55 economies included in index.

Source: Thomson Financial SDC Platinum, retrieved April 2009


5.02 IPO proceeds amount
Three-year average of total IPO (initial public offering) 5.07 Insurance premiums, direct
proceeds as a percentage of GDP | 2006–08 average Direct insurance premiums (life and non-life), including
This variable represents IPO proceeds as a percentage of GDP. commissions and other charges, prior to cession to a
The initial public offering (IPO) proceeds amount is calculated reinsurance company (US$ millions) | 2007
when the common stock has never before traded publicly in Premium volumes are converted into US dollars to facilitate
any market. Annual volumes accumulate as the proceeds comparisons between the different markets and regions,
amount + over allotment sold (US$ millions), which is the using the average exchange rate for the financial year. Where
amount of the issue in this market plus the over allotment no premium data are available (indicated by “n/a” for the local
amount (a.k.a. green shoe) sold in this market] for all issues currency value), the premium income in US dollars is estimated
based on the issue/announcement date. based on the assumption that the ratio of insurance premiums
Source: IPO information from Thomson Financial SDC Platinum, to GDP remained constant (constant insurance penetration).
retrieved April 2009; GDP data from IMF, World Economic Source: Swiss Re, World Insurance in 2007: Emerging Markets
Outlook Database (April 2009) Leading the Way
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Technical Notes and Sources


5.08 Insurance density 6.02 Outright forward foreign exchange turnover
Direct life insurance premiums (life and non-life) per capita Percentage share of world total of outright forward foreign
from domestic sources (US dollars) | 2007 exchange turnover | April 2007
Only premium income from domestic risks is used to calculate Transactions are measured in US dollars and involve the
insurance penetration and density. Cross-border business is not exchange of two currencies at a rate agreed upon on the date
included. This exclusion has a significant effect in Luxembourg, of the contract for value of delivery at a time more than two
Ireland, and the United Kingdom. days into the future. Exchange rate is for cash settlement at
some time in the future (more than two business days later).
Source: Swiss Re, World Insurance in 2007: Emerging Markets Percentages are based on 55 economies included in the Index.
Leading the Way
Source: Bank of International Settlements, Triennial Central
Bank Survey, December 2007
5.09 Real growth of direct insurance premiums
Annual real rate of growth (%) of direct premiums (life and
non-life) based on local currency prices | 2007 6.03 Foreign exchange swap turnover
Real growth rates are calculated using premiums in local Percentage share of world total of foreign exchange swap
currencies and adjusted for inflation using the consumer price turnover | April 2007
index for each country. Transactions are measured in US dollars and involve the
actual exchange of two currencies (principal amount only) on
Source: Swiss Re, World Insurance in 2007: Emerging Markets a specific date at a rate agreed upon at the time of conclusion
Leading the Way of the contract (the short leg), and a reverse exchange of the
same two currencies at a date further in the future and at a rate
(generally different from the rate applied to the short leg) agreed
5.10 Insurance penetration
at the time of the contract (the long leg). Both spot/forward and
Direct domestic premiums (life and non-life) as a percentage forward/forward swaps are included. Short-term swaps carried
of GDP | 2007 out as “tomorrow/next day” transactions are also included in
Only premium income from domestic risks is used to calculate this category. Percentages are based on 55 countries included
insurance penetration and density. Cross-border business is not in the Index.
included. This exclusion has a significant effect in Luxembourg,
Ireland, and the United Kingdom. Source: Bank of International Settlements, Triennial Central
Bank Survey, December 2007
Source: Swiss Re, World Insurance in 2007: Emerging Markets
Leading the Way
6.04 Interest rate derivatives turnover: Forward rate

5.11 Relative value-added of insurance to GDP agreements


The value added by insurance services to the economy after Percentage share of world total of over-the-counter single
costs are subtracted, as a percentage of GDP | 2008 currency forward interest rate agreements turnover | April
2007
This indicator represents what remains of total sales revenue 357
after the costs of providing insurance products are taken out, Transactions are measured in US dollars and involve interest
signifying the value the insurance sector creates in the economy. rate forward contracts in which the rate to be paid or received
Figures are preliminary and subject to change. on a specific obligation for a set period of time, beginning at
some time in the future, is determined at contract initiation.
Source: Global Insight, World Industry Monitor, April 2009 Percentages are based on 55 economies included in the Index.

