Financial Sector Assessment a handbook, Chapter 4 Assessing Financial Structure and Financial Development, imf and World Bank, August 2005

particular focus on the subsector of housing finance 
may not be warranted for financial sector assessments 
in most countries.

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Chapter 4: Assessing Financial Structure and Financial Development
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unit trusts, and so forth. Some investments of those industries are in the form of bank 
deposits or other unit trusts, so that a measuring scale in a manner that adequately nets 
out intersectoral claims can be both important and sometimes difficult in the attempt to 
benchmark scale. In addition to one’s looking at the current position, projections of future 
developments, especially of pension funds, can be possible and relevant for a view as to 
the likely contribution of those sectors to funds availability.
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The range of products supplied, as well as their pricing (relative to actuarial fairness), 
is also an area where deficiencies may exist. It is important to determine whether such 
gaps are attributable to overregulation, to lack of competition (including restrictions on 
entry), or to lack of organizational capacity and skills in the industries. Because of the 
diversity of potential insurance products,
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a comprehensive analysis of cost and avail-
ability would be an extensive exercise. Absent such a study, information can, neverthe-
less, be obtained from market participants. Industry professionals will typically be vocal 
in identifying policy barriers (including regulatory failure to approve policy design) that 
inhibit their provision of particular services and products; users will be a better source for 
identifying others that are unavailable or overpriced because of industry inefficiencies 
or market power. A similar situation prevails with regard to other collective investment 
outlets. The tax and regulatory treatment of different insurance, pension, and mutual 
fund–type products has been a strong influence on the development of the insurance and 
collective investment sectors, and the whole market can be skewed by distorting incen-
tives that should be avoided as a matter of sound development policy.
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Coverage of the subsectors also needs to examine market structure in terms of con-
centration and ownership. In countries where there is a mandatory private tier to pension 
provision, issues of competition become especially important, because the rules regarding