The Financial Development report 2012

Financial Development Index in detail (continued)

ν Development Advantage

ν Development Disadvantage

indicator

rank/62

value

best Performer

Value

5th pillar: Non-banking financial services (continued)

M&A activity

5.04

M&A market share ......................................................................

27

......ν

...................0.5

United States.....................

34.4

5.05

M&A transaction value to GDP.....................................................

11.

.....ν...................

5.7

Hong Kong SAR...................

9.9

5.06

Share of total number of M&A deals.............................................

33.

.....ν...................

0.4

United States.....................

23.3

Insurance

5.07

Life insurance penetration............................................................

28.

.....ν...................

2.2

Ireland................................

19.8

5.08

Non-life insurance penetration......................................................

37.

.....ν...................

1.6

Netherlands..........................

9.5

5.09

Real growth of direct insurance premiums....................................

15.

.....ν...................

7.4

Argentina............................

21.9

5.10

Life insurance density...................................................................

33.

.....ν...................

0.4

India...................................

43.5

5.11

Non-life insurance density............................................................

37.

.....ν...................

0.3

China.................................

16.1

5.12

Relative value added of insurance to GDP....................................

21.

.....ν...................

1.6

Bahrain.................................

6.0

Securitization

5.13

Securitization to GDP .................................................................

39.

.....ν...................

0.3

United States.......................

5.1

5.14

Share of total number of securitization deals................................

30.

.....ν...................

0.2

United States.....................

53.6

6th pillar: Financial markets

Foreign exchange markets

6.01

Spot foreign exchange turnover ..................................................

31.

.....ν...................

0.1

United Kingdom.................

38.5

6.02

Outright forward foreign exchange turnover .................................

20.

.....ν...................

0.4

United Kingdom.................

41.3

6.03

Foreign exchange swap turnover ...............................................

41.

.....ν...................

0.0

United Kingdom.................

33.3

Derivatives markets

6.04

Interest rate derivatives turnover: Forward rate agreements..........

36.

.....ν...................

0.0

United Kingdom.................

48.4

6.05

Interest rate derivatives turnover: Swaps .....................................

32.

.....ν...................

0.0

United Kingdom.................

45.3

6.06

Interest rate derivatives turnover: Options ...................................

n/a.

...........................

n/a

United Kingdom.................

50.4

6.07

Foreign exchange derivatives turnover: Currency swaps..............

21.

.....ν...................

0.4

United Kingdom.................

32.1

6.08

Foreign exchange derivatives turnover: Options...........................

44.

.....ν...................

0.0

United Kingdom.................

55.3

Equity market development

6.09

Stock market turnover ratio..........................................................

47.

.....ν.................

19.7

Turkey..............................

237.9

6.10

Stock market capitalization to GDP................................................

8.

.....ν...............

129.5

Hong Kong SAR...............

440.2

6.11

Stock market value traded to GDP...............................................

33.

.....ν.................

21.6

Hong Kong SAR...............

681.5

6.12

Number of listed companies per 10,000 people...........................

27.

.....ν...................

0.1

Hong Kong SAR...................

2.0

Bond market development

6.13

Private domestic bond market capitalization to GDP....................

27.

.....ν.................

14.4

Denmark..........................

177.2

6.14

Public domestic bond market capitalization to GDP.....................

39.

.....ν.................

18.0

Japan...............................

208.5

6.15

Private international bonds to GDP...............................................

36.

.....ν...................

5.8

Ireland..............................

202.8

6.16

Public international bonds to GDP................................................

42.

.....ν...................

1.6

Greece...............................

70.8

6.17

Local currency corporate bond issuance to GDP.........................

15.

.....ν...................

0.9

Malaysia...............................

4.9

7th pillar: Financial access

Commercial access

7.01

Financial market sophistication.....................................................

18.

.....ν...................

5.8

United Kingdom...................

6.8

7.02

Venture capital availability.............................................................

22.

.....ν...................

3.2

Hong Kong SAR...................

4.5

7.03

Ease of access to credit ..............................................................

10.

.....ν...................

4.5

Hong Kong SAR...................

5.0

7.04

Financing through local equity market..........................................

13.

.....ν...................

4.6

Hong Kong SAR...................

5.7

7.05

Ease of access to loans...............................................................

15.

.....ν...................

3.7

Bahrain.................................

4.8

7.06

Foreign direct investment to GDP...................................................

7.

.....ν...................

