Saturday, January 21, 2023

What are the indicators of efficiency and competitive strength of financial system?

What are the indicators of efficiency and competitive strength of financial system? 


Ans. Following are the indicators of competitive strength of financial system: 


(i) Total Number of Institutions; 

(ii) Herifidahl Index; 

(iii) Three or Five banks concentration ratio; 

(iv) Interest rate spreads; 

(v) Financial market concentration ratio. Following are the indicators of efficiency of financial system: 

(a) Ratio between total cost of financial intermediation and total assets; 

(b) Interest rate spread which is the difference between lending rates and deposit rates.

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