New financial intermediary development indicators for developing countries

Financial development indicators are often applied to countries/regions without taking into account specific financial development realities. Financial depth in the perspective of monetary base is not equal to liquid liabilities in every development context. This paper introduces complementary indicators to the existing Financial Development and Structure Database (FDSD). These new measures can easily be computed from the FDSD. We present absolute as well as relative measures which are robust to the finance-growth nexus. When all financial sectors are taken into account in the definition and usage of liquid liabilities: (1) the formal and non-formal/informal financial sectors are inherently mutually antagonistic and should not be assimilated to the monetary base without distinction; (2) equating formal banking sector liquid liabilities to monetary base significantly undermines the formal banking system elasticity of growth; (3) there is a trade-off between growth and welfare from one financial sector to another; (4) non-formal and informal financial sectors are independent significant growth determinants.