Non-financial corporations - statistics on financial assets and liabilities
- Data extracted in January 2018. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: January 2019.
This article focuses on the annual stock of financial assets and liabilities for non-financial corporations in the European Union (EU) and the euro area; note there is a complementary article that provides similar information for financial assets and liabilities of households.
The non-financial corporations sector comprises all private and public corporate enterprises that produce goods or provide non-financial services to the market. Across the EU-28, the financial assets of non-financial corporations mainly comprise equity and investment fund shares, other accounts receivable, loans, currency and deposits. The financial liabilities of non-financial corporations mainly comprise equity and investment fund shares, loans and other accounts payable.
The data presented in this article relate to a detailed set of non-consolidated financial balance sheets for the non-financial corporations sector released by Eurostat. Note that statistics detailing the financial account may be consolidated or non-consolidated; the latter recording not only transactions between sectors but also transactions within the same sector.
The article provides an analysis of financial assets and liabilities of non-financial corporations across the EU-28 and the euro area (EA-19), as well as for individual EU Member States, three EFTA countries and Turkey for the latest year available (2016) and for developments over the previous 10 years. Some indicators are presented in relation to gross domestic product (GDP), which is beneficial for making cross-country comparisons, especially between countries of different size.
- 1 Main statistical findings
- 2 Data sources and availability
- 3 Context
- 4 See also
- 5 Further Eurostat information
Main statistical findings
The value of financial liabilities for non-financial corporations was much greater than the value of their financial assets
Total financial assets of non-financial corporations in the EU-28 were valued at EUR 27 786 billion in 2016 (see Figure 1); this was much lower than the value of their financial liabilities, which stood at EUR 43 458 billion.
In 2006, total financial assets of EU-28 non-financial corporations represented 57.4 % of total financial liabilities. However, this ratio rose in successive years during the last 10 years, such that total financial assets represented 63.9 % of total financial liabilities by 2016.
In the years prior to the onset of the global financial and economic crisis, there was a marked rise in the debt levels (indebtedness) of non-financial corporations. However, the total value of financial assets and liabilities of non-financial corporations in the EU-28 and the euro area fell considerably in 2008. Thereafter, the value of both assets and liabilities rebounded in 2009 and 2010, remained relatively unchanged in 2011, and then followed an upward development throughout the period 2012 to 2016.
When compared with the situation prior to the global financial and economic crisis (in other words, data for 2007), the value of the financial assets for EU-28 non-financial corporations had returned to their pre-crisis levels by 2010, while it took an additional two years before the value of total financial liabilities did so. These developments in the wake of the crisis may reflect, at least to some degree, a reassessment of asset valuations, balance sheet adjustments and a reduction in corporate debt.
Financial liabilities of EU-28 non-financial corporations were valued at almost three times as high as GDP
The ratio of financial assets and liabilities relative to GDP is shown in Figure 2. The financial assets and liabilities of non-financial corporations in the EU-28 represented, on average, 165.5 % and 272.8 % of GDP during the period covering 2006-2016.
The ratio for total financial assets of EU-28 non-financial corporations fell from a peak of 159.9 % (relative to GDP) in 2007 to 143.3 % in 2008, while there was a larger reduction when analysing the ratio for financial liabilities as this fell from 277.8 % to 237.8 %. The impact of the global financial and economic crisis was relatively short-lived for financial assets, as their value in relation to GDP immediately rebounded in 2009 to the same level as that recorded before the crisis, whereas it was not until 2013 that the ratio of financial liabilities relative to GDP returned to its pre-crisis level. It is interesting to note that while the impact of the crisis was more apparent for the euro area during the period 2009-2011, relative to GDP both financial assets and liabilities rose at a faster pace in the euro area than in the EU-28 during the period 2012-2015.
Equity and investment fund shares were the most prominent form of asset and liability
Equity and investment fund shares, other accounts receivable, loans, and currency and deposits together made up 97.4 % of the total financial assets of EU-28 non-financial corporations in 2016 (see Figure 3). Equity and investment fund shares accounted for the highest share, at almost half of the total (49.9 %). Within this instrument category, equity accounted for around 95 % of the total.
In 2016, equity and investment fund shares, loans, other accounts payable, and debt securities together made up 96.8 % of the total financial liabilities of EU-28 non-financial corporations (see Figure 4). The share of equity and investment fund shares in total financial liabilities was even higher than for assets, reaching 53.6 %. As with assets, equity liabilities represented around 95 % of this instrument category.
