Financial Development Index

Most recent values

Definition, Source, and Methodology

The Financial Development Index (FDI) contains nine indices that summarize how developed financial institutions and financial markets are in terms of their depth, access, and efficiency. These indices are aggregated into an overall index of financial development. The FDI is constructed using a standard three-step approach to reducing multidimensional data into one summary index: (i) normalization of variables; (ii) aggregation of normalized variables into the sub-indices representing a particular functional dimension; and (iii) aggregation of the sub-indices into the final index.

The FDI for each country within a regional grouping is weighted by GDP (constant 2015 US$). This approach ensures that the data reflects current economic conditions while accounting for inflation, allowing for accurate comparisons across different countries. The FDI and GDP data are sourced from the World Bank.

Source:

• World Bank, Financial Development Index, https://prosperitydata360.worldbank.org/en/dataset/IMF+FDI.
• World Bank, GDP (constant 2015 US$), World Bank National Accounts Data and OECD National Accounts Data Files, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD 
   

Discussion

The Global Developing World recorded a Financial Development Index (FDI) score of 0.54 (2021), with regional variation. Emerging and Developing Asia (0.59) showed the highest level of financial development, followed by Emerging and Developing Europe (0.47) and Latin America and the Caribbean (0.47), while the Middle East and Central Asia (0.35) and Sub-Saharan Africa (0.24) remained at lower levels. Higher FDI values (closer to 1) mean deeper, more accessible, and efficient financial sectors, weighted by GDP. Countries are grouped according to the International Monetary Fund country groupings.

Why it matters for the OPEC Fund

The depth, access, and efficiency of financial systems are essential for investment, economic diversification, and job creation. The OPEC Fund strengthens financial ecosystems through its operations across several priority areas as outlined in the Review and Update of OPEC Fund Strategic Framework 2030 (specifically, Institutional Capacity, as well as Private Sector and Trade), particularly through financial inclusion, micro, small, and medium-sized enterprises (MSME) support, including to Women-Led MSMEs, and by supporting improved enabling environments. This indicator aligns with SDG 5 (Gender Equality), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 10 (Reduced Inequality) and SDG 17 (Partnerships for the Goals).