Households' financial assets decline, while debt continues to increase

Households continued to shift asset holdings out of mutual fund shares and into deposits in the third quarter of 2008. Households' net redemptions of mutual fund shares amounted to EUR 1.3 bn, and the increase in deposits totalled EUR 1.1 bn.

Households' financial assets¹ declined in July–September 2008 by EUR 4.7 bn, owing to the declining prices of high-risk financial assets. Financial assets amounted to EUR 146.4 bn at end-September, which was EUR 11.7 bn (7.4%) lower than a year earlier. Growth in households' loan-based liabilities moderated, but in September, the amount (EUR 92.7 bn) was still 9.3% higher than a year before. Owing to shrinking financial assets and expanding liabilities, households' net financial assets continued on the declining trend that began in summer 2007. In September 2008 net financial assets totalled EUR 53.7 bn, which was EUR 19.6 bn (26.7%) less than a year earlier. Households' net financial assets have not been at such a low level since five years earlier in September 2003. .

With the onset of the financial crisis, non-financial corporations have altered their debt financing, in that loans have been substituted for debt securities. In September, outstanding loans to non-financial corporations (excl. loans between Finnish corporations) amounted to EUR 87.9 bn, which was 15.9% more than a year before. Over the same period, debt securities issued by non-financial corporations² declined in value by 11.8% to EUR 21.9 bn. The amount of liabilities related to quoted shares issued by non-financial corporations declined considerably in response to the fall in share prices, standing at EUR 127.4 bn in September 2008, which was 46% less than a year earlier. The decline was also related to the fact that share repurchases exceeded share issues by EUR 2.1 bn in the period October 2007–September 2008..

The above information has been excerpted from the quarterly financial accounts statistics compiled by the Bank of Finland. These provide an overview of the stocks of financial assets and liabilities of the different sectors of the national economy and of the related transaction flows.

¹⁾ Data excludes unquoted shares and other equity, and other accounts receivable. Shares in housing corporations are also excluded from financial assets.

Further information:
Eero Savolainen, tel. +358 10 831 2235, email:forname.lastname@bof.fi