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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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Households and their financial behaviour

This chapter explains the financial behaviour of households as consumers, investors in financial and non-financial assets (dwellings), and owners of unincorporated enterprises. At the aggregate level, households are typically net “savers” and net lenders. This means that they provide funds to other domestic sectors and to non-residents. The creation and the structure of households’ financial wealth depends on several factors, such as the level of and change in disposable income and saving, the financial system, market conditions, and regulations related to pensions and taxes. To fully comprehend the relevant data, it is also important to understand the measurement of the relevant statistics, and to clarify what is actually meant with “households”. Data sources and compilation routines as well as the statistical standards of the 2008 System of National Accounts (2008 SNA) are addressed in this chapter, with the aim to show which conclusions can be drawn from the data – and which cannot.

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