ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A B ChakrababortySubscribe to A B Chakrababorty

Banking Sector's Output in National Accounts: Measurement Issues

The revision of the system of national accounts of 1993, due by 2007-08, is expected to bring about several conceptual and computational changes. The impact of such changes on the financial sector's contribution to the gross domestic product seems to be quite significant. These changes are conceptually intricate and their implementation would also be challenging. This paper presents a prospective view of the ensuing changes as debated in international forums. In addition, two key issues, namely, the valuation of GDP of the banking sector at constant prices and the treatment of non-performing loans of banks in national accounts are discussed. The paper also highlights that the adjustment of financial intermediation services, indirectly measured, for the incidence of non-performing loans will have significant effects on the estimated macroeconomic aggregates on financial activities.
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