Too Cold, Too Hot, or Just Right? Assessing Financial Sector Development Across the Globe

This paper introduces the concept of the financial possibility frontier as a constrained optimum level of financial development to gauge the relative performance of financial systems across the globe. This frontier takes into account structural country characteristics, institutional, and macroeconom...

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Bibliographic Details
Main Author: Barajas, Adolfo
Other Authors: Beck, Thorsten, Dabla-Norris, Era, Yousefi, Seyed Reza
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2013
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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300 |a 30 pages 
653 |a Economic & financial crises & disasters 
653 |a Business cycles 
653 |a Finance 
653 |a Financial crises 
653 |a Industries: Financial Services 
653 |a Financial services 
653 |a Saving and Capital Investment 
653 |a Competition 
653 |a Financial Institutions and Services: Government Policy and Regulation 
653 |a General Financial Markets: General (includes Measurement and Data) 
653 |a Economic Development: Financial Markets 
653 |a Cycles 
653 |a Financial Markets and the Macroeconomy 
653 |a Macroeconomics 
653 |a Financial services industry 
653 |a Financial sector development 
653 |a Business Fluctuations 
653 |a Financial Risk Management 
653 |a Monetary Policy 
653 |a Credit gaps 
653 |a Finance: General 
653 |a Financial Crises 
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520 |a This paper introduces the concept of the financial possibility frontier as a constrained optimum level of financial development to gauge the relative performance of financial systems across the globe. This frontier takes into account structural country characteristics, institutional, and macroeconomic factors that impact financial system deepening. We operationalize this framework using a benchmarking exercise, which relates the difference between the actual level of financial development and the level predicted by structural characteristics, to an array of policy variables. We also show that an overshooting of the financial system significantly beyond levels predicted by its structural fundamentals is associated with credit booms and busts