7.0

Hong Kong SAR.................

34.2

Retail access

7.07

Market penetration of bank accounts...........................................

41.

.....ν.................

42.2

Denmark............................

99.7

7.08

Commercial bank branches .........................................................

26.

.....ν.................

17.6

Portugal.............................

75.9

7.09

Total number of ATMs..................................................................

25.

.....ν.................

62.5

Korea, Rep.......................

250.3

7.10

Debit card penetration..................................................................

41.

.....ν.................

25.8

Netherlands........................

97.6

7.11

Loan accounts at MFIs...................................................................

8.

.....ν.................

15.2

Peru.................................

121.2

7.12

Loan from a financial institution....................................................

42.

.....ν...................

7.8

Finland...............................

23.9

Rank (out of 62)

Score (1—7 scale)

2012 Index

23

4.0

1

2

3

4

5

6

7

inputs

Factors, policies, and institutions

1st pillar: Institutional environment

35

4.1

Financial sector liberalization

44

3.6

Corporate governance

31

4.3

Legal and regulatory issues

32

3.8

Contract enforcement

27

4.7

2nd pillar: Business environment

47

3.9

Human capital

39

3.9

Taxes

54

3.8

Infrastructure

45

3.3

Cost of doing business

42

4.7

3rd pillar: Financial stability

20

4.9

Currency stability

7

6.0

Banking system stability

55

3.1

Risk of sovereign debt crisis

7

6.2

1

2

3

4

5

6

7

4th pillar: Banking financial services

17

4.4

Size index

21

3.4

Efficiency index

21

5.8

Financial information disclosure

19

3.9

5th pillar: Non-banking financial services

4

4.5

IPO Activity

1

6.9

M&A Activity

5

5.6

Insurance

15

3.6

Securitization

32

1.7

6th pillar: Financial markets

21

3.0

Foreign exchange markets

20

1.4

Derivatives markets

25

2.5

Equity market development

11

4.5

Bond market development

24

2.8

1

2

3

4

5

6

7

7th pillar: Financial access..................................................................

41

3.2

Commercial access........................................................................

37

3.5

Retail access..................................................................................

38

2.8

1

2

3

4

5

6

7

outputs

Financial Development Index in detail

ν Development Advantage

ν Development Disadvantage

indicator

rank/62

value

best Performer

Value

1st pillar: Institutional environment

Financial sector liberalization

1.01

Capital account liberalization........................................................

49

......ν

...................1.9

Multiple (25)..........................

7.0

1.02

Commitments to WTO Agreement on Trade in Services...............

26.

.....ν...................

5.1

Multiple (17)..........................

7.0

1.03

Domestic financial sector liberalization..........................................

42.

.....ν...................

3.9

Multiple (24)..........................

7.0

Corporate governance

1.04

Extent of incentive-based compensation......................................

18.

.....ν...................

4.5

United Kingdom...................

5.3

1.05

Efficacy of corporate boards.........................................................

44.

.....ν...................

4.3

South Africa.........................

5.8

1.06

Reliance on professional management.........................................

32.

.....ν...................

4.5

Finland.................................

6.3

1.07

Willingness to delegate ................................................................

33.

.....ν...................

3.8

Denmark..............................

6.2

1.08

Strength of auditing and reporting standards................................

41.

.....ν...................

4.5

South Africa.........................

6.6

1.09

Ethical behavior of firms...............................................................

32.

.....ν...................

4.0

Finland.................................

6.5

1.10

Protection of minority shareholders’ interests...............................

39.

.....ν...................

4.2

Finland.................................

6.1

Legal and regulatory issues

1.11

Burden of government regulation...................................................

8.

.....ν...................

4.2

Singapore.............................

5.6

1.12

Regulation of securities exchanges..............................................

38.

.....ν...................

4.3

South Africa.........................

6.5

1.13

Property rights ............................................................................

29.

.....ν...................

4.9

Finland.................................

6.5

1.14

Intellectual property protection.....................................................

32.

.....ν...................

3.9

Finland.................................

6.3

1.15

Diversion of public funds..............................................................

28.

.....ν...................

3.7

Denmark..............................

6.3

1.16

Public trust in politicians ..............................................................

14.

.....ν...................

4.1

Singapore.............................

6.3

1.17

Corruption perceptions index.......................................................

39.

.....ν...................

3.6

Finland.................................

9.4

1.18

Strength of legal rights index........................................................

35.

.....ν...................

