Measuring Financial Health: A Framework

Measuring financial health helps financial sector authorities understand how financial services and policies affect people’s everyday lives. It adds to the evidence they already use to guide policy and supervise financial institutions.

The working paper draws on 70 existing approaches to measuring financial health as well as consultations with experts and practitioners, and a CGAP pilot in Rwanda. It turns the G20 Global Partnership for Financial Inclusion’s definition of financial well-being into six areas of measurement and 17 indicators. These cover both people’s financial situation and how they feel about it and can be adapted to different countries.

The framework helps authorities decide what to measure, how to measure it and how to use the findings. The resulting data and evidence can help identify financially vulnerable groups, assess the effects of policies, and spot early signs of financial stress or consumer harm. Each task needs different data and analytical skills. Assessing whether a policy caused a change also requires a suitable research design.

Authorities can start with information they already collect. Comparing existing surveys and data reported by financial institutions with the framework can show what is covered, what is missing, and where further investment would help. They can begin with a selection of the 17 indicators and expand over time.

The accompanying high-level note, Measuring Financial Health: Why It Matters for Financial Sector Authorities and How to Begin, introduces the working paper’s framework to senior decision-makers. It explains how measurement can support policy and supervision, suggests how to begin, and calls on authorities to establish a baseline within the next year—a starting point for tracking changes in financial health. The note helps authorities decide where to start; the working paper provides the evidence, detailed indicators, and practical guidance to support implementation.