Source: Bank of International Settlements, Triennial Central


5.12 Securitization to GDP Bank Survey, December 2007
Three-year average of the sum of asset-backed securities
(ABS), mortgage-backed securities (MBS), high-yield bonds,
6.05 Interest rate derivatives turnover: Swaps
and highly leveraged loans’ deal value as a percentage of
GDP | 2006–08 average Percentage share of world total of over-the-counter single
currency interest rate swaps turnover | April 2007
This is calculated based on three-year average GDP.
Transactions are measured in US dollars and involve agreements
Source: Dealogic Analytics, data retrieved April 2009; GDP data to exchange periodic payments related to interest rates on a
from IMF, World Economic Outlook Database (April 2009) single currency; these can be fixed for floating, or floating for
floating based on different indices. This group includes those
swaps whose notional principal is amortized according to a
5.13 Share of total number of securitization deals fixed schedule independent of interest rates. Percentages are
Three-year average of the sum of asset-backed securities based on 55 economies included in the Index.
(ABS), mortgage-backed securities (MBS), high-yield bonds,
and highly leveraged loans as a percentage of total deals | Source: Bank of International Settlements, Triennial Central
2006–08 average Bank Survey, December 2007
This is calculated based on three-year average GDP.

Source: Dealogic Analytics, data retrieved April 2009 6.06 Interest rate derivatives turnover: Options
VI: Financial markets Percentage share of world total of over-the-counter interest
rate options turnover | April 2007
Transactions are measured in US dollars and involve option
6.01 Spot foreign exchange turnover contracts that give the right to pay or receive a specific interest
Percentage share of world total of spot foreign exchange rate on a predetermined principal for a set period of time.
turnover | April 2007 Percentages are based on 55 economies included in the Index.
Transactions are measured in US dollars and involve the
Source: Bank of International Settlements, Triennial Central
exchange of two currencies at a rate agreed upon on the date
Bank Survey, December 2007
of the contract for value of delivery at a time less than two days
into the future. The spot legs of swaps were not included
among spot transactions but were treated as swap transactions
even when they were for settlement within two days (i.e.,
including “tomorrow/next day” transactions). Percentages are
based on 55 economies included in the Index.

Source: Bank of International Settlements, Triennial Central


Bank Survey, December 2007
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Technical Notes and Sources

6.07 Foreign exchange derivatives turnover: Currency swaps 6.12 Number of listed companies per 10,000 people
Percentage share of world total of over-the-counter foreign Number of publicly listed companies per 10,000 people |
exchange currency swaps turnover | April 2007 2007
Transactions are measured in US dollars and involve contracts
that commit two counterparties to exchange streams of interest Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine.
payments in different currencies for an agreed period of time 2000. “A New Database on Financial Development and
and to exchange principal amounts in different currencies at a Structure.” World Bank Economic Review 14: 597–605.
pre-agreed exchange rate at maturity. Percentages are based Updated May 2009
on 55 economies included in the Index.

Source: Bank of International Settlements, Triennial Central 6.13 Private domestic bond market capitalization to GDP
Bank Survey, December 2007 Domestic debt securities issued by financial institutions
and corporations as a share of GDP | 2008
Ratio is calculated using the following deflation method:
6.08 Foreign exchange derivatives turnover: Options
Percentage share of world total of over-the-counter foreign
exchange options turnover | April 2007
Transactions are measured in US dollars and involve contracts
(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
that give the right to buy or sell a currency with another currency GDPt
at a specified exchange rate during a specified period. This P_at
category also includes exotic foreign exchange options such as
average rate options and barrier options. Percentages are based where F is amount outstanding of private domestic debt
on 55 economies included in the Index. securities, P_e is end-of-period CPI, and P_a is average annual
CPI.
Source: Bank of International Settlements, Triennial Central
Bank Survey, December 2007 Source: Bank of International Settlements, Quarterly Review,
September 2009, http://www.bis.org/statistics/secstats.htm;
GDP and inflation data from IMF, World Economic Outlook
6.09 Stock market turnover ratio Database (April 2009)
Ratio of the value of total shares traded to average real
market capitalization | 2007
The denominator is deflated using the following method: 6.14 Public domestic bond market capitalization to GDP
Domestic debt securities issued by government as a share
Tt of GDP | 2008
P_at Ratio is calculated using the following deflation method:
,

358
(0.5) × [ Mt
P_et
+
Mt –1
P_et –1 ] (0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
where T is total value traded, M is stock market capitalization, GDPt
P_e is end-of-period CPI, and P_a is average annual CPI. P_at
Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine.
where F is amount outstanding of public domestic debt
2000. “A New Database on Financial Development and
securities, P_e is end-of-period CPI, and P_a is average annual
Structure.” World Bank Economic Review 14: 597–605.
CPI.
Updated November 2008
Source: Bank of International Settlements, Quarterly Review,
September 2009, http://www.bis.org/statistics/secstats.htm;
6.10 Stock market capitalization to GDP GDP and inflation data from IMF, World Economic Outlook
This indicator is the value of listed shares as a percentage Database (April 2009)
of GDP | 2007 or most recent year available
The ratio is calculated using the following deflation method:
6.15 Private international bonds to GDP

