Insider Monkey Global Financial Development Index

Insider Monkey Global Financial Development Index

Index Methodology

To create the Insider Monkey Global Financial Development Index, we aimed to focus on the overall size and development of countries’ domestic equity markets and domestic debt markets. For measuring the size of equity markets, we relied on country-wise total market capitalization of domestically listed companies. For measuring the size of debt markets, we first looked for standardized data for the dollar value of domestic debt markets.

We noticed how everyone else values debt markets based on International Debt Statistics from the Bank for International Settlements. This does not indicate the value of a country’s domestic bond market. Example: if a company from Country A comes to Country B and sells $1 billion of debt, that debt should count towards the size of the financial market of Country B, not Country A.

Due to limitations for standardized data on the exact dollar value of domestic bond markets, we decided to instead use the external debt position of countries as a proxy for the size and sophistication of the fixed-income markets in each country.

Therefore, our indicators were:

Indicator 1: Total market capitalization of domestically listed companies in each country.

Indicator 2: External debt position of each country.

To find data for indicator 1, we first used the stock market capitalization data of countries, as of March 2024, from the S&P Global BMI Index. To expand our list to account for missing countries, we used the World Bank database of Market Capitalization of Domestically Listed Companies. Then, we also looked up other sources on the web including the official websites of stock exchanges, media reports, CEIC Data, and the Sustainable Stock Exchanges website to include as many countries with missing or outdated data on the World Bank. We compiled a final list of 112 countries.

To find data for indicator 2, we initially sourced our data from the Gross External Debt Position database, as of December 2023. Then, we used data from the International Monetary Fund, Trading Economics, GlobalEconomy, and CEIC Data for missing countries in the database.

Finally, we ordered lists in descending order of both our indicators separately and calculated a given country’s rank on each indicator by dividing its position by the total number of countries for both metrics. Then, we averaged these scores to calculate the Insider Monkey Global Financial Development Index for each country. For countries with missing data for one of our indicators, as indicated by N/A, we ranked them by their individual indicator scores.

Please note that a lower index value represents a country with a bigger financial market since it ranked higher on both our indicators, i.e. had a bigger equity market and a larger debt position.

The table below presents 141 countries in ascending order of their Insider Monkey Global Financial Development Index values.

Note: Stock Market Capitalization and External Debt Data is represented in million USD.

Index Creator: This index is created by Inan Dogan, PhD. Inan Dogan has more than 20 years of experience researching and investing in the financial markets.  Dr. Dogan is the co-founder and research director of Insider Monkey. He has a Ph.D. in financial economics from University at Buffalo and he has been doing quantitative stock research focusing on insider trading and hedge fund portfolio disclosures.