Scope of Activities
If one is to understand the role of the banking system in contributing to the functions of finance in the country being assessed, it is necessary to clarify what are the range and types of financial services being provided by both banks and nearbanks. The institutional organization of the financial service provision varies significantly across countries. On the one extreme might be universal banks that offer not only deposit, loan, and payment services, but also leasing, factoring, insurance, and investment bank products. On the other
extreme, one might find a system where banks are restricted to deposit, loan, and payment services and where there is a large number and variety of other banklike and nonbanking institutions that offer leasing, factoring, and mortgage finance. The institutional organization of the financial service provision is often driven by historic development and by the regulatory environment. Even if specialized financial services are offered by specialized financial institutions, there are often ownership links between them and banks. Finally, an institutionally diverse financial system may have converged with nominally different institutions that offer the same services. In this case, it is important to assess whether there is a level playing field between institutions and nondiscriminatory regulatory treatment.