(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
International debt securities issued by financial institutions
and corporations as a share of GDP | 2008
International debt securities issued by financial institutions and
GDPt corporate issuers. This is based on the nationality of the issuer.
P_at Ratio is calculated using the following deflation method:

where F is stock market capitalization, P_e is end-of-period CPI,


and P_a is average annual CPI. (0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
Source: Stock market capitalization and GDP data are from the
GDPt
World Bank, World Development Indicators database, accessed
November 2008; other data are from the IMF International P_at
Financial Statistics database, electronic version accessed
where F is amount outstanding of private international debt
November 2008. Calculated using methodology detailed in
securities, P_e is end-of-period CPI, and P_a is average annual
Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine. 2000. “A
CPI.
New Database on Financial Development and Structure.” World
Bank Economic Review 14: 597–605. Updated November 2008 Source: Bank of International Settlements, Quarterly Review
March 2009; GDP data from IMF, World Economic Outlook
Database (April 2009)
6.11 Stock market value traded to GDP
Total value of shares traded on stock market exchanges as
a percentage of GDP | 2007 or most recent year available 6.16 Public international bonds to GDP
Value of shares traded and GDP are measured over the same International debt securities issued by government as a
time period. share of GDP | 2008
International debt securities issued by government. This is
Source: Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine.
based on the nationality of the issuer. Ratio is calculated using
2000. “A New Database on Financial Development and
the following deflation method:
Structure.” World Bank Economic Review 14: 597–605.
Updated November 2008
Part 2.r2 10/14/09 3:32 PM Page 359

Technical Notes and Sources


7.10 Total number of point of sale (POS) devices
(0.5) × [ Ft
P_et
+
Ft –1
P_et –1 ] ,
Total number of POSs per 100,000 adults | 2008
Data collected as part of an access to finance questionnaire
GDPt administered in February 2009. Survey was directed to the
central bank governor’s office or head office of the financial
P_at
regulator for approval and assignment to a contact person
where F is amount outstanding of public international debt responsible for gathering the appropriate information. Response
securities, P_e is end-of-period CPI, and P_a is average annual was received from 139 economies.
CPI.
Source: CGAP. 2009. “Financial Access 2009” (forthcoming),
Source: Bank of International Settlements, Quarterly Review Washington, DC: CGAP 2009. Full results to be released by
March 2009; GDP data from IMF, World Economic Outlook CGAP in October 2009.
Database (April 2009)

7.11 MFI borrowers’ penetration rate


Total number of borrowers from microfinance institutions
VII: Financial access as a percentage of country’s poor population | 2007
The total number of poor people is calculated based on National
Poverty Rates. When National Poverty Rates are not available,
7.06 Foreign direct investment to GDP forecasted poverty rates are used only for illustrative purposes.
Comprised of equity capital, reinvested earnings, and Two different methods were used to calculate the forecasted
intra-company loans | 2007 poverty rates. In the first one, poverty was predicted based on
Equity capital is the foreign direct investor’s purchase of both $1/day and $2/day poverty rates, and the minimum of the
shares of an enterprise in a country other than that of its prediction and the $2/day rate was used. In the second, the
residence. Reinvested earnings comprise of the foreign direct prediction was made based only on GNI per capita.
investor’s share (in proportion to direct equity participation) of
Source: Microfinance Information Exchange, Inc. (MIX).
earnings not distributed as dividends by affiliates or earnings not
September 2007
remitted to the foreign direct investor. Such retained profits by
affiliates are reinvested. Intra-company loans or intra-company
debt transactions refer to short- or long-term borrowing and
lending of funds between foreign direct investors (parent
enterprises) and affiliate enterprises.

Source: United Nations Conference on Trade and Development,


2008; GDP data from IMF, World Economic Outlook Database
(April 2009)

7.07 Market penetration of bank accounts 359


Number of commercial bank accounts per 100,000 adults |
2008 or most recent available
Figures for Brazil, Denmark, France, Norway, and the Russian
Federation taken from Demirguc-Kunt, Asli, Thorsten Beck, and
Patrick Honohan. 2008. Finance for All? Policies and Pitfalls in
Expanding Access. Washington, DC: World Bank. Figures for
Nigeria and Vietnam taken from The World Bank. 2008. Banking
the Poor: Measuring Banking Access in 54 Economies.
Washington, DC: The World Bank.

