19 These institutions include credit unions, cooperative banks, finance companies, and savings banks, including postal savings banks. Their development reflects both policies and regulatory loopholes, as well as the increasing size and diversity of national financial systems and the development of customer niches. Often, these NBFIs are linked to banks, as parts of financial conglomerates. Another group of NBFIs, development banks, is competitive with banks only at the long-end of the market and often the development banks are more complementary to banks than competitive because of their lending through banks. A third group of institutions contractual savings institutions, such as life insurance companies and institutions providing fully-funded pensions, is even less competitive with banks.<sup>41</sup> Because this group is not a large source of competition for banks and because of lack of comparable data, this group is not considered here.<sup>42</sup> Availability of cross country data in the IFS on the first two classes of NBFIs is mixed. Eleven of the 25 countries do not report such data.<sup>43</sup> However, this does not mean these countries do not have non-bank sectors. For example, India does not report data on the non-bank sector and Pakistan reports only data on the government savings bank, but both have NBFIs as discussed above.

The largest and most competitive NBFI sectors are in Malaysia, Thailand, and India. In Malaysia and Thailand, the non-bank sector deposits were, respectively, 30 and 27 percent of bank deposits in 2000, though these figures represent a decline from the 46 and 33 percent figures of 1992. In India, the deposits of the Non-bank Financial Corporations (not including cooperative banks), which are not covered in the IFS, reached nearly 10 percent of the those in the banking system in 1997, before the crisis in the 1997 system (See Hanson, 2003, and World Bank, 2000b).

In the other Asian countries, NBFIs are small and do not represent much competition for banks.<sup>44</sup> In Latin America, Egypt and Turkey, the non-banks also are 41 The number of countries in which at least part of retirement income is based on fully-funded pensions and individual accounts has increased enormously since the early 1990s. In the 25 country sample, the countries that have joined Chile since 1994 are Argentina, Colombia, Mexico, and Peru from Latin America, plus Hungary, Poland, and Thailand (Fox and Palmer, 2001). Such pension institutions compete with banks for long term deposits and, in some cases, for mortgages, but they also often invest in banks’ longer-term deposit instruments. In countries where lump sum payments are made at retirement, in lieu of annuities, bank deposits may be increased by deposits from retirees.

42 The IFS reports data on insurance companies for Korea and South Africa.

43 The data is found in the IFS lines 40-49. Among the 25 largest developing country financial systems, the IFS reports separate data on such NBFIs for 14 countries: the seven Latin American countries, four East Asian countries (Korea, Malaysia, Philippines, and Thailand), Egypt, Morocco (1990-1996), and Turkey. No data, or minimal data are reported for Algeria, China, Czech Republic, Hungary, Indonesia, Poland, Russia, South Africa, Bangladesh, India, and Pakistan.

44 In Korea, the non-bank sector covered in the IFS is also large to bank deposits, nearly the same size in 1992 and, despite declining in absolute terms, still represented 25 percent of bank deposits in 2000. But over 80 percent of the reported NBFI sector consists of trust accounts of commercial banks, and thus is not really competitive with banks. The Philippines data cover only a small NBFI sector, largely composed of development banks and savings banks.