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Understanding Financial Accounts

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Understanding Financial Accounts seeks to show how a range of questions on financial developments can be answered with the framework of financial accounts and balance sheets, by providing non-technical explanations illustrated with practical examples: What are the basic principles, concepts and definitions used for this framework which is part of the system of national accounts? What sources and which methodologies are used for their compilation? How are these used to monitor and analyse economic and financial developments? What can we learn about the 2007-2009 economic and financial crisis when looking at the numbers provided in this framework? What can we learn about financial risks and vulnerabilities? This publication is intended for young statisticians, students, journalists, economists, policy makers and citizens, who want to know more about the statistics that are at the heart of the analysis of financial developments in OECD economies.

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A full accounting for wealth: Including non-financial assets

Non-financial assets play a crucial role in economic developments. Investments in these assets provide the fundamentals for the future growth potential of an economy. They can be financed from internal sources, primarily saving, or they may require additional external financing in the form of the incurrence of debt or the issuance of (additional) equity. Accounting for non-financial assets, in addition to the measurement of financial assets and liabilities, is necessary to arrive at a full and complete assessment of stocks/positions, as recorded on a balance sheet. For an economy as a whole, non-financial assets are the most important determinant of net worth, or net wealth, of an economy. This chapter describes the place of non-financial assets in the system of national accounts, and their delineation, ownership and valuation. Attention is also paid to the distribution of non-financial assets and net worth across institutional sectors, and their evolution over time.

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