Financial Sector Development: A Review

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This Policy Note assesses the financial sector development in the Philippines vis-à-vis other member-states of the Association of Southeast Asian Nations (ASEAN). Among others, it finds that the Philippines has lagged behind other comparable ASEAN member-states, particularly Malaysia and Thailand, with respect to financial deepening, access, and efficiency. There was also no significant transformation in the Philippine financial services sector over the past three decades. Nonetheless, it finds that the Philippine banking system fared better in terms of financial stability. The study urges the Philippine government to push for a more diversified, dynamic, competitive, and resilient financial system that offers a wider range of financial products and services both to consumers and businesses through more efficient delivery channels. Drawing up a comprehensive and detailed long-term strategic action plan for the Philippine financial sector would help to identify reforms to address the weaknesses and actualize the vision of a truly inclusive financial sector that is supportive of the country's economic development.