The information presented in Figures 5 and 6 is in the form of indices. It is important to bear in mind the relative weight of each financial instrument in total financial assets and liabilities (as shown in Figures 3 and 4) before considering their developments over time.
During the period 2006-2016, there was steady and almost uninterrupted growth in the value of loans that were held as financial assets by EU-28 non-financial corporations (see Figure 5); a similar pattern with slightly lower growth rates was observed for currency and deposits. By contrast, there was a more mixed development for equity and investment fund shares, as their asset value fell by 22.8 % between 2007 and 2008, before rebounding (aside from a small fall in 2011) with particularly rapid growth in 2009 and 2015. The value of financial assets held by EU-28 non-financial corporations in the form of financial derivatives and employee stock options and insurance, pensions and standardised guarantees fell between 2006 and 2016.
It should be noted that the values of equity and investment fund shares, debt securities and financial derivatives are affected by changes in prices of these instruments in financial markets.
Figure 6 shows similar information for the development of various financial liabilities held by EU-28 non-financial corporations. The value of liabilities rose for each financial instrument during the period 2006-2016, although there were some relatively large fluctuations from one year to next for selected instruments; this was particularly true for financial derivatives and employee stock options (note however, that these accounted for just 0.4 % of total financial liabilities in 2016).
In a similar development to that for assets, the value of liabilities for equity and investment fund shares fell by 28.0 % between 2007 and 2008, but thereafter recovered (apart from a fall in 2011). By contrast, there was a relatively stable development for the second most used instrument, loans, as the value of liabilities rose by 0-6 % per annum during the period 2008-2016, aside from modest reductions of no more than 1.3 % in 2009 and 2013.
France held more than one quarter of the EU-28’s financial assets and more than one fifth of its liabilities
Figure 7 shows the share of each EU Member State in the total financial assets and liabilities of EU-28 non-financial corporations; note that the figure is split into two parts with different scales on the y-axes.
Non-financial corporations in France held the highest share (26.5 %) of total financial assets held by non-financial corporations in the EU-28 in 2016, followed by those from Germany (14.3 %), the United Kingdom (9.4 %) and Spain (8.1 %). French non-financial corporations also had the highest share (21.9 %) of EU-28 financial liabilities in 2016, followed by non-financial corporations from the United Kingdom (14.2 %), Germany (13.2 %) and Italy (8.5 %).
The high share of France in EU-28 financial assets and liabilities relative to Germany is associated with a relatively high share of inter-company asset positions. Excluding these positions, the data for Germany and France are broadly similar.
A comparison between the shares of financial assets and financial liabilities for each EU Member State reveals that these were generally quite similar. However, non-financial corporations in France held a considerably higher share of the EU-28’s total financial assets than their share of EU-28 total financial liabilities (a difference of 4.6 percentage points), while the opposite was true in the United Kingdom, as its share of EU-28 financial liabilities was 4.8 points higher than its share of financial assets; Italy also had a higher share of financial liabilities, with a difference of 2.3 points when compared with its share of financial assets.
It is interesting to note that some of the relatively small EU Member States accounted for quite high shares of EU-28 financial assets and liabilities. This was particularly true for non-financial corporations in Ireland and Luxembourg, which may reflect, at least in part, the activities of multinational corporations and the impact of foreign direct investment (FDI); note that the majority of the indigenous non-financial corporations in these economies are relatively small and are largely reliant on domestic credit institutions, while multinationals tend to have much greater access to a broader range of international sources of finance.
Average annual growth rates for total financial assets and liabilities of non-financial corporations are shown in Figure 8. Across the whole of the EU-28 financial assets rose, on average, by 3.6 % per annum during the period 2006-2016, while the growth rate for financial liabilities was somewhat lower at 2.5 % per annum.
Among the EU Member States, the highest average annual growth rates for the period 2006-2016 were recorded in Ireland and Malta, with the value of financial assets held by non-financial corporations rising on average by 17.0 % and 11.3 % per annum, while the value of financial liabilities rose by an average of 15.2 % and 7.8 % per annum. The vast majority of Member States saw the value of their non-financial corporations’ financial assets and liabilities rise on average by 2.5-7.5 % per annum, although there were several exceptions where growth was more subdued. These included the four southern Member States of Portugal, Spain, Italy and Greece, with almost no change in the overall value of financial assets or financial liabilities among Spanish and Italian non-financial corporations between 2006 and 2016, while there was a reduction in the value of both the financial assets (-5.6 % per annum) and liabilities (-2.8 % per annum) held by Greek non-financial corporations.
