Finance and Prosperity 2024

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Table of Contents

• Chapter 1. Financial Sector Trends in EMDEs: Divided Risk Outlook and Development Progress 1
• Trends in Financial Sector Risk and Resilience 2
• Divided Financial Sector Risk Outlook 2
• High Buffers and Resilient Banking Sectors but Pockets of Vulnerability 11
• Policy Measures to Strengthen Financial Sector Resilience 14
• Trends in Financial Sector Development: Policy Priorities and Recent Progress Made 18
• Financial Sector Development Priorities 20
• Notes 29
• References 30
• Boxes 8
• 1.1 Regional Perspectives on Financial Sector Risks 8
• 1.2 Digital Financial Services (DFS) as a Lever to IncreaseFinancial Inclusion and Enhance Efficiency and Competition in the Financial Sector 22
• 1.3 Developing Financial Services for Improved Financial Resilience of Vulnerable Households to Climate and Other Shocks 24
• Figures 3
• 1.1 Financial Sector Risks Are Concentrated in Lower-Income EMDEs 3
• 1.2 Market Access for Risky Borrowers in LICs and LMICs Remains Challenging 5
• 1.3 A Significant Portion of Firms in EMDEs Face Debt-Servicing Risks, and ThisRises Sharply in Adverse Scenarios 7
• 1.4 Banks’ Nonperforming Loans Are Highest in the Middle East and North Africa,the South Asia region, and Sub-Saharan Africa 8
• 1.5 Sound Capital Buffers and Increasing Profitability at Most EMDE Banks 12
• 1.6 Weak Tail of EMDE Banks Is Vulnerable to Credit and Sovereign Shocks 13
• 1.7 EMDEs with High Financial Risks Often Lack the Capacity to Deal withFinancial Sector Stress 15
• 1.8 Gaps in Supervisory Regimes Should Be Closed, Particularly in Lower-Income EMDEs 16
• 1.9 Development Priorities Vary by Country Income Level, Yet Progress Is Moderate 19
• 1.10 Limited Progress in Expanding Financial Services Use in EMDEs Continuingthe Gap between AEs and EMDEs, 2011–21 21
• B1.3.1 Impact of Drought on the Poverty Rate in Seven Countries in Sub-Saharan Africa (change in percentage points) 25
• B1.3.2 Risk Layering Strategy to Build Household Climate Resilience 26
• 1.11 Growth of Investor Assets in Many EMDEs Has Not Translated into Widespread Capital Market Deepening 28