The ownership structure of the sector (Chart 3-31), i.e.
the sectoral breakdown of the value of equities issued by the companies underwent major transformation in the past twenty years. In 1995 major part of the corporate equity wealth was owned by the state, then due to the privatisation, the rapid growth of the number of companies and the inflow of foreign capital the role of state ownership declined and its share in equity decreased to 8 percent from the previous 40 percent. The ownership share of households grew from 15 percent to nearly 23 percent by the end of 2013.
Similarly, the value of equity owned by non-financial companies increased from 16 percent to 22 percent.
The ownership participation of non-residents reached by 1995 25 percent and it almost doubled by today, it grew to nearly 45 percent in the domestic non-financial corporations sector. Holding non-financial equity is the least typical for financial companies, their share along the entire time series is almost around 2 percent.
IntErnAtIonAl outlook
23By examining the assets structure of non-financial corporations (Chart 3-32) in international comparison we may establish that the stock of non-financial assets of non-financial companies is high for each surveyed country, it is over 40 percent. Regarding this, the Czech Republic stands out, where the stock of non-financial assets is even over 65 percent. As regards the ratio of financial assets, Greece leads the line, where the ratio
23 Data on non-financial companies are suitable for making international comparisons only to a limited degree, especially if companies outside of the European Union are also included in the analysis. Discrepancy may show namely in the sectoral classification practice of the individual countries, in the accounting of instruments and in the valuation methods.
Chart 3-31
ownership structure of non-financial corporations by the value of issued equity
0
100 Per cent Per cent
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
breakdown of the consolidated assets of non-financial corporations, international comparison (2013)
100 Per cent Per cent
Czech Republic Germany* Greece** Hungary Poland** Portugal Slovakia** United Kingdom EU 28** USA
Non-financial assets Currency and deposits Debt securities Loans
Equity and investment fund shares Insurance, pension and stand. guar. schemes Financial derivatives
Other accounts receivable
* The stock of non-financial assets includes only the net stock of fixed assets and excludes inventories.
**In the case of countries indicated the stock of non-financial assets is not available, for them the difference of financial assets and liabilities is shown as the stock of non-financial assets.
Sources: Eurostat, Fed.
of financial assets held by the sectors approximate 26 percent. Namely, as the consequence of the crisis hitting Greece the Greek companies’ willingness to invest is rather low, investments halted and financial investments are also avoided and financial assets are set aside. Without eliminating the inter-company relations, the ratio of loans lent by non-financial companies is the highest in Hungary, it totals to almost 11 percent. Hungary is followed by Portugal and the United Kingdom. However, as regards consolidated data, the order is reversed. It is interesting in the case of loans lent by the sector that their ratio is only minor in the United States. The ratio of equity held by non-financial companies is the highest in Germany, as the stock of quoted shares and investment fund shares held by German non-financial companies is rather significant compared to the ratios observable in other countries. other receivables represent a significant share among assets in Poland and in the United States.
on the liabilities side of non-financial corporations (Chart 3-3) the ratio of equity is 55 percent in the United States, that of other liabilities is 17 percent, of loans 15 percent, while securities represent 11 percent of the corporate sources. This distribution compared to the entirety of the member states of the European Union is similar in the case of equity and other liabilities, however, in the European Union non-financial companies raise external sources typically by lending and issue less debt securities. From among the highlighted EU member states a higher share of securities is typical only in Portugal and the United Kingdom. This is not the only aspect in which the sources structure of these two countries differs from the others. While in Portugal raising external funds is overall large-scale, and the share of holder in the companies represent only 38 percent of the liabilities, this ratio is higher than 45 percent in all highlighted countries but is less than the half of liabilities. on
the other hand, in the United Kingdom equity in non-financial corporations makes up more than half of the liabilities. Non-financial corporations are here outstanding also considering the higher rate of insurance technical reserves due to the penetration of corporate pension schemes. Significant corporate insurance technical reserve is observable in addition to the United Kingdom only in Germany. Considering the ratio of external and internal sources it is worth mentioning Greece, where the loan holding of non-financial corporation is the highest as a consequence of the crisis, it approximates 50 percent of liabilities.
Chart 3-33
breakdown of the consolidated liabilities of non-financial corporations, international comparison (2013)
0 10 20 30 40 50 60 70 80 90 100
0 10 20 30 40 50 60 70 80 90
100Per cent Per cent
Czech Republic Germany Greece Hungary Poland Portugal Slovakia United Kingdom EU 28 USA
Debt securities Loans
Equity and investment fund shares Insurance, pension and stand. guar. schemes Financial derivatives
Other accounts payable
Sources: Eurostat, Fed.