The value of financial assets for Irish non-financial corporations relative to GDP more than trebled between 2006 and 2016
Figure 9 shows the change in the value of financial assets and liabilities relative to GDP between 2006 and 2016. In keeping with the overall figures for the EU-28 it was commonplace to find that these ratios generally rose during the period under consideration.
The value of total financial assets of non-financial corporations relative to GDP more than trebled in Ireland between 2006 and 2016, while the next highest rate of change was recorded in the Netherlands (another economy where multinational corporations play a relatively important role). Despite a small reduction in their value of financial assets relative to GDP, non-financial corporations in Luxembourg continued to record the highest ratio among the EU Member States (899.2 % in 2016). Aside from Luxembourg, there were five other EU Member States where a decline was reported between 2006 and 2016: Spain, Italy, Slovenia, Greece and Romania.
The value of total financial liabilities of non-financial corporations relative to GDP also rose at a rapid pace in Ireland (it was 2.75 times as high in 2016 as in 2006), Cyprus and Belgium. The ratio of the value of financial liabilities to GDP peaked in Luxembourg at 1 116.6 % in 2016, followed by Ireland (745.3 %), Sweden (525.3 %) and Cyprus (521.9 %). There were seven EU Member States where a decline was reported when comparing the value of financial liabilities relative to GDP between 2006 and 2016: Estonia, Greece, the Czech Republic, Italy, Spain, Slovenia and Romania.
The final two figures in this article present information relating to an analysis of financial assets (Figure 10) and financial liabilities (Figure 11) by financial instrument.
As already shown, across the EU-28 equity and investment fund shares were the principal instrument held by non-financial corporations for both assets and liabilities. This pattern was repeated in a majority of the EU Member States in 2016, with equity and investment fund shares accounting for at least half of the total value of the financial assets held by non-financial corporations in Belgium, Cyprus, Denmark, Luxembourg, Spain, Sweden and France. In the Member States where equity and investment fund shares did not record the highest share of total financial assets, it was common to find that the principal instrument was other accounts receivable/payable, the only exceptions being in Greece (where more than half of all financial assets were held as currency/deposits) and Malta (where just less than one third of all financial assets were held in the form of loans).
In 2016, equity and investment fund shares accounted for the highest share of total financial liabilities of non-financial corporations in all but four of the EU Member States. Their share of total financial liabilities rose above 50.0 % in 13 Member States, with shares of more than 60.0 % in France, Luxembourg and Sweden. In Greece, Malta and Cyprus, loans were the principal instrument held by non-financial corporations and their share of total financial liabilities peaked at 49.8 % in Greece. Romania was an exception insofar as it was the only Member State to report that other accounts receivable/payable were the principal liability of non-financial corporations (46.8 % of total financial liabilities in 2016).
Data sources and availability
The compilation of financial accounts follows the European System of Accounts 2010 (ESA 2010).
The financial account and balance sheet
The financial account is the final account in the sequence of accounts that record transactions, for example the transactions during a quarter or a year. The balancing item of the financial account, the net acquisitions of financial assets less net incurrence of liabilities, is net lending (+) or net borrowing (-). Financial balance sheets are statements of the value of assets and liabilities at a particular point in time, for example at the beginning or end of a quarter or a year. The balance sheet shows, on its left side, financial assets and, on its right side, liabilities; the balancing item of the financial balance sheet is financial net worth. The changes from previous balance sheets allow the measurement of changes in wealth effects.
Eurostat’s website includes detailed financial accounts by country. Financial accounts are published in consolidated and non-consolidated forms; within this article the latter are presented. As a rule, the accounting entries in ESA 2010 are non-consolidated, as a consolidated financial account requires information on the counterpart grouping of institutional units. Note that data for the EU-28 and euro area (EA-19) aggregates are calculated as a sum of data for Member States; no adjustment is made for flows between Member States.
The non-financial corporations sector
Institutional sectors bring together economic units with broadly similar characteristics and behaviour. The non-financial corporations sector is one of five sectors — along with financial corporations, general government, households and non-profit institutions serving households — that together make up the domestic economy.
