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damage the interests of local financial firms. Because of their specialist knowledge, 
incumbent providers are often in a strong position to resist policy changes that, though 
good for growth and overall financial development in the economy generally, may 
damage their sectoral interest. For a detailed and instructive account of how bank-
ruptcy professionals, judges, and lawyers systematically blocked bankruptcy reform in 
the United States throughout the twentieth century, see Skeel (2003).
2. For the importance of the functional approach as opposed to the institutional 
approach, see Beck and Levine (2002) and Levine (1997).
3. Beck, Demirgüç-Kunt, and Levine (2000) provide a set of benchmark indicators for 
different parts of the financial system. Research is ongoing to enrich the cross-country 
data, notably on access.
4. For example, Demirgüç-Kunt, Laeven, and Levine (2003) find a significant role for 
bank-level variables (such as bank size, equity and liquidity ratios, and fee income), 
together with national-level variables (such as bank concentration, inflation, GDP per 
capita, quality of governmental institutions that are based on governance indicators 
compiled by World Bank), property rights, and restrictiveness of bank conduct and 
entry regulations).
5. Regulation and supervision are also part of the infrastructure review, here covered in 
the information-gathering phase on a sector-by-sector basis.
6. Chapter 9 contains a discussion of the scope of the insolvency and creditor rights 
standards.
7. Chapter 10 contains a discussion of the scope of corporate governance standards.
8. Jappelli and Pagano (2002) present an early study on the positive relationship between 
the availability of debtor information through credit registries and financial develop-
ment. Miller (2003) is a collection of papers on different aspects of the issue. Levine, 
Loayza, and Beck (2000) discuss the importance of accounting standards for financial 
intermediary development. The Center for International Financial Analysis and 
Research Inc. provides data for 44 countries on accounting standards.
9. Honohan (2004b) describes of a wide range of data sources, including recent efforts 
to increase systematic coverage of financial issues in surveys. For example, the World 
Bank–led Enterprise Surveys have already covered approximately 50 countries since 
2002 and are being rolled out at the rate of about 20 countries per year. The World 
Bank has also surveyed bank regulators in approximately 70 countries about overall 
access indicators—such as number of branches and ATMs, average loan and deposit 
size—and provider banks in approximately 60 countries about product and process 
technology.
10. The Basel Core Principles (BCPs) for Effective Banking Supervision state that “bank-
ing supervision is only part of wider arrangements that are needed to promote stability 
in financial markets” (see chapter 5). Those prerequisites are spelled out in the BCP 
source document, and they include much of what is needed for efficiency and reach, 
as well as stability. If a BCP assessment is being conducted in parallel, the assessors 
will also be gathering information relevant to the sectoral development assessment 
on banking. For an overview of relation between standards assessments and sectoral 
reviews, see box 4.5.

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Chapter 4: Assessing Financial Structure and Financial Development