Financial Sector Assessment:A Handbook Mie8@d” erelctantfor long r of im e role 2 ort-term savings into re ively illiqui long-term investments,thus promoting capital accumulation.The availability of liquid. ity,therefore,allows savers to hold assets that they can sell easily if they need to redeem their savings. Against this background.it is important to examine the degree of access that specified target groups(e.g,farmers,the poor,small and medium enterprises,or different geograph- ic regions)have to those financial services.Access is defined as the availability and cost of cial services and could be measured in a variety of waysFirst,relevant measures of inan ial serv cludes the e numbe of dif erent sand other service outles,the num the population per outlet.The volume of services(deposits,credi t,money transmission etc.provided is another useful measure,especially if it is broken down by clientele and size (i.e.,in a breakdown by socioeconomic groups or broad sectors or by size distribution). Second,it is also relevant to consider demand-side measures of access.However,demand- side indicators are not easy to construct and often require surveys to collect relevant data. Those surveys have often focused on collecting relevant information such as the savings and credit eds of households and ent needs relative to the s upply,andhe ant to the win the nea rd ren h of financial s y examining the leve and trends in he prices of oth financial services (e.g.,fees and minimum balances for deposits,as well as cost and time of payment services). In addition.indicators of the functioning of various elements of financial system infrastructure-the insolvency and creditor rights regime,the systemic liquidity arrange. ments (other than those of payment systems,which have already been covered as a core financial system function), and the information and go ernance arrangements (e.g. porting,disclos mles). provide usefuli ights into cost ind effici nsact ns.Appendix B(Illu ustrative Dat Questionna res for C mprehensive Financial Sector Assessment)contains examples of those types of indicators 2.2 Financial Soundness Indicators Financial soundness indicators (FSIs)are indicators of the current financial health and soundness of the financial institutions in a country,as well as of their corporate and household counterparts,and FSIs play a crucial role in financial stability assessments.FSIs include both aggregated individual institution data and indicators that are representative of the markets in which the financial institutions operate.FSIs are calculated and dissemi. nated for use in macro rudential surveillance,which is the assessment and monitoring the str are a re tively new body of economic statistics that reflect a mixture of influ ences.Some of the concepts are drawn from prudentia l and commercial measuremen frameworks,which have been developed to monitor individual entities.Other concepts 22 Financial Sector Assessment: A Handbook 1 I H G F E D C B A 12 11 10 9 8 7 6 5 4 3 2 projects. Most high-return projects require a long-term commitment of capital; however, savers are often reluctant to give up their savings for long periods of time.9 The role of the financial system is to transform liquid, short-term savings into relatively illiquid, long-term investments, thus promoting capital accumulation. The availability of liquid￾ity, therefore, allows savers to hold assets that they can sell easily if they need to redeem their savings. Against this background, it is important to examine the degree of access that specified target groups (e.g., farmers, the poor, small and medium enterprises, or different geograph￾ic regions) have to those financial services. Access is defined as the availability and cost of financial services and could be measured in a variety of ways.10 First, relevant measures of the supply of financial services includes the numbers of different types of financial institu￾tions, the number of branches and other service outlets, the number of clients served, and the population per outlet. The volume of services (deposits, credit, money transmission, etc.) provided is another useful measure, especially if it is broken down by clientele and size (i.e., in a breakdown by socioeconomic groups or broad sectors or by size distribution). Second, it is also relevant to consider demand-side measures of access. However, demand￾side indicators are not easy to construct and often require surveys to collect relevant data. Those surveys have often focused on collecting relevant information such as the savings and credit needs of households and enterprises, the needs relative to the supply, and the ease or difficulty of meeting those needs.11 Finally, it is important to examine the costs of financial services, usually by examining the level and trends in spreads between the borrowing and lending rates, the general interest rate structure, and the prices of other financial services (e.g., fees and minimum balances for deposits, as well as cost and time of payment services). In addition, indicators of the functioning of various elements of financial system infrastructure—the insolvency and creditor rights regime, the systemic liquidity arrange￾ments (other than those of payment systems, which have already been covered as a core financial system function), and the information and governance arrangements (e.g., credit reporting, disclosure rules)—can provide useful insights into costs and efficiency of financial transactions. Appendix B (Illustrative Data Questionnaires for Comprehensive Financial Sector Assessment) contains examples of those types of indicators. 2.2 Financial Soundness Indicators Financial soundness indicators (FSIs) are indicators of the current financial health and soundness of the financial institutions in a country, as well as of their corporate and household counterparts, and FSIs play a crucial role in financial stability assessments. FSIs include both aggregated individual institution data and indicators that are representative of the markets in which the financial institutions operate. FSIs are calculated and dissemi￾nated for use in macroprudential surveillance, which is the assessment and monitoring of the strengths and vulnerabilities of financial systems. FSIs are a relatively new body of economic statistics that reflect a mixture of influ￾ences. Some of the concepts are drawn from prudential and commercial measurement frameworks, which have been developed to monitor individual entities. Other concepts