Households’ net financial assets eroded by a third in 2008

Households continued to shift asset holdings out of mutual fund shares and into deposits in the fourth quarter of 2008. Households' net redemptions of mutual fund shares amounted to EUR 1.5 bn, and their deposits increased by an equivalent amount.

Households' financial assets declined in October–December 2008 by EUR 6.8 bn, owing to the declining prices of high-risk financial assets. Financial assets amounted to EUR 140.4 bn at end-December, which was EUR 15.5 bn (10.0%) lower than a year earlier. Growth in households' loan-based liabilities continued to moderate, but in December, at EUR 93.3 bn, the amount was still 7.8% 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 December 2008, net financial assets totalled EUR 47.1 bn, which was EUR 22.3 bn (32%) less than a year earlier.

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 December, outstanding loans to non-financial corporations (excl. loans between Finnish corporations) amounted to EUR 94.5 bn, which was EUR 13.7 bn more than a year before. Over the same period, debt securities issued by non-financial corporations declined in value by EUR 3.5 bn to EUR 19.7 bn. In the aggregate, debt financing increased by 9.8% in a year. 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 98.5 bn in December 2008, which was 56% less than a year earlier. The decline was also related to the fact that share repurchases exceeded share issues by EUR 1.3 bn in the course of 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