lower data quality). On the other hand, ATMs per capita slightly dominates bank branches per capita on account of a better fit and somewhat lower uniqueness factors in the principal components analysis. Hence, until better information is collected, we picked _ATMs per capita_ as our choice reach indicator for banks.

**Table 11: Selecting the Core Indicators**

||**Dimension**|**Variable**|**Empirical link**<br>**with**<br>**welfare/growth**|**Goodness**<br>**of fit**|<br>**Factor**<br>**loading**|**Coverage**|**Within to**<br>**between**<br>**variation**|**Final**<br>**indicator?**|
|---|---|---|---|---|---|---|---|---|
|**BANKS**|SIZE|Log private credit via deposit money banks to GDP|DIRECT|HIGH|HIGH|EXCELLENT|HIGH|**YES**|
|||Log total private credit to GDP|DIRECT|HIGH|HIGH|POOR|HIGH|**NO**|
|||Log deposits to GDP|INDIRECT|HIGH|HIGH|EXCELLENT|HIGH|**YES**|
|||Log total assets of deposit money banks to GDP|INDIRECT|HIGH|HIGH|GOOD|HIGH|**NO**|
||EFFICIENCY|Log net interest margin|INDIRECT|MEDIUM|HIGH|GOOD|HIGH|**YES**|
|||Log interest spread|INDIRECT|MEDIUM|MEDIUM|GOOD|LOW|**NO**|
|||Log overhead to total assets|INDIRECT|LOW|HIGH|GOOD|HIGH|**NO**|
||REACH|Log ATMs per 100,000 people|INDIRECT|HIGH|MEDIUM|LOW|NA|**YES**|
|||Log deposits per 1,000 people|INDIRECT|HIGH|HIGH|LOW|NA|**NO**|
|||Log branches per 100,000 people|INDIRECT|HIGH|LOW|LOW|NA|**NO**|
|**INST. INVESTORS**|SIZE|Log assets of institutional assets to GDP|INDIRECT|MEDIUM|-|LOW|NA|**YES**|
|||Log assets of pension funds to GDP|INDIRECT|LOW|-|LOW|NA|**NO**|
|||Log assets of insurance companies to GDP|INDIRECT|HIGH|-|LOW|NA|**NO**|
|||Log assets to mutual funds to GDP|INDIRECT|HIGH|-|LOW|NA|**NO**|
|**STOCK MARKETS**|SIZE|Log stock market capitalization|INDIRECT|MEDIUM|HIGH|GOOD|HIGH|**YES**|
|||Log number of listed firms|INDIRECT|HIGH|MEDIUM|GOOD|HIGH|**YES**|
||LIQUIDITY|Log turnover|DIRECT|MEDIUM|HIGH|GOOD|MEDIUM|**YES**|
|||Log value traded|INDIRECT|HIGH|LOW|GOOD|HIGH|**NO**|
||REACH|Log market capitalization of 10 largest firms|INDIRECT|MEDIUM|MEDIUM|LOW|HIGH|**NO**|
|||Log of closely held shares|INDIRECT|MEDIUM|MEDIUM|LOW|HIGH|**NO**|
|||Log total public offerings to GDP|INDIRECT|LOW|MEDIUM|LOW|HIGH|**NO**|
|||Log stock price synchronicity|INDIRECT|LOW|MEDIUM|LOW|HIGH|**NO**|
|**BOND MARKETS**|SIZE|Log private bonds to GDP|INDIRECT|HIGH|-|LOW|HIGH|**YES**|
|||Log public bonds to GDP|INDIRECT|LOW|-|LOW|HIGH|**YES**|
||EFFICIENCY|Log turnover domestic private bonds|INDIRECT|LOW|-|LOW|HIGH|**NO**|
|||Log turnover domestic public bonds|INDIRECT|LOW|-|LOW|LOW|**NO**|
||REACH|Log value new issues domestic private bonds to GDP|INDIRECT|LOW|-|LOW|LOW|**NO**|

- As regards institutional investors, _total assets_ in the sector is a clear winner on account of the fact that it incorporates information on pension funds that otherwise would be lost due to the fact that the pension fund assets on their own are basically “all over the place”, reflecting the great variety of institutional arrangements and dates of introduction. However, the good fit of insurance companies and mutual funds suggests that a breakdown by sub-sectors would also serve a useful purpose.<sup>37</sup>

- As regards the equity market size indicators, we picked _market capitalization_ over value traded notwithstanding the former’s lackluster performance in terms of fit and linkages with welfare objectives. The higher factor loadings of market cap as regards size and the high correlation between value traded and turnover suggests that market cap provides more additional value in terms of understanding the level of development of the equity market than value traded, which basically replicates the information already provided in turnover.

> 37 For this reason, although we do not include these indicators in the core set, we report their values separately in the benchmarks template.

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