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Finance and Prosperity 2024

This inaugural edition analyzes new data and highlights a growing divergence in financial sector resilience and stability among emerging market and developing economies (EMDEs) and critical trends in climate finance. 

While financial sector risks in the larger and higher per capita countries are moderate, half of lower-income countries face significant risks over the next 12 months. Nearly 70 percent of countries facing high financial sector risks are currently not adequately prepared to handle financial stress. The report also identifies a particular risk facing financial sectors in several countries: a large and growing exposure to sovereign debt. This exposure surged to its highest level in the past decade. Finally, the report looks at how countries can enable more climate finance through the banking sector without compromising on the important goals of financial sector stability and inclusion for underserved people. 

Learn more about the critical role of finance in achieving prosperity for all in the Finance and Prosperity report.

INTERACTIVE DATA
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About the Finance and Prosperity Report

Finance and Prosperity is an annual World Bank report that examines financial sector developments and vulnerabilities in low- and middle-income countries. These countries have much to gain by strengthening their financial sectors as they strive to support job creation, attract private capital, address climate change, and tackle other development challenges.

Chapters

  • Finance & Prosperity Chapter 1
    Chapter 1. Financial Sector Trends in EMDEs: Divided Risk Outlook and Development Progress

    Chapter 1 analyzes new data and highlights a divergence in the resilience and stability of financial sectors in emerging market and developing economies (EMDEs). An analysis of 50 EMDEs, which represent 93 percent of total bank assets in EMDEs, found that 30 percent of these countries face high financial-sector risks in the next 12 months. The majority do not have an adequate policy framework and the institutional capacity to deal with financial stability challenges. The report details measures that banking authorities in these countries can take to fortify vulnerable financial sectors.

  • Finance & Prosperity cover chapter 3
    Chapter 2. Sovereign-Bank Nexus Risks Need to Be Addressed

    Chapter 2 calls attention to the excessive holdings of government debt by domestic banks in emerging market and developing economies (EMDEs) – an Achilles heel for some economies – particularly those with weaker macroeconomic policies, facing public debt sustainability challenges. Between 2012 and 2023, the exposure of EMDE banks to government debt surged by over 35 percent. While banking authorities cannot resolve sovereign-bank nexus risks alone, they should take steps to foster more prudent risk-taking by banks and strengthen financial sector resilience.

  • Finance & Prosperity cover chapter 2
    Chapter 3. Acting on Climate Risks and Climate Finance through the Banking Sector

    Chapter 3 looks at how emerging market and developing economies (EMDEs) can enable more climate finance without compromising on the important goals of financial sector stability and inclusion for underserved people. EMDEs face substantial financing gaps in low-carbon, climate-resilient investments. EMDE banks have the potential to play a larger role in closing the EMDE climate financing gap. In almost 60 percent of banks in EMDEs, lending for climate-related investment accounts for less than 5 percent of their overall portfolios, and more than one-quarter offer no climate financing at all.