Contrast the modern construct for FISIM with a measure that sub- tracts deposits from the financial sector’s lending to measure value added in the financial sector, i.e. what we called gross profits. How will these two measures differ in terms of size and sensitivity to risk? Can you give differing views of a world without finance for each to be the proper measure of value added? [Note these are two different statistics which are designed to measure the same number so if they differ at least one of is incorrect.]

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Asked Dec 4, 2019
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  1. Contrast the modern construct for FISIM with a measure that sub- tracts deposits from the financial sector’s lending to measure value added in the financial sector, i.e. what we called gross profits. How will these two measures differ in terms of size and sensitivity to risk? Can you give differing views of a world without finance for each to be the proper measure of value added? [Note these are two different statistics which are designed to measure the same number so if they differ at least one of is incorrect.]

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Expert Answer

Step 1

Financial Intermediation Services Indirectly Measured (FISIM) In general, only a small part of intermediation services is charged explicitly, as commissions, by financial institutions (banks) to their customers. Financial institutions charge implicitly (i.e. indirectly) a large part of these services to their customers by lending at higher interest rates to their borrowers and borrowing at lower interest rates from their depositors. Therefore, FISIM is the indirect measure of the value of the production of services that financial intermediaries (banks) do not explicitly charge to their customers.

Step 2

For the calculation of FISIM, data on the total amount of loans granted to borrowers and the total amount of deposits made by lenders are needed for the accounting period; also needed are data on the interests paid to banks by borrowers and interests received by depositors from banks; debtor interest rates (interest rates on loans), creditor interest rates (interest rates on deposits) and inter-bank borrowing and lending rate need also to be known. These data need to be available by sector or industries if possible. All these data are normally available from the central banks and commercial banks statistics.

Step 3
In Cameroon, the mains data sources for the calculation of FISIM are:
• The central bank (BEAC) monetary situation
• The statistical and fiscal statements of banks and credit cooperatives
• The balance of payments (BOP)
• The statement of the financial operations of the ...

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