Download National Balance Sheet Accounts in Israel Methods and Uses

National Balance Sheet
Accounts in Israel
Methods and Uses
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Contents
• Introduction
• Sources and Methods
• Co-operation with the financial
stability unit at the Bank of Israel
• Uses of the balance sheets
• Main findings of latest balance sheet
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Introduction
• The national balance sheet accounts
for Israel were first published in 2002
for the year 1995.
• Since then the balance sheets have
been prepared for the years 2001 to
2004 (presently completing 2005-2006).
• Over the years changes in number of
sub sectors and types of instruments
have been introduced.
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Sources and Methods
• The value of asset/liability derived
from :
- method related to an institutional
sector
- distribution of the total value of
an asset/liability among various
sectors.
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Sources and Methods
• First phase: assets and liabilities are
recorded in accordance with the data in
each sector’s financial statements.
• Second phase: comparison between
the sums of assets and the
corresponding liabilities. Choosing the
most reliable estimate.
• Third phase: if no information is
available we use the “counterpart”
method or the “residual derivation”
method.
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Sources and Methods
• Non Financial Corporations, Other
Financial Intermediaries and
Financial Auxiliaries – based on the
analysis of the balance sheets of the
corporations.
• Households – balance sheets of
other sectors and information about
specific assets known for the
households (deposits and loans).
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Sources and Methods
• Deposit Money Corporations – the main
source is the Central Bank, Supervisor
of banks, and some details are
collected directly from the large banks.
• Pension and Provident Funds and
Insurance Corporations – the source is
the report of Capital Market of the
Insurance and Saving division of the
Ministry of Finance.
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Sources and Methods
• Central Government – the source is
the Ministry of Finance, Office of the
Accountant General.
• NPISH and GNPI – survey of balance
sheets for public and private NPI
conducted by the CBS.
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Sources and Methods
• The Tel Aviv Stock Exchange is the
source for the market values of the
quoted governmental bonds, quoted
private bonds and shares.
• The source for the non financial
assets is the net capital stock
calculated in the NA using the PIM
method (doesn’t include land).
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Co-operation with the financial
stability unit at the Bank of Israel
Has led to changes in balance sheets:
 Separation of the Holding Companies from
the Other Financial Intermediaries.
 Division between foreign currency indexed
assets and CPI indexed assets – used to
sum up all assets linked or denominated in
foreign currency (to analyze the economy’s
resilience to exchange rate risk).
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Co-operation with the financial
stability unit at the Bank of Israel
 Breakdown of assets and liabilities
by maturity (to analyze liquidity
risks).
 Compilation of up-to-date quarterly
national balance sheets (still under
development).
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Uses of the balance sheets
• Paper which presents a framework
for analyzing an economy’s
resilience to exchange rate risk using
the balance sheet approach.
This analysis shows that Israel’s
economy was highly vulnerable to a
depreciation of the shekel in 1997,
but from then until 2005 it became
more resilient. (written by Yair Haim
and Roee Levy of the Bank of Israel).
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Uses of the balance sheets
• Distribution of credit by all the lender
and borrower sectors and by type of
financial instrument – last data
available is for 2004.
Based on the latest complete balance
sheet a similar but partial matrix is
prepared by the Central Bank to have
an up-to-date preliminary set of data
– last matrix available at present is
for the first quarter of 2008.
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Uses of the balance sheets
• The financial stability unit also uses
the balance sheets and other data as
basic input for calculating financial
soundness indicators.
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Main findings - 2004
• Israel’s total national wealth – NIS
1,166 billion, which is 2.06 times
GDP.
• The total assets – NIS 5,139 billion,
which is 9.1 times GDP.
• The government debt (mainly bonds)
– NIS 564 billion.
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Main findings - 2004
• The total credit – NIS 1,388 billion.
The loans from the banks – 44% of the
total credit. Were mainly given to NonFinancial Corporations (50%) and the
households (38%).
Total credit to Non-Financial
Corporations - NIS 428 billion
Total credit to the Households – NIS
241 billion.
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Distribution of assets - 2004
Non
Financial
Corporations
17.6%
Financial
Corporations
32.6%
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Households
and NPISH
42.1%
Government
, Local
Authorities
and GNPI,
7.7%
Distribution of liabilities - 2004
Non
Financial
Corporations
17%
Financial
Corporations
52%
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Households
and NPISH
10%
Government,
Local
Authorities
and GNPI
21%
Ratio of financial assets to nonfinancial assets
3.20
3.10
3.00
3.10
2.98
2.90
2.97
2.83
2.80
2.70
2.60
2001
2002
2003
YEAR
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2004
Conclusion
• The balance sheets were first
developed within the NA.
• The collaboration with the Central
Bank has proved fruitful and has lead
to wider use of the balance sheets,
mainly for analysis of financial
soundness.
• The ongoing development of the
balance sheets will make further uses
possible in the future.
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