3.6 net borrowing from the rest of the world
CorrElAtIons bEtwEEn thE nAtIonAl ACCounts AnD thE bAlAnCE of PAyMEnts
Statistics presenting the financial accounts of non-residents comprise the part of financial accounts in the broad sense, which reveal the financial relationships between foreign (non-resident) and Hungarian (resident) institutional units. They indicate the stocks of financial assets and liabilities of non-resident institutional units vis-à-vis non-residents, and the components of the change in stocks. With respect to content, they basically correspond to the financial accounts of the balance of payments statistics and the related stock statistics of investment positions vis-à-vis the rest of the world.
The methodology of the balance of payments is described in the Balance of Payments Manual of the International Monetary Fund, while the methodology of national accounts is based on the System of National Accounts Manual24 compiled under the supervision of the UN. With the exception of small structural differences, the rules of accounting set out in the two manuals are basically identical.
The statistics of national accounts classify institutional units in the economic area of a specific country on the basis of their behaviour and the role they play in the economy. Institutional units operating outside of the area of a specific country but maintaining an economic relationship with its residents are commonly classified into a sector defined as the ‘rest of the world’. Similarly to the rest of the world account of national accounts, the balance of payment statistics also present the relationship between residents and non-residents with a formal difference. While national accounts indicate economic relations from the perspective of the rest of the world, the balance of payment statistics approach these from the perspective of residents.
Both national accounts and balance of payments statistics are composed of current and accumulation accounts showing the economic flows, and balance sheets showing stocks (see Chart 3-34). A formal
difference is that, the balance of payments statistics calls the statements describing the processes balance sheet instead of account–in the Hungarian practice, stemming from the traditions–and uses the expression
‘international investment position’ instead of the term
‘balance sheet’.
Notwithstanding the fact that the structure of the balance of payments corresponds to that of national accounts, its logic differs in a few aspects. The current accounts of the national accounts express the production of goods and services, distribution of income and consumption. The capital account represents investments and capital transfers, the financial account indicates the financing processes. The current account of the balance of payments statistics indicates the export and import of goods and services and the income distribution processes. The capital account presents capital transfers and flow of non-produced non-financial assets; whereas the financial account describes the financing processes. Similarly to production, imports increase the supply of goods and services, while exports, similarly to consumption and investment, contribute to the use of goods and services. The logic of expressing the income distribution and financing processes is identical in the two statistics.
Chart 3-34
structure of national accounts and the balance of payments Current
The substantive correlation between national accounts and the balance of payments statistics is primarily illustrated by the following conformity: in the economy the difference between savings and investments is equal to the current account balance. Consequently, if the amount of domestic disposable income differs from domestic use (the sum of consumption and investment), this will be also indicated in the balance of trade and income distribution transactions conducted with the rest of the world. The total net borrowing of a country is expressed by the joint balance of the current account balance and the capital balance, in other words, in addition to the current account balance, the net capital transfers and the net acquisition of non-produced non-financial goods is also an item to be financed.
The financial account of the balance of payments, similar to the narrowly interpreted financial accounts of the rest of the world of national accounts, indicates transaction related changes in the financial assets and liabilities. Again, the balance of such changes is equal to the net lending/net borrowing of the economy.
However, the conformity between the joint balance of the current and capital accounts and the balance of the financial accounts is true on a theoretical basis only; in practice, there are almost always differences between the two, resulting from statistical measurement errors.
The same correlations apply to the national accounts as well.
The practices of compiling the national accounts as a whole, and within this the financial accounts varies significantly from country to country as to the degree in which they rely on the balance of payments statistics in the process of compiling data on the sector of the rest of the world. In Hungary, the quality and compilation frequency of the balance of payments statistics allow statisticians to rely on them completely as a fundamental data source for determining non-resident assets and liabilities in the financial accounts.
The discrepancies in content between the two statistics could be fully eliminated by the beginning of 2013 through a multiple-steps-harmonisation in the past years. Thus, the financial assets and liabilities in the balance of payments are shown also in the financial accounts for the respective sectors among the receivables from or liabilities to the rest of the world, the balance of the financial accounts in the balance of payments statistics corresponds to the consolidated transaction balance of the national economy shown in the financial accounts (i.e. net lending/net borrowing of the rest of the world multiplied by -1).