Financial Intermediation Services Indirectly Measured (FISIM): The role of reference rate
Abstract
Adoption of SNA2008 for measurement of financial sector's output has brought about several conceptual issues and practical challenges. The proposed reference rate approach plays a vital role in computation and the choice of which affects the FISIM, and thereby financial sector's output. Depending on the reference rate, it can take a value as low as interest spread times the quantum of loans or as high as interest spread times the quantum of deposits. As there is no consensus on the reference rate, much of the debate among national accountants community over the measurement of FISIM has been confined to the appropriate choice of reference rate. In this context, this paper presents the issues and challenges of implementing the FISIM methodology of SNA2008 with respect to the commercial banking sector in India.
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