The financial sector is a crucial sector of any economy, affecting its business environment, investment,
economic prospects and social dimensions, including poverty. Vulnerabilities in financial sectors often result
in financial crises, economic slowdowns, and fiscal costs. Financial sectors are thus important to monitor
and compare across economies and over time. Data typically available and analyses thereof, however, lack
the robustness needed to comprehensively and succinctly assess countries' financial sector development.
Information is scattered, disparate, often limited to measuring only the size of the financial system, not
allowing other dimensions of financial sector to be easily compared over time or across countries. Furthermore,
in an increasingly integrated world, where shocks transmit swiftly across boundaries, the need for
comprehensive financial risk assessment data has become all the more imperative.

The 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. Although the Handbook 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, it is designed for generic use in financial sector assessments, whether conducted by country authorities themselves, or by World Bank and IMF teams.

This chapter presents an overview of quantitative indicators of financial structure, development, and soundness. It provides guidance on key system-wide and sectoral indicators, including definitions, measurement, and usage. Key data sources for these indicators are explained in appendix C (Data Sources for Financial Sector Assessments).