6.0

Multiple (6)..........................

10.0

1.19

Central bank transparency...........................................................

49.

.....ν...................

4.0

Sweden..............................

15.0

Contract enforcement

1.20

Effectiveness of law-making bodies..............................................

19.

.....ν...................

4.3

Singapore.............................

6.4

1.21

Judicial independence..................................................................

35.

.....ν...................

3.9

Finland.................................

6.5

1.22

Irregular payments in judicial decisions.........................................

39.

.....ν...................

3.8

Denmark..............................

6.8

1.23

Time to enforce a contract...........................................................

19.

.....ν...............

406.0

Singapore.........................

150.0

1.24

Number of procedures to enforce a contract................................

26.

.....ν.................

34.0

Multiple (2)..........................

21.0

1.25

Strength of investor protection index............................................

41.

.....ν...................

5.0

Singapore.............................

9.3

1.26

Cost of enforcing contracts ...........................................................

3.

.....ν.................

11.1

Norway................................

9.9

2nd pillar: Business environment

Human capital

2.01

Quality of management schools...................................................

39.

.....ν...................

4.2

United Kingdom...................

6.1

2.02

Quality of math and science education.........................................

18.

.....ν...................

4.6

Singapore.............................

6.3

2.03

Extent of staff training...................................................................

31.

.....ν...................

4.2

Switzerland..........................

5.6

2.04

Local availability of specialized research and training services.......

37.

.....ν...................

4.4

Switzerland..........................

6.4

2.05

Brain drain...................................................................................

28.

.....ν...................

4.1

Switzerland..........................

6.3

2.06

Tertiary enrollment ......................................................................

47.

.....ν.................

25.9

Korea, Rep.......................

103.1

Taxes

2.07

Irregular payments in tax collection...............................................

45.

.....ν...................

3.9

Finland.................................

6.9

2.08

Distortive effect of taxes and subsidies on competition.................

26.

.....ν...................

4.2

United Arab Emirates...........

5.9

2.09

Marginal tax variation...................................................................

56.

.....ν.................

19.0

Kuwait................................

-4.8

2.10

Time to pay taxes.........................................................................

52.

.....ν...............

398.0

United Arab Emirates.........

12.0

Infrastructure

2.11

Quality of overall infrastructure .....................................................

40.

.....ν...................

4.3

Switzerland..........................

6.6

2.12

Quality of electricity supply...........................................................

38.

.....ν...................

5.2

Netherlands..........................

6.8

2.13

Internet users ..............................................................................

45.

.....ν.................

38.3

Norway..............................

94.0

2.14

Broadband Internet subscriptions................................................

33.

.....ν.................

11.6

Switzerland........................

39.2

2.15

Telephone subscriptions...............................................................

33.

.....ν.................

21.2

Germany............................

63.1

2.16

Mobile telephone subscriptions ...................................................

56.

.....ν.................

73.2

Hong Kong SAR...............

209.6

Financial Development Index in detail (continued)

ν Development Advantage

ν Development Disadvantage

indicator

rank/62

value

best Performer

Value

2nd pillar: Business environment (continued)

Cost of doing business

2.17

Cost of starting a business...........................................................

22

......ν

...................3.5

Denmark..............................

0.0

2.18

Cost of registering property .........................................................

27.

.....ν...................

3.6

Multiple (2)............................

0.0

2.19

Cost of closing a business...........................................................

49.

.....ν.................

22.0

Multiple (4)............................

1.0

2.20

Time to start a business...............................................................

58.

.....ν.................

38.0

Australia...............................

2.0

2.21

Time to register property..............................................................

31.

.....ν.................

29.0

Portugal...............................

1.0

2.22

Time to close a business..............................................................

22.

.....ν...................

1.7

Ireland..................................

0.4

3rd pillar: Financial stability

Currency stability

3.01

Change in real effective exchange rate (REER).............................

15.

.....ν...................

2.9

Brazil....................................

8.3

3.02

External vulnerability indicator.........................................................

2.

.....ν.................

14.3

Saudi Arabia.........................

9.3

3.03

Current account balance to GDP.................................................

17.

.....ν...................

4.4

Kuwait................................

32.0

3.04

Dollarization vulnerability indicator...............................................

n/a.

...........................

n/a

Multiple (25)..........................

0.0

3.05

External debt to GDP (developing economies)................................

1.

.....ν...................

9.6

China...................................

9.6

(advanced economies)................................................................

n/a.