Source: CGAP. 2009. “Financial Access 2009” (forthcoming),


Washington, DC: CGAP 2009. Full results to be released by
CGAP in October 2009.

7.08 Commercial bank branches


Number of commercial bank branches per 100,000 adults |
2008
Data collected as part of an access to finance questionnaire
administered in February 2009. Survey was directed to the
central bank governor’s office or head office of the financial
regulator for approval and assignment to a contact person
responsible for gathering the appropriate information. Response
was received from 139 economies.

Source: CGAP. 2009. “Financial Access 2009” (forthcoming),


Washington, DC: CGAP 2009. Full results to be released by
CGAP in October 2009.

7.09 Total number of ATMs


Total number of ATMs per 100,000 adults | 2008
Data collected as part of an access to finance questionnaire
administered in February 2009. Survey was directed to the
central bank governor’s office or head office of the financial
regulator for approval and assignment to a contact person
responsible for gathering the appropriate information. Response
was received from 139 economies.

Source: CGAP. 2009. “Financial Access 2009” (forthcoming),


Washington, DC: CGAP 2009. Full results to be released by
CGAP in October 2009.
Part 2.r2 10/14/09 3:32 PM Page 360
Part 2.r2 10/14/09 3:32 PM Page 361

About the Authors


About the Authors

Toopan Bagchi Thierry Geiger


Toopan Bagchi is an Engagement Manager with Thierry Geiger is Economist and Associate Director
McKinsey & Company. He serves leading private-sector within the Global Competitiveness Network and a Global
and non-profit organizations in the United States and Leadership Fellow at the World Economic Forum. His
emerging markets on issues of strategy and organization. responsibilities include the development and computation
Mr. Bagchi contributed to The Financial Development of a wide range of indexes as well as analysis for a
Report while seconded to the World Economic Forum number of regional and topical projects. His main areas of
USA. He was previously with The Boston Consulting interest include econometrics, trade, and finance, while
Group, the Monitor Group, and the Inter-American his geographical focus is Asia. He is a co-author of The
Development Bank. Mr. Bagchi holds an MBA from the Global Competitiveness Report, The Global Information
Darden School of Business at the University of Virginia, Technology Report, and The Global Enabling Trade Report.
an MA in International Affairs from the Nitze School of He is also a contributor to The Financial Development
Advanced International Studies at Johns Hopkins Report and co-editor of The Ukraine Competitiveness
University, and a BA in International Relations and Report series. A Swiss national, Mr. Geiger holds a BA in
Economics from Brown University. Economics from the University of Geneva with a special-
ization in monetary and financial economics, and an MA
James Bilodeau in Economics from the University of British Columbia.
James Bilodeau is an Associate Director and Head of Prior to joining the Forum, he worked for the World Trade
the Emerging Markets Finance Group at the World Organization and Caterpillar Inc. He is also co-founder of
Economic Forum USA. He joined the Forum following Procab Studio SA, an IT company based in Geneva.
361
10 years of management consulting and research
experience, primarily in the areas of financial services Margareta Drzeniek Hanouz
and information technology. Immediately prior to joining Margareta Drzeniek Hanouz is Director and Senior
the Forum, Mr. Bilodeau independently led syndicated Economist with the Global Competitiveness Network at
research projects for cohorts of Global 2000 companies the World Economic Forum, where she researches and
ranging from an analysis of the key drivers of effective writes on issues of national competitiveness, in particular
information security and risk management to a study related to the Arab world, Eastern Europe, and interna-
benchmarking the performance of retirement service tional trade. She is lead author or editor of a number of
providers. While working at the Corporate Executive regional and topical reports and papers, including The
Board in Washington, DC, he led research initiatives on Global Enabling Trade Report. Previously, she oversaw
topics such as the provision of financial services to lower- the economic modeling for some of the Forum’s scenario
income consumers, emerging enterprise applications for projects and was charged with developing the economics
wireless technology, and IT-enabled collaboration. Mr. section of the program for the World Economic Forum’s
Bilodeau also worked as a strategy consultant with Arthur Annual Meeting in Davos. Before joining the Global
D. Little, Inc. He has an MBA with concentrations in Competitiveness Network, Dr Drzeniek Hanouz worked
Finance and Strategic Management from the University for several years with the International Trade Centre in
of Chicago and a BA (honors) in East Asian Studies from Geneva, where she was in charge of relations with
Brown University. He completed a fellowship at Keio Central and Eastern European countries. Dr. Drzeniek
University in Tokyo, Japan, as the recipient of the Hanouz received a Diploma in Economics from the
Monbusho Japan Studies Scholarship and is currently a University of Münster and holds a PhD in International
Global Leadership Fellow at the Forum. Economics from the University of Bochum, both in
Germany.
Erik Feyen
Erik Feyen is a Financial Economist in the World Bank’s Ibiye Harry
Finance and Private Sector Vice-Presidency. He has been Ibiye Harry is a Project Associate with the Emerging
working on financial sector policy and banking and capital Markets Finance team at the World Economic Forum
market operations for client countries in the African and USA. Prior to joining the Forum, Ms. Harry worked as an
Middle-Eastern regions. He currently heads the develop- investment banking analyst at Credit Suisse in New York.
ment of the World Bank’s financial sector indicators Ms. Harry holds a BS in Economics with a concentration
database and benchmark methodology. Most recently, in Business and Public Policy from The Wharton School,
he analyzed the banking systems of Mozambique and University of Pennsylvania.
Tanzania as part of the Financial Sector Assessment
Program (FSAP), a financial sector diagnostic tool of
the IMF and the World Bank. Prior to joining the World
Bank, Dr. Feyen worked as a management consultant
and as an analyst at the RAND Corporation. He holds a
PhD in finance from the University of Amsterdam.
Part 2.r2 10/14/09 3:32 PM Page 362

