National%20Balance%20Sheet%20Accounts%20in%20Israel%20Methods%20and%20Uses

1
National Balance Sheet Accounts in IsraelMethods
and Uses
2
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

3
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.

4
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.

5
Sources and Methods

• First phase assets and liabilities are recorded
  in accordance with the data in each sectors
  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.

6
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).

7
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.

8
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.

9
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 (doesnt include land).

10
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 economys resilience to exchange
  rate risk).

11
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).

12
Uses of the balance sheets

• Paper which presents a framework for analyzing an
  economys resilience to exchange rate risk using
  the balance sheet approach.
• This analysis shows that Israels 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).

13
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.

14
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.

15
Main findings - 2004

• Israels 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.

16
Main findings - 2004

• The total credit NIS 1,388 billion.
• The loans from the banks 44 of the total
  credit. Were mainly given to Non-Financial
  Corporations (50) and the households (38).
• Total credit to Non-Financial Corporations -
  NIS 428 billion
• Total credit to the Households NIS 241
  billion.

17
Distribution of assets - 2004
18
Distribution of liabilities - 2004
19
Ratio of financial assets to non-financial assets
20
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.