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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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Financial accounts uses

This chapter takes the perspective of users of the macro framework of financial accounts and balance sheets. Different frequencies, quarterly versus annually, may be more or less appropriate depending on the questions raised by these users. Thus, portfolio shifts may be better captured through quarterly financial accounts and balance sheets, whereas annual data may provide more accurate information for structural types of analysis. The interest in financial accounts and balance sheets is also a function of specific events and times. Undoubtedly, the 2007-09 economic and financial crisis has increased the demand for financial accounts and balance sheets, both from a general macroeconomic point of view, and from the perspective of financial stability analysis and monetary policy. This chapter highlights the latter use of financial accounts and balance sheets for policy purposes, and also discusses the use of financial statistics by famous economists, from the early 1950s to today.

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