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FISIM

This article discusses the possible methods for allocating Financial Intermediation Services Indirectly Measured (FISIM) by industry, including the UK approach and its weaknesses. It also explores the level of allocation required and the data sources used for calculations.

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FISIM

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  1. FISIM Allocation by Industry

  2. Possible Methods • Eurostat have suggested 2 possible methods for allocating FISIM by industry • 1. Based on the estimate of loans and deposits for each industry • 2. Based on the output of each industry.

  3. UK Approach • Adopted to use a GVA proxy • No breakdown of output in UK • Takes account of different distribution by industry of activity by various sectors • Allows for differences in use of deposit and loan products by industrial categories

  4. Main Weaknesses • The main weakness of this approach are • it is not sensitive to differences in margins charged to producers in different industries who are in the same sector • It does not take account of differences in the use of loan and deposit products between producers in different sectors in the same industry.

  5. Level of Allocation • Eurostat Requirement • This should be allocated at the A60 level in accordance with NACE Rev 1. • ONS requirement • Will need to integrate allocated FISIM into our input/output system

  6. Level of Allocation • UK calculation have been set up to produce data at an 123 industry level. • This is consistent with SIC92 which in turn is consistent with NACE. • It is then aggregated from 123 industries to the 60 industries demanded.

  7. Data Sources • Main source is 2 questionnaires issued by the Bank of England to UK banks. • These are quarterly and returned to the Bank within 15 days of the quarter concerned. • They cover bank loans and advances and deposits.

  8. Data Sources • The forms cover 28 categories of non-financial industries and 12 categories of financial industries. • Loans data has only been collected since 1997.

  9. Data Sources • The second major source is detailed input/output income component tables. • It gives • value-added in 123 product categories by each producing sector. • Is available for annual periods from 1989

  10. Calculations - General • The allocation to industry is based on a redistribution of sectoral FISIM already calculated. • It uses available stocks of lending and deposits. • We cannot calculate from the ground up

  11. Calculations - General • Calculations of FISIM by industry are done for total (£ + fc only) • Industry analysis of FISIM consumption obtained using the banking data is extrapolated without variation to allocate consumption of FISIM output of all UK intermediaries.

  12. Sequence of calculations • Allocation of reported post 1997 deposit and loan data to 123 industry categories pro-rata to total GVA • Allocation of pre 1997 loan data and totals of pre 1997 deposits using post 1997 allocations where necessary.

  13. Sequence of Calculations • Calculation of quarterly centered deposits and loans • Attribution of centred deposits and loans of each industry to sectors pro-rata to the sectors’ contribution to total GVA in the industry.

  14. Sequence of Calculations • Constraint of resulting sector totals of deposits and lending to the total sector deposits and loans used in FISIM calculations. • Allocations of FISIM sector totals to industries pro-rata to holdings of deposits and loans

  15. Sequence of calculations • Aggregation of all sectors’ FISIM on deposits and loans for each industry. • Aggregate to A60 levels

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