Financial Sector Development
ADB identified financial sector development as one of the five core operational areas in its long-term strategic framework, Strategy 2020. In May 2011, ADB issued the Financial Sector Operational Plan to articulate the financial sector agendas of Strategy 2020 and guide its implementation.
ADB has been supporting Financial Sector Development (FSD) of developing member countries (DMCs) in the Asia and Pacific region through various modalities. Financial sector operations since 1966 have accounted for 11% of total ADB operations. In 2012, sovereign lending of $730 million supported development of the general financial market, capital market, and microfinance. Non-sovereign investments reached $404 million, largely supporting supply chain finance, microfinance, and guarantees. Most technical assistance was for preparing lending programs/projects, and implementing policy reforms and building capacity, while the remainder backed efforts by ADB's developing member countries to promote regional economic and financial integration.
DMCs differ widely in income level, population size and density, and the level of development in financial market. These differences have generated diverging priorities and assistance needs in FSD among DMCs, and ADB’s assistance will be tailored depending on the specific needs of each DMC. Given the broad characteristics of DMCs, the Financial Sector Operational Plan has identified five common strategic agendas for FSD, on which ADB will focus in its future financial sector operations.
- Some low-income and conflict-affected economies need to strengthen public confidence in their financial systems in pursing development of financial market. ADB aims to support developing public debt market, strengthening central banking, and establishing basic infrastructure that could be a foundation for building public confidence in financial system.
- The region’s financial sector needs to support greater domestic demand for more balanced economic growth. ADB is promoting enhanced financial access for the traditionally underserved including households and SMEs.
- The region needs to invest aggressively in infrastructure in the years ahead. To do so, it is necessary to develop capital markets and institutional investor base that generate long-term finances and risk capital. ADB continues to be actively involved in supporting the development of capital markets, including subnational debt markets and the enhancement of the access to long-term finances by infrastructure.
- As the financial sector extends its reach beyond its traditional customer base and takes on new risks, it is essential to ensure the sector’s continued stability and integrity. ADB is funding DMCs efforts to improve the macro- and micro-prudential regulation and supervision of financial institutions and markets and promote their accountability and transparency.
- ADB continues to support the integration of the region’s financial sector to facilitate the channeling of savings from net saving DMCs to net borrowing ones. ADB is actively involved in regional initiatives in liberalizing capital accounts and foreign direct investments in the financial sector, adopting common standards for financial transactions and services across the region.