Économie et Statistique n° 366 - 2003 Job Insecurity: Has the Protective Role of Seniority Diminished in France? - Intragenerational Redistribution and the Private-Sector Employees' Pension Scheme - Financial Intermediaries - An estimate of the Market value of Unlisted Shares
Financing non-financial agents in Europe: financial intermediaries still play a dominant role
The extent of financial intermediation in thirteen Euro-pean countries from 1994 to 2001 is evaluated using the national financial accounts (Eurostat base). Two approaches are distinguished. The demand-based approach relates to agents in need of financing who ask for a loan from a banking intermediary or issue securi-ties on the market. The supply-based approach takes in the activity of financial institutions, which help finance the economy, over and above bank loans, by buying securities on the market. The outstanding amount of securities is corrected by the stock market value to pro-vide a measurement of the intermediation rate in volume. The idea is to capture solely the «new financ-ing» aspect of the increase in market capitalisation. The deviation between the evaluation in value and our proposed evaluation in volume shows the magnitude of the bias induced by stock market value effects. The deviation between the supply-based approach and the demand-based approach shows that a large proportion of inancing «demanded» by non-financial agents is «supplied» by financial intermediaries (FIs). The devia-tions between the different countries barely concern the external financing level (market financing/intermediated financing). They have much more to do with the very methods of intermediation, depending on whether the FIs' activity consists more of credit or buying securities. These evaluations show that the extent of financial intermediation of financing held steady in Europe from 1994 to 2001, during a buoyant phase on the capital markets. This trend supports the idea that the financial markets cannot grow to the detriment of the growth of financial intermediaries.