The ratio of credit to GDP of a country is used as a measure to assess the participation of banks in the economic development of a country. Are there any other measures?
I would look at more detailed data.... For example, bank credit to private sector to GDP.... or Bank credit to manufacturing sector to GDP.... or sectoral distribution of ban credit in general.....
I would look at the financial inclusion which gives you the idea of the access to financial services. And I would also give a look at the amount of payments done using bank payment services
Assalam-o-Alaikum Brother!
I would like to suggest you to look at the variables like consumer loans as a percent of GDP, Credit to government sector/GDP, Credit to Private sector/GDP or total of both/GDP. You may also look at the volume of trade finance as a % of GDP or some combination of these variables.
Dear Saeed Al-Muharrami
Besides all suggestion above, I want to give some ideas:
The financial intermediary such as banks are a part of financial market, in which you want to evalute its effects on the economic development, you have to make sure that
1. There are 3 dimensions that you might want to consider about the development of banks and their effects on the economy:
- The scale of banking system => your indicator is one of that. It measures the scale through the ratio of credit on the GDP (a relative ratio) or you might want to use the growth rate of credit
- The deeply of financial service that banks supply such as the number of account on 10k persons, or the number of ATM...
- The financial inclusion of banking system as Pro Anna suggested. That is getting more attention from researchers recently
I hope that it's helpful
Best
Canh
Dr. Ghassn Omet
Thank you for your advice to check the credit of each industry and calculate the credit to GDP of each sector.
Dr. Anna Omarino
I will check the financial inclusion or the delivery of financial services at affordable costs to low-income of the society.
My question is how to calculate the financial inclusion or the financial exclusion?
Dr. Mohammad Hanif Akhtar
Thank you for your suggestion and I will consider your recommendation.
Dr. Nguyen Phuc Canh
Thank you for your advice to consider the three dimensions.
This is more an input mesure but you may be also interested and output or results indicador. Generally have to do with banking share services related to population, also amount of credit that goes for productive activities.
Thank you Dr. Hichem Hamza for the IMF Working paper. I found it very informative.
At the Gross level it would be Bank Credit to GDP Ratio. Also the distribution of credit across different segments of the economy will be a good indicator.
Banks collect the savings of the individuals and lend them out to business- people and manufacturers. Bank loans facilitate commerce. Manufacturers borrow from banks the money needed for the purchase of raw materials and to meet other requirements such as working capital. It is safe to keep money in banks.
Banks collect the savings of the individuals and lend them out to business- people and manufacturers. Bank loans facilitate commerce. Manufacturers borrow from banks the money needed for the purchase of raw materials and to meet other requirements such as working capital. It is safe to keep money in banks.
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