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# **Notes**

**Private Credit to Gross Domestic Product (GDP)** measures the domestic private credit to the real sector by deposit money banks as percentage of local currency GDP. Data on domestic private credit to the real sector by deposit money banks is from the International Financial Statistics (IFS) line 22D published by the International Monetary Fund (IMF). Local currency GDP is also from IFS. Missing observations are imputed by using GDP growth rates from World Development Indicators (WDI), instead of substituting the levels. This approach ensures a smoother GDP series.

**Accounts per Thousand Adults from Commercial Banks** is the number of depositors with commercial banks per 1,000 adults. For each type of institution the calculation follows: (reported number of depositors)*1,000/adult population in the reporting country. Number of depositors from Commercial Banks is from Financial Access Survey reported by the IMF. Adult population data is from WDI.

**Lending-Deposits Spread** is lending rate minus deposit rate. Lending rate is the rate charged by banks on loans to the private sector and deposit interest rate is the rate paid by commercial or similar banks for demand, time, or savings deposits. Both lending and deposit rate are from IFS line 60P and 60L, respectively.

**Z- Score weighted average from Commercial Banks** is estimated as follows: (ROA + Equity / Assets)/(Standard Deviation of ROA). Return of Assets (ROA), Equity, and Assets are from Bankscope. The standard deviation of ROA is estimated as a 5-year moving average.

**Stock Market Capitalization plus Outstanding Domestic Private Debt Securities to GDP** measures the market capitalization plus the amount of outstanding domestic private debt securities as percentage of GDP. Market capitalization (also known as market value) is the share price times the number of shares outstanding. Listed domestic companies are the domestically incorporated companies listed on the country's stock exchanges at the end of the year. Listed companies does not include investment companies, mutual funds, or other collective investment vehicles. Data is from Standard & Poor's, Global Stock Markets Factbook and supplemental S&P data, and is compiled and reported by the WDI. Amount of outstanding domestic private debt securities is from Table 16A (domestic debt amount) of the Securities Statistics by Bank for International Settlements. The amount includes all issuers except governments.

**Percent Market Capitalization out of Top 10 Largest Companies** measures the ratio of market capitalization out of top ten largest companies to total market capitalization. The World Federation of Exchanges (WFE) provides data on the exchange level. This variable is aggregated up to the country level by taking a simple average over exchanges.

**Stock Market Turnover Ratio** is the total value of shares traded during the period divided by the average market capitalization for the period. Average market capitalization is calculated as the average of the end-of-period values for the current period and the previous period. Data is from Standard & Poor's, Global Stock Markets Factbook and supplemental S&P data, and is compiled and reported by the WDI.

**Asset Price Volatility** is the annual standard deviation of the price of a 1-year sovereign bond divided by the annual average price of the 1-year sovereign bond (both based on end-month data).

**Averaging.** Each observation is an arithmetic average of the corresponding variable over the period 2008-2010. When a variable is not reported or not available for a part of this period, the average is calculated for the period for which observations are available.

**Visualization.** To illustrate where a country’s observation is vis-à-vis the global distribution of the variable, the table includes four bars on the left of each observation. The four bar scale is based on the location of the country in the statistical distribution of the variable in the _Global Financial Development Database_ : values below the 25th percentile show only one full bar, values equal or greater than the 25th and less than the 50th percentile show two full bars, values equal or greater than the 50th and less than the 75th percentile show three full bars, and values greater than the 75th percentile show four full bars. The bars are calculated using “winsorized” and “rescaled” variables, as described in the main text. To prepare for this, the 95th and 5th percentile for each variable for the entire pooled country-year dataset are calculated, and the top and bottom five percent of observations are truncated. Specifically, all observations from the 5th percentile to the minimum are replaced by the value corresponding to the 5th percentile, and all observations from the 95th percentile to the maximum are replaced by the value corresponding to the 95th percentile. To convert all the variables to a 0-100 scale, each score is rescaled by the maximum for each indicator, and the minimum of the indicator. The rescaled indicator can be interpreted as the percent distance between the ‘worst’ (0) and the ‘best’ (100) value of the respective financial system characteristic, defined by the 5<sup>th</sup> and 95<sup>th</sup> percentile of the original distribution. The four bars on the left of the country name show the unweighted arithmetic average of the “winsorized” and rescaled variables (dimensions) for each country. This average is only reported for those countries where data for 2008-2010 are available for at least three variables (dimensions).