The experience of many countries around the world clearly shows that while financial sector development can spur economic growth, financial fragility and instability can seriously harm growth.
Following the financial crises of the late 1990s, there was an increasing interest in the systematic assessment of the strengths and weaknesses of financial systems, with the ultimate goal of formulating appropriate policies to foster financial stability, and stimulate financial sector development. Consequently, there was been an increased demand from financial sector authorities in many countries, as well as from the Bank and International Monetary Fund (IMF) staff for information on key issues, and sound practices in the assessment of financial systems, and in the design of policy responses.
This Handbook presents an overall analytical framework for assessing financial system stability and developmental needs, providing broad guidance on approaches, methodologies, and techniques of assessing financial systems.
It draws substantially on World Bank and IMF experience with the Financial Sector Assessment Program (FSAP) and from the broader policy and operational work in both institutions, but it is designed for generic use in financial sector assessments, whether conducted by country authorities themselves, or by World Bank and IMF teams.