The non-financial corporations sector consists of institutional units which are independent legal entities and market producers, and whose principal activity is the production of goods and non-financial services. It may be divided into three subsectors covering: public non-financial corporations; national private non-financial corporations; foreign controlled non-financial corporations.
In general, sole proprietorships and most partnerships that do not have an independent legal status are considered to be part of the household sector, rather than as corporations (financial or non-financial). However, there are sometimes practical difficulties in delineating ‘quasi-corporations’ (unincorporated businesses with the characteristics of companies) between corporations on one hand and the household sector on the other, which may influence the scope and comparability of the data presented as well as the internal consistency of the full set of accounts.
Financial assets and liabilities
Financial assets are economic assets, comprising all financial claims, equity and the gold bullion component of monetary gold. These assets are stores of value representing a benefit or series of benefits accruing to the economic owner through holding or using the assets over a period of time. They are a means of carrying forward value from one accounting period to another. By contrast, financial liabilities are established when debtors are obliged to provide a payment or a series of payments to creditors.
The classification of financial assets and liabilities corresponds to the classification of financial transactions. Financial assets and liabilities as negotiable financial instruments are valued at market value; these values should exclude commissions, fees and taxes. Financial instruments that are non-negotiable are valued at nominal value. These assets/liabilities include:
- Monetary gold and special drawing rights (SDRs): the former is gold bullion held by financial authorities (or others subject to effective control by such authorities) as a reserve asset against which no outstanding financial liability exists; the latter is an international reserve asset created by the International Monetary Fund (IMF).
- Currency and deposits: the former is composed of banknotes and coins issued by monetary authorities; the latter are exchangeable for currency on demand and may be used directly for making payments by cheque, giro, direct debit, and so on.
- Debt securities: negotiable financial instruments (legal ownership of which may be transferred) that must be designed for potential trading on an organised exchange or in the over-the-counter market.
- Loans: financial assets created when creditors lend funds to debtors, either directly or through brokers, which are either evidenced by non-negotiable documents or not evidenced by documents.
- Equity and investment fund shares or units: composed of financial assets that represent property rights on corporations or quasi-corporations (such assets generally entitle the holders to a share of profit, and to a share of net assets in the event of liquidation).
- Insurance, pension and standardised guarantee schemes: composed of financial assets of policy holders or beneficiaries and financial liabilities of insurers, pension funds, or issuers of standardised guarantees.
- Financial derivatives and employee stock options: financial assets linked to a financial asset, a non-financial asset or an index, through which specific financial risks can be traded in financial markets in their own right (for example, options, forwards and credit derivatives, or agreements for the purchase of an employer’s stock at a stated price).
- Other accounts receivable/payable: financial assets that are created as a counterpart of a financial or a non-financial transaction in cases where there is a timing difference between this transaction and the corresponding payment (for example, the direct extension of credit by suppliers, advances for work that is in progress or has yet to be undertaken, or prepayment for goods/services that have yet to be delivered).
Financial accounts form part of the national accounting framework, and are compiled in the EU in accordance with the European system of national and regional accounts (ESA 2010). They are a significant tool for analysing financial developments and policy decisions, and provide key statistical information on financial transactions, other financial flows, and financial balance sheets by institutional sector, including non-financial corporations.
Particular issues relating to the non-financial corporations sector include the indebtedness of the sector, its debt servicing burden and its impact on access to external finance as well as its capacity to withstand economic shocks. Indeed, since the global financial and economic crisis, financial accounts for non-financial corporations have been integrated into an enlarged set of policy indicators that are used to monitor private sector debt as part of the macroeconomic imbalance procedure (MIP) surveillance mechanism.
Financial accounts show how borrowers obtain resources by incurring liabilities or reducing assets, and how lenders allocate their surpluses by acquiring assets or reducing liabilities. The types of assets and liabilities that non-financial corporations hold carry different levels of risk and can be used to assess financial risk, vulnerability and welfare.
Further Eurostat information
- Key indicators (nasa_10_ki)
- Non-financial transactions (nasa_10_nf_tr)
- Financial flows and stocks (nasa_10_f)
Methodology / Metadata
- European system of accounts — ESA 2010
- Key legal documents for ESA 2010
- Financial flows and stocks (Eurostat metadata)
- Publications of sources and methods for compilation of annual financial accounts
Source data for tables, figures and maps (MS Excel)
- Non-financial corporations financial assets and liabilities: tables and figures
- Non-financial corporations financial assets and liabilities: annex