The treatment of banking and other financial intermediaries' output in national accounts is one of the longstanding issues for generations of national accountants. Various methods of banking imputation have been proposed and implemented so far. FISIM (Financial Intermediation Services Indirectly Measured) as recommended first in System of National Accounts 1993 (inter-bank rates or central bank lending rates) and also in the 2008 revision to System of National Accounts 1993 (Commission of the European Communities et al. [2009]) in a somewhat modified form may be regarded as the latest authorized method of banking imputation.

Despite their varieties, most known methods for measuring banking output use some kind of interest spreads. In the method adopted in United Nations [1983, 1968], the spread between the lending rate and the deposit rate is used as the banking output measure. Meanwhile, FISM approaches to measuring banking outputs as recommended in Commission of the European Communities et al. [1993, 2009] use the reference rate of interest. Thus, according to the proposal, the spread between the lending rate and the reference rate represents banking output for borrowers and that between the reference rate and the deposit rate represent the output for depositors. These documents recommend to use the inter-bank rates or central bank lending rates as the reference rates.

The present paper will show that, according to Japanese experiences in the first decade in 2000's, this new method as proposed in Commission of the European Communities et al. [1993, 2009] seems to be vastly inadequate. There are known inadequacies involved with FISIM. An example may be the inadequacy involved with the treatment of risk premium elements.

In addition, the present paper claims that it measures gains from accessibility to the reference rate of interest (inter-bank rates or central bank lending rates) by commercial banks as their output. Thus, the measure gives the impression that the performance of financial intermediaries in Japan in the very period that is, the earliest decade in the 2000's which most economists regard as the period in which the financial intermediaries functioned most badly is highly effective. In fact, the FISIM measure as estimated by the Government of Japan has its peak in the earliest years in 2000's.

A Short Bibliography:

United Nations [1953] The System of National Accounts and Supporting Tables.

United Nations [1968] The System of National Accounts.

Commission of the European Communities, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations, and World Bank [1993] System of National Accounts 1993.

Commission of the European Communities, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations, and World Bank [2009] System of National Accounts 2008.

Keywords: FISIM; SNA; national accounting

Biography: Born in 1950, graduated from the graduate school of Hitotsubashi University in 1978 and work at School of Economics, Senshu university, JAPAN since 1979.