...........................

n/a

Hong Kong SAR...............

287.7

Banking system stability

3.07

Frequency of banking crises.........................................................

28...... ...................

ν

1.5

Multiple (9)............................

0.0

3.08

Financial strengths indicator.........................................................

39...... ...................

ν

3.0

Multiple (3)............................

9.0

3.09

Aggregate measure of real estate bubbles....................................

49...... ...................

ν

1.0

Ireland..................................

6.9

3.10

Tier 1 capital ratio.........................................................................

51...... ...................

ν

9.7

Ghana................................

22.7

3.11

Output loss during banking crises................................................

30...... .................

ν

29.1

Multiple (20)..........................

0.0

Risk of sovereign debt crisis

3.12

Local currency sovereign rating....................................................

20...... .................

ν

17.0

Multiple (10)........................

20.0

3.13

Foreign currency sovereign rating.................................................

18...... .................

ν

17.0

Multiple (10)........................

20.0

3.14

Aggregate macroeconomic indicator..............................................

9...... ...................

ν

6.0

Peru.....................................

6.4

3.15

Manageability of public debt ..........................................................

6...... .................

ν

15.1

Kuwait..................................

6.2

3.16

Credit default swap spreads.........................................................

17...... ...............

ν

128.4

Norway..............................

36.2

4th pillar: Banking financial services

Size index

4.01

Deposit money bank assets to GDP.............................................

15...... ...............

ν

130.5

Ireland..............................

245.1

4.02

Central bank assets to GDP.........................................................

16...... ...................

ν

3.9

Brazil..................................

18.3

4.03

Financial system deposits to GDP................................................

39...... .................

ν

51.0

Hong Kong SAR...............

305.8

4.04

M2 to GDP.....................................................................................

2...... ...............

ν

170.6

Hong Kong SAR...............

320.5

4.05

Private credit to GDP....................................................................

15...... ...............

ν

120.3

Denmark..........................

229.8

4.06

Bank deposits to GDP.................................................................

40...... .................

ν

51.0

Hong Kong SAR...............

305.8

4.07

Money market instruments to GDP..............................................

33...... ...................

ν

0.0

Ireland................................

18.6

Efficiency index

4.08

Aggregate profitability indicator......................................................

4...... ...................

ν

5.6

Czech Republic....................

6.0

4.09

Bank overhead costs.....................................................................

3...... ...................

ν

0.9

Finland.................................

0.6

4.10

Public ownership of banks...........................................................

62...... .................

ν

83.4

Multiple (22)..........................

0.0

4.11

Bank operating costs to assets....................................................

10...... ...................

ν

1.0

Sweden................................

0.8

4.12

Non-performing bank loans to total loans.......................................

6...... ...................

ν

1.0

Finland.................................

0.5

Financial information disclosure

4.13

Private credit bureau coverage ....................................................

53...... ...................

ν

0.0

Multiple (12)......................

100.0

4.14

Public credit registry coverage .......................................................

2...... .................

ν

82.5

Portugal.............................

86.2

5th pillar: Non-banking financial services

IPO activity

5.01

IPO market share ..........................................................................

1...... .................

ν

37.8

China.................................

37.8

5.02

IPO proceeds amount ...................................................................

4...... ...................

ν

1.1

Hong Kong SAR...................

5.1

5.03

Share of world IPOs.......................................................................

1...... .................

ν

30.2

China.................................

30.2

Financial Development Index in detail (continued)

ν Development Advantage

ν Development Disadvantage

indicator

rank/62

value

best Performer

Value

5th pillar: Non-banking financial services (continued)

M&A activity

5.04

M&A market share ........................................................................

3

......ν

...................6.7

United States.....................

34.4

5.05

M&A transaction value to GDP.....................................................

32.

.....ν...................

2.8

Hong Kong SAR...................

9.9

5.06

Share of total number of M&A deals...............................................

2.

.....ν...................

9.7

United States.....................

23.3

Insurance

5.07

Life insurance penetration............................................................

30.

.....ν...................

1.8

Ireland................................

19.8

5.08

Non-life insurance penetration......................................................

45.

.....ν...................

1.2

Netherlands..........................

9.5

5.09

Real growth of direct insurance premiums....................................

51.

.....ν.................

-6.4

Argentina............................

21.9

5.10

Life insurance density.....................................................................

2.

.....ν.................

24.9

India...................................

43.5

5.11

Non-life insurance density..............................................................

