Macrofinancial indicators for 117 developing and industrial countries

This paper examines macrofinancial data from 117 developing and industrial countries for the year 1985. The objective is to broadly characterize the financial systems of these countries using generally available data and to produce a set of comparative indicators for use in other work in this area. The analysis reveals the following : a) the level of economic development and institutional factors associated with geographic location are key determinants of the size of a country's financial system. Other macrofinancial characteristics, such as the mix between monetary and interest bearing financial instruments, also vary systematically with region and level of economic development; b) inflation negatively influences the overall size of the financial system; c) nominal returns on financial assets positively influence the overall size of the financial system; and d) since the inflation response is quantitatively more negative than the deposit rate response is is positive, maintaining the size of the financial system at high inflation rates by raising deposit rates requires sustaining exceptionally high real deposit rates.