Download Бельгибаева Куралай Канашевна - G

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Belgibaeva Kuralai Kanashevna
INTERNATIONAL COMPARISONS OF FINANCING ACTIVITIES OF
BANKS
The aim of the research is to define the main factors that have an effect on
fluctuations of financial intermediation services measured indirectly
Methodological approaches. Globalization and integration processes
developing in the world economy have become especially apparent in the
financial sector since the second half of 2007. These processes have caused a
need for specification of the ways of economy development further. Deep social
and economic transformations put forward the tasks to improve methods of
statistical research of macroeconomic processes for assessing financing
activities of different countries. Such methodological approaches include:
compatibility of indicators based on the national accounts, use of the single
currency for conversion of indicators, use of methods of generalizing values and
parallel ranges.
Keywords
–
simplified
method
of
evaluating
banks’
financial
intermediation services indirectly measured in the CIS countries; currency
purchasing power parity, relative values, factors.
Research part. The activities of the institutional units of financial
corporations sector are diverse and they are characterized by a system of
indicators. One of them is an output of financial intermediation services
indirectly measured (FISIM). In the UN System of National Accounts (UNSNA)
financial intermediation services indirectly measured (FISIM) relate to the
market services of financial intermediaries [1]. In Kazakhstan the second-tier
banks serve as such financial intermediaries. The banks don’t charge explicitly
for financial intermediation services, and the value of financial intermediation
services is measured by indirect, simplified method in majority of countries of
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the world under the 1968 SNA [2,3,4,5]. The essence of simplified method
approach to financial intermediation service is in evaluation of FISIM at the
macro-level by allocating directly the amounts of the services to intermediate
consumption of a notional industry and equaling the output to zero. Application
of such methodological approach allows avoiding the practical complications
arising in the process of allocation of the amounts of financial intermediation
services to concrete institutional units of economy. However, the aggregate
value of GDP is underestimated as a result of the simplified approach, since a
portion of costs of the financial intermediation services shall be charged to the
final consumption and export. Their value equals the difference between the
property income, received from the bank loan interest and the deposit interest
income. FISIM is deducted from gross value added to arrive at GDP. The 1993
SNA also admitted the possibility of using the simplified approach in allocation
of the amounts of financial intermediation services. An updated version of the
2008 SNA recommends allocating the output of financial intermediation
services to concrete directions of use: intermediate consumption, final
consumption, export, and import of financial services. However, this method is
under development.
A number of methodological problems of compatibility appear when
comparing FISIM and other value indicators between countries in order to have
an objective appraisal of the status and development of ongoing processes. First,
statistical indicators shall be calculated based on one methodological principle.
Secondly, the value indicators should be expressed in the single currency and for
a base period of time. In the third place, the relative and average values must be
used. In the fourth place, it is necessary to make a complex research of the
factors that discover trends in the development of national economy. Thereupon,
the global GDP and its components are valued by the UN Statistical
Commission based on purchasing power parity (PPP). The purchasing power
parity (PPP) represents a rate of conversion that balances exchange rates of
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different currencies. It expresses the price ratio. PPP measures, for example, a
number of units of Kazakhstan currency required in Kazakhstan to buy the same
amount of appropriate goods and services for a unit of Armenian currency in
Armenia. All aggregates in the world statistical practice are recalculated in base
prices of 2005, and then they are converted in US dollars using the 2005 PPP.
Out of 192 countries of the world including those that use the simplified method
of valuation of FISIM, information from 2000 till 2008 is available for three
countries: Kazakhstan, Armenia and Kyrgyzstan [6]. This is a reason for
selecting two CIS countries for comparison with Kazakhstan.
Practical part. The evolution of FISIM in three CIS countries is presented in
Table 1.
Table 1 – Dynamics of FISIM absolute amounts in CIS countries as
per the 2005 PPP, in millions US$.
Country
Years
2000 2001 2002 2003 2004 2005 2006
2007 2008
Kazakhstan
959
2340 5118 5922 983
462
549
488
537
Armenia
2
7
48
41
108
104
94
100
96
Kyrgyzstan
186
186
186
207
195
179
154
127
132
*Source [6]
Data in Table 1 shows unstable development of FISIM in Kazakhstan and its
susceptibility to wavy fluctuating processes. This period of time is split into two
parts: growth and decline of FISIM. For three years from 2000 till 2003 the
FISIM amounts increased 6.2 times, and between 2003 and 2008, on the
contrary, they fell 11 times. Most dramatic decrease in FISIM took place in
critical year of 2004, when their amounts had been reduced 6 times in
comparison with 2003. A year later, in 2005 compared to 2004, they decreased
2.1 times. In 2004 and 2005 the Kazakhstan banks had been in financial
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instability which was a sign of crisis. In 2005-2008 the amounts of FISIM
didn’t even reach the amounts of 2000, they were 1.8 – 2.1 times less of the
level of 2000.