About the Authors

Nouriel Roubini
Nouriel Roubini is an internationally renowned expert
in the field of international macroeconomics. He is a
Professor of Economics at New York University’s
Stern School of Business and is also the Co-Founder
and Chairman of RGE Monitor (www.rgemonitor.com).
From 1998 to 2000, Professor Roubini served as the
Senior Economist for International Affairs at the White
House Council of Economic Advisers and then the
Senior Adviser to the Under Secretary for International
Affairs at the US Treasury Department, helping to resolve
the Asian and global financial crises, among other issues.
The International Monetary Fund, the World Bank, and
numerous other prominent public and private institutions
have also drawn upon his consulting expertise. He has
published more than 70 theoretical and empirical policy
papers on international macroeconomic issues and co-
authored the books Political Cycles: Theory and Evidence
(MIT Press, 1997) and Bailouts or Bail-ins? Responding
to Financial Crises in Emerging Markets (Institute for
International Economics, 2004). Professor Roubini’s
views on global economics issues are widely cited by
the media, and his blog was named one of 20 “must-
read” sources by the Wall Street Journal. Professor
Roubini received an undergraduate degree from Bocconi
University in Milan, Italy, and a PhD in Economics from
Harvard University. Prior to joining Stern, he was a faculty
member of the Economics Department at Yale University.

Ayah El Said
Ayah El Said is a Lead Analyst at RGE Monitor working
362 on financial development and emerging markets issues,
with a particular focus on the Middle East and North
Africa. Her areas of expertise include international finance
and monetary economics. Prior to joining RGE Monitor,
she worked in the Monetary Policy Unit of the Central
Bank of Egypt, the World Bank office in Cairo, and
as a Teaching Associate/Adjunct at New York University.
Ms. El Said holds a BA with highest honors from the
American University in Cairo, and a Master’s degree from
New York University, where she was a Fulbright scholar
for two years. Both degrees were in Economics.
Part 2.r2 10/14/09 3:32 PM Page 363

Partner Institutes
Partner Institutes

The World Economic Forum’s Global Competitiveness Bulgaria


Center for Economic Development
Network is pleased to acknowledge and thank the
Anelia Damianova, Senior Expert
following organizations as its valued Partner Institutes,
Burkina Faso
without whom the realization of The Financial Development
lnstitut Supérieure des Sciences de la Population (ISSP),
Report 2009 would not have been feasible: University of Ouagadougou
Argentina Samuel Kabore, Economist and Head of Development Strategy
IAE- Universidad Austral and Population Research
María Elina Gigaglia, Project Manager Canada
Eduardo Luis Fracchia, Professor Institute for Competitiveness and Prosperity
Australia Tamer Azer, Researcher
Australian Industry Group Roger Martin, Chairman and Dean of the Rotman
Nicholas James, Economist School of Management, University of Toronto
Tony Pensabene, Associate Director, Economics & Research James Milway, Executive Director
Heather Ridout, Chief Executive Chile
Austria Universidad Adolfo Ibáñez
Austrian Institute of Economic Research (WIFO) Ignacio Briones, Associate Professor of Economics,
Karl Aiginger, Director School of Government
Gerhard Schwarz, Coordinator, Survey Department Leonidas Montes, Dean, School of Government
Camila Chadwick, Project Coordinator
Bahrain 363
Bahrain Competitiveness Council, Bahrain Economic China
Development Board Institute of Economic System and Management
Nada Azmi, Business Intelligence Specialist, Economic National Development and Reform Commission
Planning & Development Zhou Haichun, Deputy Director and Professor
Jawad Habib, Senior Partner, BDO Jawad Habib Chen Wei, Research Fellow
Rima Al Kilani, Director, International Marketing Dong Ying, Professor

