| Financial Soundness Indicators---Instructions
The Purposes of Compiling Financial Soundness Indicators (FSIs)
Financial instability may have an adverse impact on the investment behavior of corporations and may deepen the volatility of the economic cycle. Once a financial crisis occurs, it takes several years to solve the damage caused. To enhance financial stability,the IMF and World Bank launched the Financial Sector Assessment Program (FSAP) in 1999 and developed a comprehensive financial stability analytical framework. Through this, the IMF helps selected countries to identify the soundness, vulnerabilities and sources of risks of their financial systems as well as the relationship between the performance of financial sectors and macroeconomics in order to identify the needs for financial developments and to assist them in developing appropriate policy responses. FSIs, composed of a set of financial indicators associated with financial institutions, financial markets, real estate market, corporations and households, is part of the analytical framework and aims at monitoring the overall risks and vulnerabilities of financial stability.
The Contents of FSIs
FSIs are composed of 39 financial indicators which are classified into core set and encouraged set indicators, according to data importance and availability. Core set indicators include 12 financial ratios of deposit takers which are directly relevant to the financial stability. These indicators mostly from regulatory statistics can be collected and understood easily. Encouraged set indicators consist of 27 financial indicators including indicators associated with deposit takers, other financial institutions, non financial corporations, household sectors and real estate market as well as market liquidity. Due to the difficulties and higher cost of data collecting, only those encouraged set indicators relevant to financial institutions are adopted and will be revised according to compilation experiences gained and financial environment developments of various countries.
Attachment : FSIs [DOC][PDF]
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