The International Monetary Fund (IMF) announced that Korea ranked sixth among 183 countries in terms of financial development level. The ranking is distinct from Korea’s standing of 87th in a similar evaluation by the World Economic Forum (WEF) based on a survey of entrepreneurs in 2015.
According to the evaluation of Korea’s financial development level based on the IMF Financial Development Index released by the Bank of Korea (BOK) on March 16, Korea’s financial development index stood sixth with 0.854 among 183 countries in the survey.
First place was claimed by Switzerland (0.951) which was followed by Australia (0.890), United Kingdom (0.882), United States (0.877) and Spain (0.860). Korea, standing sixth with 0.854, was followed by Canada (0.847), Japan (0.827), Hong Kong (0.827) and Italy (0.785).
France (0.763) ranked 11th while Germany (0.747) ranked 14th. Singapore (0.731) came in 16th. China (0.572) ranked 33th.
Korea’s index is much higher than 0.328, the average of newly emerging countries and outstrips 0.718, the average of developed countries.
The IMF’s Financial Development Index generally evaluates financial development levels in terms of three key factors -- financial depth, access, and efficiency.
Korea recorded high rankings in the Financial Institution Development Index and the Financial Market Development Index, too.
Korea’s Financial Institution Development Index arrived at 0.789, ranking 16th. This index is similar to the average of developed countries (0.783). Korea’s Financial Institution Depth Index and Access Index and Efficiency Index came in 17th, 28th and 11th, respectively.
Asked about why Korea had a relatively low Access Index, “This index is based on the numbers of bank branches and ATMs per 100,000 adults, the spread of mobile and internet banking contributed to cutting down on their numbers in Korea,” said a BOK official.
Korea ranked second with its Financial Market Development Index of 0.902 which towered over the average of 0.640. The index outnumbered the average of developed nations in all aspects such as depth, access and efficiency. Korea’s depth, access and efficiency indices ranked tenth, ninth and first, each.
The reason why Korea’s efficiency index was much higher compared to other sectors is that this index is measured based on stock market turnovers and stock trade is very active in Korea.
“The IMF selected Korea as a top-tier country after assessing countries by using a wide range of objective indicators that can be internally compared,” said an official at the BOK. “Both Korean financial institutions and financial market are on a par with those of developed countries in terms of depth, access and efficiency.”
But in the case of the new Financial Development Index, it was calculated based on simple indicators that can be obtained from all countries and the assessment of financial innovation, the variety of financial services and the level of financial globalization left something to be desired, he explained.