SDG #10 is to “Reduce inequality within and among countries.”
Within SDG #10 are 10 targets, of which we here focus on Target 10.5:
Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations
Target 10.5 has one indicator:
Indicator 10.5.1: Financial Soundness Indicators
This target seeks to stem the risk to the global economy, or otherwise build its resilience, to shocks. It aims to identify vulnerabilities in the system ahead of time. The International Monetary Fund developed the Financial Soundness Indicators to measure this. Examples of the indicators include the number or value of non-performing loans held by banks which are late in repayment or unlikely to be repaid.
Why are calamities in financial markets relevant to Goal #10? Though they may wipe out the assets of the rich in the largest volumes, they're likely to affect the poorest the most in living standards.
A series of three agreements named after the Swiss city of Basel serve as rules for assets banks need to hold as a certain fraction of what they loan out. The intent is to avert crises in the global financial system, as experienced in 2007-08. These agreements are overseen by the Basel Committee on Banking Supervision. This committee, within the Bank of International Settlements, has international oversight of banks.
We’ll look at the performance of the world’s biggest financial market, which precipitated the crisis of 2007-08, the United States. We'll compare 2021 data to 2009, in the wake of the crisis.
Return on assets was 1.45% in 2021 compared to 0.22% in 2009. The amount of capital which banks must keep as a fraction of their lending was 8.62% in 2021, little different than in 2009. Non-performing loans were a 0.81% share of all loans in 2021, down from 5% of all loans in 2009.