Bangladesh China Center for Economic Statistics Research,


Centre for Policy Dialogue (CPD) Tianjin University of Finance and Economics
Khondaker Golam Moazzem, Senior Research Fellow Lu Dong, Professor
Kazi Mahmudur Rahman, Senior Research Associate Jian Wang, Associate Professor
Mustafizur Rahman, Executive Director Hongye Xiao, Professor
Bojuan Zhao, Professor
Belgium
Huazhang Zheng, Associate Professor
Vlerick Leuven Gent Management School
Lutgart Van den Berghe, Professor, Executive Director Colombia
and Chairman, Competence Centre Entrepreneurship, National Planning Department
Governance and Strategy Alvaro Edgar Balcazar, Entrepreneurial Development Director
Bieke Dewulf, Associate, Competence Centre Entrepreneurship, Carolina Rentería Rodríguez, General Director
Governance and Strategy Mauricio Torres Velásquez, Advisor
Wim Moesen, Professor
Colombian Council of Competitiveness
Brazil
Hernando José Gomez, President
Fundação Dom Cabral
Carlos Arruda, Executive Director, International Board Czech Republic
and Professor and Coordinator of the Competitiveness CMC Graduate School of Business
and Innovation Center Tomas Janca, Executive Director
Marina Araújo, Economist and Researcher of the
Competitiveness and Innovation Center Denmark
Copenhagen Business School, Department of
Movimento Brasil Competitivo (MBC) International Economics and Management
Cláudio Leite Gastal, Director President Lise Peitersen, Administrative Director
Denise Alves, Projects Coordinator Casper Rose, Professor
Elisa de Araújo, Projects Assistant Egypt
Brunei Darussalam The Egyptian Center for Economic Studies
Ministry of Industry and Primary Resources Hanaa Kheir-El-Din, Executive Director and Director of Research
Pehin Dato Yahya Bakar, Minister Naglaa El Ehwany, Deputy Director and Lead Economist
Dato Paduka Hj Hamdillah Hj Abd Wahab, Deputy Minister Malak Reda, Senior Economist
Dato Paduka Hamid Hj Mohd Jaafar, Permanent Secretary
Part 2.r2 10/14/09 3:32 PM Page 364

Partner Institutes

Finland Jordan
ETLA—The Research Institute of the Finnish Economy Ministry of Planning & International Cooperation
Petri Rouvinen, Research Director Jordan National Competitiveness Team
Pasi Sorjonen, Head of the Forecasting Group Hiba Abu Taleb, Primary Researcher
Pekka Ylä-Anttila, Managing Director Hussein Abwini, Primary Researcher
Kawthar Al-Zou’bi, Primary Researcher
France
HEC School of Management, Paris Kazakhstan
Bertrand Moingeon, Professor and Deputy Dean JSC “National Analytical Centre of the Government and the
Bernard Ramanantsoa, Professor and Dean National Bank of the Republic of Kazakhstan”
Ayana Manasova, Chairperson
Germany
Aibek Baisakalov, Expert Analyst
WHU - Otto Beisheim School of Management, Vallendar
Ralf Fendel, Professor of Monetary Economics Korea, Republic of
Michael Frenkel, Professor, Chair of Macroeconomics College of Business School, Korea Advanced Institute of
and International Economics Science and Technology – KAIST
Ingoo Han, Senior Associate Dean and Professor
Hong Kong SAR
Ravi Kumar, Dean and Professor
Hong Kong General Chamber of Commerce
Youjin Sung, Manager, Exchange Programme
David O’Rear, Chief Economist
Kuwait
Federation of Hong Kong Industries Economics Department, Kuwait University
Alexandra Poon, Director Abdullah Alsalman, Assistant Professor
Mohammed El-Sakka, Professor
The Chinese General Chamber of Commerce Reyadh Faras, Assistant Professor

