Abstract:
This paper extends the IMF's financial development index by incorporating a stability dimension for the Philippines, creating a multi-dimensional measure. Using principal components analysis, we construct quarterly indices for Q1 2009 to Q4 2020 that assess development across Philippine financial institutions and markets. The study finds that access, depth, efficiency, and stability are distinct dimensions of financial development. These dimensions serve as valuable tools for identifying potential fragilities in the Philippine financial system. Furthermore, our results indicate that the financial sector has advanced over time, even during the global pandemic, with the Bangko Sentral ng Pilipinas' timely policy responses mitigating potential adverse impacts.