Item19b: F inancial I ntermediation S ervices I ndirectly M easured ESTP course on National Accounts ESA 2010 Luxembourg, 15 May - 19 May 2017 Eurostat

Financial Intermediation Services Indirectly Measured What is FISIM and how is it measured Treatment of FISIM output Concept of FISIM allocation By sectors By industries In the non-financial account, including adj. of interest Calculation and allocation of FISIM in practice

1. What is FISIM and how is it measured The measurement of output of a market producer is based on price or fee for which its service is sold. In case of financial intermediaries (FIs) they explicitly charge commissions and fees to their customers. The measurement possesses no special problem in National Accounts. But FIs are also able to provide services for which they charge implicitly via interest margin. They pay lower rates of interest (interest payable) to those that lend them money and charge higher rates of interest (interest receivable) to those who borrow from them. In this situation, the National Accounts must use an indirect measure, called F I S I M . Interest receivable € Interest Margin Interest payable time 3 t

2. Treatment of FISIM output Two treatments of FISIM: ESA95: FISIM output is not allocated but is treated as absorbed by the intermediate consumption of a nominal sector and, therefore, the GDP is not affected. ESA2014 (chapter 14): FISIM output is allocated among the various users of the services, namely intermediate consumption of enterprises, final consumption of households, and exports. In this approach, FISIM allocated to final consumption and net trade increase the level of GDP.

3. Concept of FISIM allocation Reference rate = 2% Stock on Loan of 200 € Interest receivable by FI of 6.5 % So FISIM on Loan = 200 € x (6. 5% - 2 %) = 9 € Stock of Deposit of 200 € Interest payable by FI of 1.5 % FISIM on Deposit= 200 € x (2% - 1.5%) = 1 € Total FISIM output = 10 € Rate on loan % Ref rate Margin loan Rate on dep. Margin deposit time t

FISIM allocation: by sectors

FISIM allocation: by sectors

FISIM allocation: by sectors

FISIM allocation: by sectors

FISIM allocation: by industries   FISIM allocated Financial Int. Output 48 Industry Int.Cons. 4 GVA 44 Non-market 9 producers Other 23 -23 Nominal Total 57 36 21

FISIM allocation: in the Sector Accounts, household sector % time Rate on loan t Margin deposit loan

4. Calculation and allocation of FISIM in practice To calculate FISIM output and allocate it into user sectors, we need: Matrix of stocks of deposits / loans of FIs by sectors Matrix of interest paid / received by FIs to/from sectors

Example 13

Example (in €) (in €) rr= 30€/1000€ = 3% (in %) FISIM

Example (in €) (in €) rL= 150€/3000€ = 5% (in %) FISIM 15

Example FISIM D to S.11= ( - rr) * Stock D= 1 % * 600 € = 6 € (in €) (in €) (in %) FISIM D to S.11= ( - rr) * Stock D= 1 % * 600 € = 6 € FISIM L to S.11= ( - ) * Stock L= 2 % * 3000 € = 60 € FISIM 16

Example Solution to the example above: FISIML = 60 € to non-financial enterprise (S11) FISIMD = 24 € to households (S14) FISIMD = 6 € to non-financial enterprise (S11) Total FISIM output = 90 €