Distinction between financial and non-financial sectors
3.54. The allocation of corporations and market NPIs to the non-financial corporations sector or the financial corporations sector is based on the SNA93 distinction between financial intermediation and auxiliary financial activities and other market activities. Financial intermediation is defined in SNA93 as 'a productive activity in which an institutional unit incurs liabilities on its own account for the purpose of acquiring financial assets by engaging in financial transactions on the market'. (SNA93, paragraph 4.78.)
3.55. The role of financial intermediaries is described as channelling funds from lenders to borrowers by collecting funds from lenders and transforming or repackaging them in ways which suit the requirements of borrowers. Liabilities are incurred by accepting deposits and issuing bills, bonds or other securities. The funds are used to acquire financial assets, principally by making advances or loans to others but also by purchasing bills, bonds or other securities. A financial intermediary does not simply act as an agent for other units, but places itself at risk by incurring liabilities on its own account.
3.56. Auxiliary financial activities are services that are closely related to, and designed to facilitate, financial intermediation. The activities may be performed as secondary activities, by financial intermediaries, or performed on an agency basis by specialists. The latter include securities brokers, flotation companies, loan brokers, agencies that guarantee bills by endorsement, and institutions that arrange hedging instruments such as swaps, options and futures. Such units are not financial intermediaries because they do not incur liabilities on their own account.
3.57. In summary, corporations, quasi-corporations and market NPIs that are engaged primarily in financial intermediation or auxiliary financial services are classified to the financial corporations sector. All other corporations, quasi-corporations and market NPIs are classified to the non-financial corporations sector.