Hungary Malaysia
KOPINT-TÁRKI Economic Research Ltd. Institute of Strategic and International Studies (ISIS)
Ágnes Nagy, Project Manager Tan Sri Mohamed Jawhar Hassan, Chairman and
Éva Palócz, Chief Executive Officer Chief Executive Officer
Mahani Zainal Abidin, Director-General
India
Steven C.M. Wong, Assistant Director-General
Confederation of Indian Industry (CII)
Chandrajit Banerjee, Director General
Malaysia Productivity Corporation (MPC)
Tarun Das, Chief Mentor
Dato’ Nik Zainiah Nik Abd. Rahman, Director General
Virendra Gupta, Head, International and Trade Fairs
Lee Saw Hoon, Senior Director
364
Indonesia
Mexico
Center for Industry, SME & Business Competition Studies,
Center for Intellectual Capital and Competitiveness
University of Trisakti
Erika Ruiz Manzur, Executive Director
Tulus Tambunan, Professor and Director
René Villarreal Arrambide, President and Chief Executive Officer
Ireland Jesús Zurita González, General Director
Competitiveness Survey Group, Department of Economics,
University College Cork Instituto Mexicano para la Competitividad (IMCO)
Eleanor Doyle, Professor, Department of Economics Gabriela Alarcon Esteva, Economist
Niall O’Sullivan Manuel J. Molano Ruiz, Deputy General Director
Bernadette Power Roberto Newell Garcia, General Director

National Competitiveness Council Ministry of the Economy


Adrian Devitt, Manager Felipe Duarte Olvera, Undersecretary for Competitiveness
Caoimhe Gavin, Policy Advisor and Standardization
Gráinne Greehy, Graduate Trainee Gerardo de la Peña, Technical Secretary for Competitiveness
Jose Antonio Torre, Chief of Staff, ProMéxico Trade & Investment
Israel Paulo Esteban Alcaraz, Research Director, ProMéxico
Manufacturers’ Association of Israel (MAI) Trade & Investment
Shraga Brosh, President
Dan Catarivas, Director Netherlands
Yehuda Segev, Managing Director Erasmus Strategic Renewal Center,
Erasmus University Rotterdam
Italy Frans A. J. Van den Bosch, Professor
SDA Bocconi School of Management Henk W. Volberda, Professor
Secchi Carlo, Full Professor of Economic Policy, Bocconi University
Paola Dubini, Associate Professor, Bocconi University Nigeria
Francesco A. Saviozzi, SDA Assistant Professor, Nigerian Economic Summit Group (NESG)
Strategic and Entrepreneurial Management Department Felix Ogbera, Associate Director, Research
Sam Ohuabunwa, Chairman
Japan Chris Okpoko, Senior Consultant, Research
Hitotsubashi University, Graduate School of International
Corporate Strategy (ICS) Norway
in cooperation with Keizai Doyukai Keizai (Japan Association BI Norwegian School of Management
of Corporate Executives) Eskil Goldeng, Researcher
Yoko Ishikura, Professor Torger Reve, Professor
Kiyohiko Ito, Vice-President and General Manager for Policy
Studies, Keizai Doyukai
Part 2.r2 10/14/09 3:32 PM Page 365

Partner Institutes
Pakistan Sweden
Competitiveness Support Fund Center for Strategy and Competitiveness,
Arthur Bayhan, Chief Executive Officer Stockholm School of Economics
Stephen Manuel, Manager Media & Communication Christian Ketels, Senior Research Fellow
Imran Naeem Ahmad, Communication Specialist Örjan Sölvell, Professor