1.

.....ν.................

16.1

China.................................

16.1

5.12

Relative value added of insurance to GDP....................................

43.

.....ν...................

0.7

Bahrain.................................

6.0

Securitization

5.13

Securitization to GDP .................................................................

51.

.....ν...................

0.1

United States.......................

5.1

5.14

Share of total number of securitization deals................................

15.

.....ν...................

1.0

United States.....................

53.6

6th pillar: Financial markets

Foreign exchange markets

6.01

Spot foreign exchange turnover ..................................................

18.

.....ν...................

0.5

United Kingdom.................

38.5

6.02

Outright forward foreign exchange turnover .................................

16.

.....ν...................

0.6

United Kingdom.................

41.3

6.03

Foreign exchange swap turnover ...............................................

24.

.....ν...................

0.3

United Kingdom.................

33.3

Derivatives markets

6.04

Interest rate derivatives turnover: Forward rate agreements.........

n/a.

...........................

n/a

United Kingdom.................

48.4

6.05

Interest rate derivatives turnover: Swaps .....................................

31.

.....ν...................

0.0

United Kingdom.................

45.3

6.06

Interest rate derivatives turnover: Options ....................................

10.

.....ν...................

0.6

United Kingdom.................

50.4

6.07

Foreign exchange derivatives turnover: Currency swaps..............

41.

.....ν...................

0.0

United Kingdom.................

32.1

6.08

Foreign exchange derivatives turnover: Options...........................

33.

.....ν...................

0.0

United Kingdom.................

55.3

Equity market development

6.09

Stock market turnover ratio............................................................

5.

.....ν...............

186.5

Turkey..............................

237.9

6.10

Stock market capitalization to GDP..............................................

17.

.....ν.................

83.8

Hong Kong SAR...............

440.2

6.11

Stock market value traded to GDP.................................................

5.

.....ν...............

145.8

Hong Kong SAR...............

681.5

6.12

Number of listed companies per 10,000 people...........................

55.

.....ν...................

0.0

Hong Kong SAR...................

2.0

Bond market development

6.13

Private domestic bond market capitalization to GDP....................

21.

.....ν.................

22.7

Denmark..........................

177.2

6.14

Public domestic bond market capitalization to GDP.....................

35.

.....ν.................

21.9

Japan...............................

208.5

6.15

Private international bonds to GDP...............................................

49.

.....ν...................

1.4

Ireland..............................

202.8

6.16

Public international bonds to GDP................................................

51.

.....ν...................

0.1

Greece...............................

70.8

6.17

Local currency corporate bond issuance to GDP...........................

3.

.....ν...................

2.3

Malaysia...............................

4.9

7th pillar: Financial access

Commercial access

7.01

Financial market sophistication.....................................................

49.

.....ν...................

4.1

United Kingdom...................

6.8

7.02

Venture capital availability.............................................................

18.

.....ν...................

3.5

Hong Kong SAR...................

4.5

7.03

Ease of access to credit ..............................................................

26.

.....ν...................

4.0

Hong Kong SAR...................

5.0

7.04

Financing through local equity market..........................................

36.

.....ν...................

3.9

Hong Kong SAR...................

5.7

7.05

Ease of access to loans...............................................................

30.

.....ν...................

3.1

Bahrain.................................

4.8

7.06

Foreign direct investment to GDP.................................................

41.

.....ν...................

1.7

Hong Kong SAR.................

34.2

Retail access

7.07

Market penetration of bank accounts...........................................

31.

.....ν.................

63.8

Denmark............................

99.7

7.08

Commercial bank branches ........................................................

n/a.

...........................

n/a

Portugal.............................

75.9

7.09

Total number of ATMs.................................................................

n/a.

...........................

n/a

Korea, Rep.......................

250.3

7.10

Debit card penetration..................................................................

29.

.....ν.................

41.0

Netherlands........................

97.6

7.11

Loan accounts at MFIs.................................................................

26.

.....ν...................

0.1

Peru.................................

121.2

7.12

Loan from a financial institution....................................................

46.

.....ν...................

7.3

Finland...............................

23.9

Rank (out of 62)

Score (1—7 scale)

2012 Index

46

3.2

1

2

3

4

5

6

7

inputs

Factors, policies, and institutions

1st pillar: Institutional environment

52

3.5

Financial sector liberalization

46

3.4

Corporate governance

48

4.0

Legal and regulatory issues