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

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for banking depth where macro-variables, such as inflation and the level of gross domestic 
product (GDP) per capita, are key determinants along with institutional variables, such as 
shareholder and creditor rights (e.g., see Beck, Demirgüç-Kunt, and Levine 2003).
There are also some cross-country studies of other dimensions, including insurance 
penetration, stock market capitalization, and turnover, although those studies may not 
yet be sufficiently well established for heavy reliance to be placed on them for bench-
marking purposes. Along with other dimensions, including access to financial services, 
cross-country research is not yet sufficiently developed to support this kind of benchmark-
ing. In those cases, simple cross-country comparisons against peers can, nevertheless, be 
informative and can point to areas of deficiency.
4.3
Review of Legal, Informational, and Transactional Technology 
Infrastructures for Access and Development
The major cross-cutting infrastructures can be grouped under the three headings of legal, 
informational, and transactional technology.
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The robustness of legal infrastructures is 
universally acknowledged as crucial to a healthy financial system. Creditor protection 
in principle and in practice is central, as is bankruptcy law and its implementation. In 
both of those areas, reform of the court system is often at the heart of needed reforms. 
Corporate governance law and practice can also be seen as coming under this heading. 
Informational infrastructures include accounting and auditing rules and practice, plus the 
legal and organizational requirements for public or private credit registries and property 
registries. Other aspects, such as the ratings industry, may be relevant in more-advanced, 
middle-income countries. Internationally recognized accounting and auditing standards 
exist, and assessments of their observance, when available, can be useful for both stability 
and development assessments. The most important transactional technology infrastruc-
tures—relating to wholesale payments and settlements—may already be assessed using 
the Core Principles of Systemically Important Payment Systems (CPSIPS). (See chapter 
11 for details of CPSIPS.) The additional dimension required for development purposes 
is the functioning of the retail payments system: although it is not vulnerable to sudden 
failure on a large scale, it is not considered “systemically important” in the sense of the 
CPSIPS. The efficiency with which the legal, information, and transactional technol-
ogy infrastructures support financial intermediation in the country plays a critical role in 
access and development. Detailed assessments of those areas are described in chapters 9, 
10, and 11 of this handbook, and they provide information on the quality of the infra-
structure elements, which are discussed below.