Government Finance Statistics Manual 2014

Institutional Units and Sectors 17

Figure 2.1 Types of Institutional Units and Their Relation to Sectors of the Economy

√ Units included in sector

nonfi nancial services. Th e sector includes public and
private corporations and is composed of:

• All resident nonfi nancial corporations (as de-
  fi ned in paragraphs 2.31–2.32), regardless of the
  residence of their owners


• Th e branches of nonresident enterprises that are
  engaged in nonfi nancial production in the eco-
  nomic territory on a long-term basis


• All resident NPIs that are market producers of
  goods or nonfi nancial services.

Financial corporations sector

2.53 Th e fi nancial corporations sector consists of
resident corporations that are principally engaged in
providing fi nancial services, including insurance and
pension fund services, to other institutional units. Th e
production of fi nancial services is the result of fi nan-
cial intermediation, fi nancial risk management, liquid-
ity transformation, or auxiliary fi nancial activities. In
addition, the sector includes NPIs engaged in market
production of a fi nancial nature, such as those fi nanced
by subscriptions from fi nancial enterprises whose role
is to promote and serve the interest of those enterprises.

2.54 Financial corporations can be divided into
three broad classes: fi nancial intermediaries, fi nan-
cial auxiliaries, and captive fi nancial institutions and
money lenders.

• Financial intermediaries are institutional units
  that incur liabilities on their own account for the
  purpose of acquiring fi nancial assets by engag-
  ing in fi nancial transactions on the market. Th e
  assets and liabilities of fi nancial intermediaries

are transformed or repackaged with respect to

maturity, scale, risk, and the like, in the fi nancial

intermediation process. Th e fi nancial intermedia-

tion process channels funds between third parties

with a surplus of funds and those with a demand

for funds. A fi nancial intermediary not only acts

as an agent for these other institutional units, but

also places itself at risk by acquiring fi nancial as-

sets and incurring liabilities on its own account.

Financial intermediation is limited to acquiring

assets and incurring liabilities with the general

public or specifi ed and relatively large groups

thereof. Where the activity is limited to small

groups, no intermediation takes place. Financial

intermediaries include deposit-taking corpora-

tions, insurance corporations, and pension funds.

• Financial auxiliaries consist of fi nancial corpo-
  rations that are principally engaged in activities
  associated with transactions in fi nancial assets
  and liabilities or with providing the regulatory
  context for these transactions but in circum-
  stances that do not involve the auxiliary taking
  ownership of the fi nancial assets and liabilities
  being transacted. Th ey include brokers, manag-
  ers of pension funds, mutual funds, etc. (but not
  the funds they manage), foreign exchange bu-
  reaus, and central supervisory authorities.


• Captive fi nancial institutions and money lend-
  ers are institutional units providing fi nancial ser-
  vices other than insurance, where most of their
  assets or liabilities are not available on open fi -
  nancial markets. Th ese entities transact within
  only a limited group of units (such as with sub-
  sidiaries) or subsidiaries of the same holding

Sector

Type of unit

Households

Corporations

Nonprofit institutions

Government units

Nonfinancial

corporations

sector

Financial

corporations

sector

General

government

sector

Households

sector

Nonprofit

institutions

serving

households

sector