Between 2000 and 2004 the FISIM in Armenia had been increasing in
geometric progression, 54 times as opposed to Kazakhstan. From 2005 there
was a decline, so in 2008 FISIM had fallen to 11.1% compared to 2004.
The same years the amounts of FISIM had declined in Kyrgyzstan. The
amounts of FISIM had been reduced to 29% in 2008 in comparison with 2000.
The first three years (2000-2002) the amounts of FISIM were constant. Within
one year in 2003 they increased by 11.2%, and then they had been decreasing
annually from 2004 till 2008. Smaller amount of FISIM had been observed in
Kyrgyzstan during the crisis year of 2007.
In our opinion, FISIM per capita and FISIM in percentage to GDP, as
relative indicators, characterize a level of development of the bank financial
intermediation and degree of their dissemination in the country. The relative
levels of FISIM in Kazakhstan and Kyrgyzstan had fallen abruptly. The levels of
FISIM per each citizen of Kazakhstan had been reduced in average from 64
USD in 2000 to 34 USD in 2008. FISIM per capita in Kyrgyzstan had been
reduced from 38 USD in 2000 to 25 USD in 2008.
FISIM in percentage to GDP had been also decreasing in these countries. In
Kazakhstan the level of the indicator reduced 3.6 times, in Kyrgyzstan - 1.9
times. Within dynamic ranges the levels of FISIM reproduce fully their absolute
amounts presented in Table 1. So, in Kazakhstan the highest levels of FISIM per
capita and in percentage to GDP were in 2003 - USD 397 and 6.48%,
respectively, and the lowest levels were in 2005 – USD 31 and 0.37%,
respectively. Approximately similar situation took place in Kyrgyzstan. In 2003
there were high relative levels at large absolute amounts of FISIM, and in 2007,
on the contrary, there were low relative levels at smaller absolute FISIM. In
Armenia, the FISIM had been growing annually from 1 USD per each resident
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in 2000 up to 30 USD in 2008. With regard to GDP the level of FISIM also
increased from 0.03% in 2000 to 0.56% in 2008.
Originality. Comparing financing activities of the banks of Armenia,
Kazakhstan and Kyrgyzstan with the help of relative macroeconomic indicators
and simple statistical research methods has detected certain regularities:
1. Growth in the levels of economic development in Kazakhstan, Kyrgyzstan
and Armenia by indicators per each citizen, such as GDP, final consumption
expenditures, gross capital accumulation, foreign trade activity. Increase in GDP
was mainly due to increase in price of goods and services.
2. The existing dynamics of population size in three countries didn’t have any
significant impact on development of FISIM and other macroeconomic
indicators. During these years the growth rates of population size had varied
insignificantly: in Kazakhstan - from -0.2% to +1.1%, in Armenia - from -0.1%
to +0.1%, and in Kyrgyzstan - from от 0.8% to 1.1%.
3. The following has been detected inter three countries: differentiation in the
structure of GDP use, unstable ratios of final consumption expenditures to
capital accumulation and product taxes less subsidies.
4. The FISIM evolution in three countries is divided into periods:
a) FISIM had been increasing since 2000:
in Armenia till 2005, in
Kazakhstan and Kyrgyzstan till 2004 at decrease in product taxes less subsidies
and relatively smaller levels of GDP deflators (less than 100%);
b) FISIM had been falling till 2008: in Armenia from 2005, in Kazakhstan
and Kyrgyzstan from 2004 at increase in product net taxes and GDP deflator
during these years.
Thereby, rise in prices of goods and services and increase in net taxes for
products have caused the changes in preferences and potential opportunities of
the population of three countries. They stipulated the decline in absolute
amounts and relative levels of the banks’ financial intermediations services
indirectly measured per capita and in percentage to GDP.
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LITERATURE
1. System of National Accounts, 1993. Brussels/Luxemburg, Washington,
D.C., NY, Paris: Eurostat, IMF, OECD, UN, World Bank, 1998.
2. National Accounts: Introduction. UN. NY, 2006 – 166p., p. 28.
3. Economic Statistics. 2nd edition: Textbook/ Edited by Ivanov Yu. I. M.:
INFRA-M, 2002. – 480p.
4. Obraztsova O.I. System of National Accounts [Text]: Textbook /
Obraztsova O.I., Kopeikina O.V., State University – Higher Economy School —
M.: SU HE School Publishing House, 2008. — 460 p.
5. System of National Accounts is a Macroeconomic Analysis Tool:
Textbook/ Ivanov Yu. N., Karaseva L.A., Kazaronova S.E. and others; Edited
by Ivanov – M: “Finstatinform”, 1996. -285p.
6. World
Development
Indicators
Database,
World
Bank,
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www.worldbank.org - July 2010
Advanced
This paper concerns the actual methodological problems of identifying and
analyzing the activities of financial sector. The use of absolute and comparative
indicators concerning measuring the services of the players of the banking sector
is recommended. International comparisons of the conditions, dynamics and
factors indirectly measuring the services of the financial intermediaries of the
banks in Kazakhstan, Armenia and Kyrgyzstan.