Sector Accounts: Financial Corporations Leslie Nootenboom

Contents Sector accounts of financial corporations Subsectors: population, sources… ESA 2010 Practical experience FISIM

Sectors S.11 Non-financial corporations S.12 Financial corporations S.13 General government S.14 Households S.15 Non-profit institutions serving households S.2 Rest of the world

Subsectors S.12 Financial corporations S.121 Central bank S.122 Deposit-taking corporations except the central bank S.123 Money market funds (MMFs) S.124 Non-MMF investment funds S.125 Other financial intermediaries S.126 Financial auxiliaries S.127 Captive financial institutions and money lenders S.128 Insurance corporations (IC) S.129 Pension funds (PF)

Sequence of accounts

Financial account Financial transactions (F) are transactions in financial assets (AF) and liabilities between resident institutional units, and between them and non-resident institutional units.(ESA 2010 par. 5.01)

S.121 Central bank Population: DNB (Central Bank of the Netherlands) Sources: DNB Special Drawing Rights (SDRs)

S.122 Deposit-taking corporations Population: 5 banks have 85% of the total balance of banks Sources: Social-economic reports (SE) Exchange rates Stock market indices Intrinsic value of credit institutions Financial derivatives

S.123 Money Market Funds (MMFs) In ESA95: S.122 Total balance: less than 2 billion euros

S.124 Non-MMF Investment funds Population, sources Population: Non-MMF investment funds receive from institutional units, investment fund shares or units which are not close substitutes for deposits, and on their own account, to make investments primarily in financial assets other than short-term financial assets and in non-financial assets (usually real estate) (ESA 2010 2.82). Before 2008Q4: only investment funds under supervision Since 2008Q4: all investment funds Sources: Direct Report (DRA) T + 40 version 1, one week later version 2 Stock market indices

S.124 Non-MMF Investment funds Correction for continuation (1)

S.124 Non-MMF Investment funds Correction for continuation (2)

S.124 Non-MMF Investment funds Correction for plausibility Production and intermediate consumption have about the same development Received interest and dividends = paid interest and dividends Received interest plausible with market interest rates and portfolio Revaluations plausible with stock market indices OB + FT + OM = CB OB t = CB t-1

S.125 Other financial intermediaries Population, sources Non-MFI subsidiaries of MFIs Financial lease companies Special Purpose Vehicles (SPVs) All other financial intermediaries (OFIs) Sources: SPVs: quarterly and yearly. OFIs: annual reports Non-MFIs and lease: DNB (yearly, only stocks)

S.125 Other financial intermediaries SPVs

S.126 Financial auxiliaries (1) Population: Options and stock markets Stockbrokers, investment consultants Trust offices Stock specialists, market makers Mortgage and credit mediation, exchange offices, bank and saving agencies Insurance markets Insurance intermediaries Actuarial and pension consultancies Guarantee funds Damage assessment, fix rates for insurances ESA 2010: Head offices of financial corporations Sources: Quarterly and annual reports Market indicators

S.126 Financial auxiliaries (2) Who determines the population? What to do when you don’t have sources?

S.127 Special Purpose Entities (SPEs) Great share in OFIs Distortion of GDP!?

S.128/S.129 Insurance corporations and pension funds (1) Population: Before 2008: only pension funds under supervision Since 2008: all pension funds Sources: Direct Report (DRA)

S.128/S.129 Insurance corporations and pension funds (2) Importance of pension funds relative to the size of the economy, OECD countries, 2010 (OECD)

S.128/S.129 Insurance corporations and pension funds (3) Look through principle: Portfolio (shares, securities) F.52 Mutual funds shares Interesting discussions about Ageing problem Economic crisis

ESA 2010: subsectoring of S.12

ESA 2010: special purpose entities Balance sheet 2010 after revision

Corrections for a consistent matrix

Quarterly and yearly figures Quarterly figures (regular, adjusted) Yearly figures (provisional, definitive) Rebase: quarterly figures fit with yearly figures (yearly figure = sum of quarterly figures)

FISIM (1) Financial Intermediation Services Indirectly Measured Calculated for types (n) of loans (A) and deposits (D) Interest spread (p) based on a reference rate (rR) Average balance (q) and period (t)

FISIM (2)

FISIM (3) FISIM in volume terms Deflated stocks method uses a general deflater; Consumer Price Index (CPI) Output indicator method uses weights (w) and number of payment transactions (T) per type (i)