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MEASURING FINANCIAL SECTOR DEVELOPMENT: A STUDY OF SELECTED ASIA‐PACIFIC COUNTRIES
Author(s) -
LYNCH David
Publication year - 1996
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.1996.tb00727.x
Subject(s) - citation , library science , asia pacific , political science , business , computer science , international trade
RADITIONAL measures of financial deepening, those based on monetary and credit aggregates, may not enable to assess accurately a country's financial development. For example, China has a higher ratio of broad money to GDP than Australia, and around the same level as Japan. Yet no one would consider China's financial system to be anywhere near as well developed as either of these two. Alternative measures are required to improve the evaluation of levels of financial development. This is of practical importance. Financial sector develop- ment is promoted as a means to generate economic efficiency by national govern- ments and multinational agencies, like the International Monetary Fund and Asian Development Bank. A well-defined set of measures of financial development is required for effective policy formulation, implementation, and evaluation. Indica- tors of financial development suggested in this paper may contribute to achieving this objective. Section II briefly examines the theoretical foundations of financial development. Based on this discussion, Section III presents a range of indicators of financial development for selected Asia-Pacific countries. Financial development is con- cerned with the unification of fragmented financial markets and these indicators can be used for this purpose. Thus, they extend beyond traditional indicators and, taken as a set, can trace financial development from less developed financial sys- tems, like those of China, to highly advanced systems, like those of Australia. Sec- tion IV presents some conclusions.