Compilation of FSI Data: Practical Issues

Pages:118-137
SUMMARY

Introduction. Basic Data Sources. Deposit Takers. Commercial and supervisory data. National accounts data. Other Financial Corporations. Nonfinancial Corporations and Households. Other Data Requirements. Deposit Takers. Domestic consolidated data. Income and expense series. Balance-sheet-related series. Consolidated information. Cross-border consolidated data. Compiling cross-border consolidated... (see full summary)

 
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Introduction

11.1 The previous chapter discussed strategic and managerial issues that arise in the compilation and dissemination of FSI data. This chapter focuses on practical considerations.

11.2 At the outset, it is worth noting that practical experience in compiling FSI data is still relatively limited, and experience will be gained as the compilation and calculation of FSIs gather momentum. In this context, this chapter focuses on the basic data sources that can be employed in calculating FSI ratios, as well as on other data series required to meet the Guide 's requirements. The focus is on FSI ratios derived from financial statements. Data sources for the FSIs covering financial and real estate markets are discussed in Chapters 8 and 9, respectively.

11.3 It is likely that existing data sources for deposit takers can meet many of the data requirements for compiling FSIs. This may be particularly true for domestically controlled cross-border consolidated data, whose source is information available to supervisors (see paragraph 11.8). The compiler should thus see the extent to which existing data sources, including possible adaptations, can meet the requirements of the Guide before investigating the possibility of collecting new data series. In determining the need to collect new data, and hence to incur increased cost, authorities must make a judgment as to the likely impact and importance of the additional data series for compiling FSI data. For instance, where an additional series would have an insignificant impact on an FSI ratio, the case for collecting such data would not be strong.

Basic Data Sources
Deposit Takers

11.4 There are typically three main sources of information available for compiling FSIs on deposit takers. They are (1) commercial accounting data, (2) national accounts data, including monetary statistics (see Box 11.1), and (3) supervisory data. 1

11.5 There are important differences between national accounts and commercial accounting data, arising from the different purposes for which data are compiled. In terms of scope, commercial accounting statements for deposit takers consolidate activities of subsidiaries with the parent to evaluate the performance of the entire group. In contrast, national accounts data include only the flows and positions of deposit takers located in the domestic economy, reflecting the focus of the data on macroeconomic developments in the domestic economy. Therefore, whereas commercial accounting data and supervisory data eliminate intragroup transactions, national accounts data are based on those reported for each individual deposit taker within a group, without netting out transactions and positions with other group members. Another important difference between the data sources is that national accounts data are collected on the basis that the information will be aggregated to compile data for the sector as a whole, 2 unlike commercial accounting and supervisory data that have been designed for the reporting of the activity of individual units.

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Box 11.1. Relationship Between Monetary and Financial Statistics and FSIs

Balance sheet data reported to central banks by financial corporations for the compilation of monetary aggregates and financial statistics are a potential source of information for the compilation of data for deposit takers on a domestic consolidation basis. In 2000, the IMF published the Monetary and Financial Statistics Manual ( MFSM ). 2A The MFSM is harmonized with the 1993 SNA and addresses specific analytical needs relating to the role of monetary statistics in assisting monetary policy formulation and monitoring. This box explains how data collected using the MFSM methodology can be utilized to compile the agreed indicators for deposit takers.

The MFSM encourages the collection of balance sheet data from resident financial corporations (including branches of foreign banks). Subject to adjustments (see below), the balance sheet items specified in the MFSM 2B can be aggregated to construct the following data series on a domestic consolidated basis: 2C

- Customer deposits

- Noninterbank loans

- Sectoral distribution of loans

- Total loans

- Capital and reserves

- Assets

- Gross asset and liability positions in financial derivatives

- Total liabilities

- Equity and other shares

While a reliable source, monetary statistics might need to be adjusted to bring data series on loans, capital, financial derivatives, and assets and liabilities into accordance with the principles set out in the Guide. 2D Moreover, unlike the monetary data, the balance sheet data presented in the Guide are explicitly linked to an income and expense account for the financial corporations.

Drawing on the series set out in Tables 11.1-11.3, the following adjustments might be necessary:

- Equity investments in subsidiaries and associates are valued on the basis of the investor's prorated share of these entities' capital and reserves and not at the market price of the equity held. Any difference in the value is reflected in assets and in capital and reserves. Data shown in Table 11.1 could be used.

- To avoid double counting of deposit takers' capital and reserves at the sector level, equity investments among deposit takers in the reporting population should be excluded and counterpart adjustments made to capital and reserves. The adjustments could be implemented by using information collected under item 1 (and perhaps 2) in Table 11.2 to eliminate from assets and capital and reserves (1) the market value of shares and other equity investments in other resident deposit takers and (2) equity investments in deposit-taking subsidiaries and deposit-taking associates.

- Other bilateral claims and liabilities among resident deposit takers that belong to the same group should be eliminated using the information specified in Table 11.3. Thus, loans and positions in financial derivatives among resident deposit takers in the same group should be excluded from the aggregated balance sheet data used to compile the data series listed above.

- In the Guide, unlike the MFSM, data on loans (and other assets) should exclude accrued interest on nonperforming loans (other assets).

- In contrast to the MFSM approach, in the Guide the value of total assets excludes specific provisions. 2E Accordingly, total assets in the aggregated balance sheet should be adjusted to exclude specific provisions, with a counteradjustment to capital and reserves (as well as to narrow capital and reserves). In addition, in the Guide the value of total assets and of capital and reserves excludes purchased goodwill, unlike in the MFSM.

- Moreover, while general provisions are classified as "other receivables/payable" in the MFSM, 2F they are classified as part of capital and reserves in the Guide. - Whereas the Guide includes unrealized gains/losses on financial assets and liabilities in retained earnings, 2G such gains and losses are included as part of the revaluation account in the MFSM. Thus, if compiling a narrow measure of capital and reserves from the aggregated balance sheet data, unrealized gains/losses on financial instruments should be reallocated to retained earnings. Moreover, although the MFSM encourages the collection of balance sheet data from all resident financial corporations, as explained in Chapter 2, coverage of the "other depository corporations" in the MFSM might not be identical to that of the deposit-taking sector in the Guide (see paragraph 2.4, footnote 3).

Other data sources, such as the BIS locational data on the geographic distribution of bank lending, may be collected from the same reporting population as for monetary and financial statistics, facilitating combination of data sources to compile the agreed FSIs. For example, the indicator on the geographic distribution of loans to total loans can be constructed by using the aforementioned BIS data for the numerator and data on total loans from the monetary statistics for the denominator.

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11.6 In summary, national accounts data are more suited to monitoring developments in the domestic economy on an aggregate basis, 3 while commercial and supervisory data are more suited to monitoring developments of deposit-taking groups on a cross- border consolidated basis.

Commercial and supervisory data

11.7 Balance sheet as well as income and expense data are usually collected by supervisory agencies as an essential element of their supervisory function. Because typically the collection has a statutory basis, these data may be more reliable than those collected for statistical purposes in economies with weak statistical systems. However, while there are internationally agreed supervisory requirements, the methods by which these are implemented vary by country. Moreover, the accounting standards that supervisors regard as a basis for relevant and reliable measures of income and expense and balance sheet items, as well as of capital adequacy, are currently varying across countries, even though the International Accounting Standards Board is working toward common international standards.

11.8 In some countries, data might be collected for supervisory purposes on standardized forms with clear and specific instructions on how and when they should be...

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