Panama Switzerland
INCAE Business School, Latin American Center for University of St. Gallen, Executive School of Management,
Competitiveness and Sustainable Development (CLACDS) Technology and Law (ES-HSG)
Arturo Condo, Rector Franz Jaeger, Professor
Lawrence Pratt, Director, CLACDS Beat Bechtold, Project Manager
Luis Reyes, Project Manager, CLACDS
Thailand
Marlene de Estrella, Director of External Relations
Sasin Graduate Institute of Business Administration,
Peru Chulalongkorn University
Centro de Desarrollo Industrial (CDI), Sociedad Nacional Pongsak Hoontrakul, Senior Research Fellow
de Industrias Toemsakdi Krishnamra, Director of Sasin
Néstor Asto, Project Director Piyachart Phiromswad, Faculty of Economics
Luis Tenorio, Executive Director
Thailand Development Research Institute (TDRI)
Philippines
Somchai Jitsuchon, Research Director
Makati Business Club
Chalongphob Sussangkarn, Distinguished Fellow
Alberto A. Lim, Executive Director
Yos Vajragupta, Senior Researcher
Michael B. Mundo, Chief Economist
Mark P. Opulencia, Deputy Director Turkey
TUSIAD Sabanci University Competitiveness Forum
Poland
Dilek Cetindamar, Director and Professor
The Economic Institute, The National Bank of Poland
Funda Kalemci, Project Specialist
Mateusz Pipien, Director
Zbigniew Zólkiewski, Deputy Director Ukraine
Piotr Boguszewski, Advisor CASE Ukraine, Center for Social and Economic Research
Dmytro Boyarchuk, Executive Director
Management Observatory Vladimir Dubrovskiy, Leading Economist
Monika Nowacka, Projects Director
United Arab Emirates
Ireneusz Tomczak, Chairman of the Board
Economic & Policy Research Unit (EPRU), Zayed University
Warsaw School of Economics
Nico Vellinga, Professor 365
Bogdan Radomski, Associate Professor
Dubai Competitiveness Council
Russian Federation Adel Alfalasi, Executive Director
Bauman Innovation Khawla Belqazi, Special Projects Manager
Alexei Prazdnitchnykh, Principal, Associate Professor
United Kingdom
Katerina Marandi, Consultant
LSE Enterprise Ltd, London School of Economics
and Political Science
Stockholm School of Economics, Russia
Adam Austerfield, Project Director
Igor Dukeov, Area Principal
Jane Lac, Project Coordinator
Carl F. Fey, Associate Dean of Research
Robyn Klingler, Graduate Researcher
Saudi Arabia
Venezuela
National Competitiveness Center (NCC)
CONAPRI - Venezuelan Council for Investment Promotion
Awwad Al-Awwad, Deputy Governor for Investment
Gladis Genua, Executive Director
Khaldon Mahasen, Manager, Investment Performance Assessment
Litsay Guerrero, Manager, Economic Affairs
Singapore
Vietnam
Economic Development Board
Central Institute for Economic Management (CIEM)
Lim Hong Khiang, Director Planning 2
Dinh Van An, President
Chua Kia Chee, Head, Research and Statistics Unit
Phan Thanh Ha, Deputy Director, Department of
Cheng Wai San, Head, Planning
Macroeconomic Management
Slovak Republic Pham Hoang Ha, Senior Researcher, Department of
Business Alliance of Slovakia (PAS) Macroeconomic Management
Robert Kicina, Executive Director
Martin Toth, Researcher Institute for Development Studies in HCMC (HIDS)
Nguyen Trong Hoa, Professor and President
South Africa
Du Phuoc Tan, Head of Department
Business Leadership South Africa
Trieu Thanh Son, Researcher
Friede Dowie, Director
Michael Spicer, Chief Executive Officer

Business Unity South Africa


Jerry Vilakazi, Chief Executive Officer
Vic Van Vuuren, Chief Operating Officer

Spain
IESE Business School, International Center for Competitiveness
Antoni Subirà, Professor
María Luisa Blázquez, Research Associate
Alessandro Cembalo, Research Assistant
Part 2.r2 10/14/09 3:32 PM Page 366
fdr.cover.mech.r2 10/14/09 2:15 PM Page 1

The importance of financial systems as a key factor in economic growth has become
even more pronounced in recent years, yet there is still surprisingly little agreement
about how to define and measure their development. To address this gap, the World
Economic Forum has undertaken an ongoing initiative that aims to provide business

The Financial Development Report 2009


leaders and policymakers with a common framework to identify and discuss the drivers
of the development of global financial systems and markets.

The Financial Development Report 2009, the second edition since its first publication in
2008, measures and analyzes the factors enabling the development of financial systems
in 55 economies. The Report aims to provide a comprehensive means for countries to
benchmark the various aspects of their financial systems and establish priorities for
improvement. It is published annually so that countries can continue to benchmark
themselves and track their progress over time.

The Report presents the rankings of the second Financial Development Index (FDI)
developed by the World Economic Forum in collaboration with the academic community,
multilateral organizations, and business leaders. The FDI assembles a vast amount of
data to create a holistic assessment of the different aspects of complex financial
systems, including the institutional environment, the business environment, financial
stability, banks, capital markets, and overall capital availability and access. Essay
contributions elaborate on specific effects of the current crisis on emerging markets
and on the achievement of the Millennium Development Goals. The Report contains
detailed profiles for the 55 economies covered by the FDI this year. Data used in the
calculation of the Index are fully annotated and clearly presented.

Written in a nontechnical language and style, the Report appeals to a large audience of
policymakers, business leaders, academics, and different organizations of civil society. It

2009
aims to provide policymakers with a balanced perspective as to which aspects of their
country’s financial system are most important and the ability to empirically calibrate this
view relative to other countries.
The Financial
Development Report

ISBN-13: 978-92-95044-27-2

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