Page 74 - Contributed Paper Session (CPS) - Volume 5

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operations, but these direct fees account for only a portion of the total revenue
of the financial sector. The financial sector, particularly institutions such as
banks, uses interest rates as a standard for service charges. Banks provide
intermediary services mainly by earning interest margins. To measure the
value of financial intermediary services generated by interest margins, the
concept of "indirectly measured financial intermediary services (FISIM)" has
been widely adopted in various countries around the world. This concept was
first introduced by the United Nations System of National Accounts (SNA)
1993. The SNA shows that financial intermediaries provide related services,
providing flexible payment mechanisms, providing loans or other investments,
to households, enterprises, Governments, etc., but without explicit fees.
Financial instruments related to FISIM are limited to loans and deposits.
The FISIM total output is measured by multiplying the difference between the
effective interest rate (payable and receivable) and the "reference" rate by the
balance of the deposit and loan. According to the 2008 SNA, "the reference
rate represents the pure cost of borrowing funds-eliminating the risk premium
to the maximum extent and not including any intermediate services". FISIM's
calculations have long used risk-free rates, and banks 'risk-bearing earnings
are part of nominal output. After the actual test of the financial crisis in 2008,
the FISIM measured by the risk-free rate is very different from the actual one.
The reason is that in a financial crisis, default risk and liquidity risk have shown
an overall upward trend, and banks will rationally respond to the increase in
expected losses by raising interest rates. With this FISIM framework, it results
in an increase in interest income being an increase in output, so the financial
sector's contribution to the real economy might be overestimated.

2. Methodology for Measuring Reference rate
A. Literature review
The key to FISIM's total accounting is the determination of the reference
rate, and the key to the determination of the reference rate is to examine the
problem of separating service rates from the deposit and loan interest rates.
In terms of international standards, the SNA (1993) considers the reference
rate to be the rate representing the net cost of the borrower, i.e. the net
"property rate of return" obtained by excluding the full risk cost and the total
cost of intermediary services. You can choose the interbank lending rate or the
central bank loan rate as the reference rate. The 2008 SNA considers reference
rate should take risk factors and liquidity adjustment factors into account. The
European System of National Accounts 2010(ESA), the Balance of Payments
and International Investment Position Manual (BPM6) and the Manual on
Financial Production, Flows and Stocks in the System of National Accounts
(2015) are aligned with the 2008 SNA. Other countries also use different
interest rates to calculate the total output of FISIM. In the absence of a uniform

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