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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