Revision of the quarterly financial accounts

Since October 2007, the Czech National Bank has been publishing quarterly financial accounts statistics in order to provide users with information on current financial developments in the economy and on the financial linkages between economic sectors. As these statistics are relatively new, methodological changes have had to be made on an ongoing basis to further refine the statistics and align them with ESA 95. However, it has not been possible to incorporate these changes immediately and completely into past quarters, and the data for some indicators have thus not been fully methodologically comparable over the entire time series published.

For this reason, the CNB has performed an overall revision of the stock data (balance sheets) of the quarterly financial accounts in 2009 H2, thereby ensuring consistency of the data over the entire time series. So far, revised data have been published for the period from 2007 Q1 to 2009 Q3. In October 2010, the time series will be extended back to 2004 Q1. Consistent time series increase the analytical usefulness of the statistics, as they allow better monitoring of financial developments in recent quarters, indicate potential financial risks more precisely and can expand our knowledge of the seriousness of the impacts of the financial crisis on the balance sheets of economic sectors.

The release of the entire revised time series of stock financial accounts in October 2010 will be accompanied by an extension of the published datasets to include counterparty information describing the relations between individual sectors. In addition to balance sheets, the entire time series (from 2004 Q1) of the financial account, i.e. the account that records financial transactions effected in the economy, will be published.

The quarterly financial accounts data are commonly used in many countries to conduct partial analyses in the area of financial (im)balances at the level of economic sectors, to study the wealth effect, to assess debt growth or to monitor the degree of financial intermediation. These data play an essential role mainly in the analysis of sectors for which comprehensive financial data are not available from other statistics (from direct data collection), i.e. for example in the analysis of non-financial corporations and households from the point of view of their financing or the development of their overall financial position.

In addition to sectoral analyses, the quarterly financial accounts can be used in analyses of past macroeconomic developments or shortterm macroeconomic projections. Their information value for this type of analysis is shown in Chart 1, illustrating the evolution of economic activity (GDP) and financial assets before and during the current financial and economic crisis. The co-movement of these variables in the Czech Republic in 2007–2009 confirms the general assumption that financial developments are as a rule pro-cyclical in nature and correspond with GDP, even though financial assets, unlike output, were still rising year on year in 2009. Chart 1 shows that their growth stopped slowing in 2009 Q2 and accelerated slightly again in Q3. This was largely due to price effects, particularly renewed growth in stock prices on the capital markets.

A more detailed sectoral view of the total financial position expressed by net financial assets (i.e. financial assets minus liabilities) confirms that the above indicator evolved differently in the household and nonfinancial corporations sectors, mainly as a result of a different structure of financial assets and liabilities (see Chart 2). The household sector is traditionally a net creditor, whereas the overall financial position of non-financial corporations is that of a debtor. The financial position of households in 2009 indicates a year-on-year improvement (see Chart 3) resulting from a gradual slowdown in the growth rate of liabilities (mainly in the form of loans received) and an only modest annual decline in growth in the value of financial investment; the aforementioned pick-up in stock price growth was also a minor contributing factor. Net financial assets in the non-financial corporations sector remained negative in the medium term at around CZK -3 trillion (see Chart 2). In 2009, they increased. The deterioration was due to a recovery in growth in prices of equity (quoted shares in particular) on the capital market, which account for about 50% of the total liabilities of non-financial corporations, and to only weak growth in the sector’s financial assets. These effects completely offset the impact of a sizeable slowdown in growth in loans received in the crisis period.

More detailed information on the overall financial situation and on the current tendencies in the economic sectors is regularly published in the commentary on the quarterly financial accounts. Other ways of using the quarterly financial accounts data for the analysis of individual sectors are given, for example, in a previous analysis Financing and financial investment of corporations and households in Box 2 of Inflation Report III/2009.