Constant price estimation of financial sector output: Challenges and the way forward

SNA2008 brought many issues and challenges in the measurement of financial sector output. The issue of constant price estimation is not dealt in SNA2008 as it mostly deliberates on chain-linked approach. However, ESA2010 throws some light on constant price estimation. Constant price estimation of financial intermediary services indirectly measured (FISIM), as per ESA2010, should be base year interest rate margin times the quantum of loans or deposits. However, in the ever growing financial sector with new instruments, it would be difficult to preserve/have base year interest rate margins. Therefore, the paper suggests an alternative methodology of estimating constant price FISIM using Banking Services Price Index, even in the absence of base year interest rate margins.