17
FINANCIAL AND CAPITAL MARKETS
GENERAL
public
in
ordinary
banking
institutions.
Current deposits: Demand deposits of
the
public
(chequeing
and
nonchequeing
accounts)
and
drafts
payable in Israeli currency.
Time deposits: Non-indexed deposits
bearing interest for a period of a
week or more.
Restitution
deposits:
Deposits
deriving from restitution payments to
individuals
(mainly
restitution
payments from Germany) deposited in
accordance with the permit of the
Controller of Foreign Exchange.
Deposits in saving schemes in Tables
17.1-17.2 are deposits in schemes for
which the Savings Commissioner in the
Ministry of Finance has approved
reductions in taxation on interest
and
linkage,
excluding
authorised
savings schemes in
mortgage banks
and in the Postal Bank (these schemes
matured in 1999) and the Ministry of
Construction and Housing.
A revalued balance is the total
liabilities of the bank to the saver,
assuming that the saver will not
withdraw the account before the end
of the saving period, so that full
linkage
will
be
earned
on
the
principal. As of 1981, the revalued
balance
also
includes
linkage
differentials on the grants.
Deposits of the public in foreign
currency are demand deposits and
fixed term accounts of Israeli and
foreign
residents,
deposited
in
banking institutions in Israel.
A
banking
institution
is
an
institution
bound
by
the
full
liquidity instructions of the Bank of
Israel, including commercial banks
and credit co-operative societies, as
well as other financial institutions
which are also bound by the full
liquidity instructions (excluded are
special banking corporations, such a
mortgage banks, banks for financing
investments
and
financial
All financial data in the tables of
this chapter are presented at current
prices. Tables 17.1, 17.2 and 17.417.8 present end-of-year balances,
and Tables 17.3 and 17.9 present
summations of monthly data.
At the top of each table, the percent
of change in the Consumer Price Index
is presented as follows: for end-ofyear balances, the percent change in
December CPI is indicated as against
December of the previous year that is
specified in each table; and for
annual summations, the percent of
change between the annual averages of
the
Consumer
Price
Index
is
indicated.
It should be noted that not all items
are linked to the Consumer Price
Index (some are not linked at all,
others are linked to foreign currency
or to another price index, etc.).
Consequently, the percent of change
listed in the tables presents no more
than a general measure of changes in
prices, but not an exact calculation.
FINANCIAL ASSETS
The
public:
Individuals
and
corporations, including households,
firms, and national institutions. The
government of Israel, the Bank of
Israel, commercial banks, mortgage
and investment banks, and investments
of
foreign
residents
are
not
included.
Table 17.1 summarises the financial
assets
held
by
the
public
and
specifies their composition.
Until 2000, the data were obtained
from the series of data published by
the Research Department of the Bank
of Israel. In 2001, the data were
obtained from the series published by
the Monetary Department of the Bank
of Israel, with new definitions.
For additional tables on the topic,
see also Chapter 25 - Banking and
Insurance.
Money supply: Cash held by the public
and demand deposits (current) of the
(95)
institutions, which are not fully
bound by the liquidity regulations).
Velocity of money according to debits
to current accounts of the public at
banking institutions is calculated
according to the formula:
transactions
of
financing
by
leasing equipment.
b. Table 17.4, which is based on
financial reports to the public and
on the monthly balance of the Bank
Supervisor, presents data on credit
after
deductions
of
specific
differencials,
the
additional
differential
and
the
general
differential.
c. In Table 17.5, which is based on
the
report
on
credit
by
the
economy’s branches sent to the Bank
Supervisor in the Bank of Israel,
all the data are presented after
the
deduction
of
specific
allocations to doubtful debts. Up
to
1990
includes
credit
from
deposits of the government and the
public
for
granting
of
loans
(including loans for payments of
taxes)
and
credit
in
foreign
currency. As of 1991 does not
include credit from deposits for
granting loans. As of end 1994,
credit to public does not include
deposits of mortgage banks and
investment financing banks.
As of 1997, the credit includes
bonds and is at the exclusive
responsibility
of
the
banking
corporation, i.e. credits whose
return is conditioned upon their
collection,
are
no
longer
included.
Debits to current accounts and
overdraft
accounts during the year
Yearly average of current accounts
and
unutilized lines of credit
The velocity relates to the financial
and real transactions in the given
period and is measured according to
total debits on current accounts and
on accounts relative to the stock of
given money.
Increased velocity means that the
money changes more hands i.e., that
it represents more transactions.
Debits to current accounts are a sum
of all debits to current accounts and
overdraft accounts during the year.
Current accounts are current deposits
in
banking
institutions
excluding
payable drafts. Current deposits in
mortgage and investment banks are
also excluded.
The
annual
average
of
current
accounts is an arithmetical average
of 12 monthly averages of current
accounts on a daily basis. A monthly
average
of
current
accounts
is
obtained
directly
from
commercial
banks, and is based on daily averages
of the reported calendar.
Credit - including discount of bills,
financing
through
renting
assets,
credit
from
deposits
for
loans,
debits balances in current accounts
and
customer
liabilities
on
the
receipts account.
As of March 31, 1997, the banking
corporation is solely responsible for
the credit, i.e. credit from deposits
by
extent
of
collection
is
not
included
anymore,
and
they
are
extrabalance items.
Credit to the Public
a. Including loans to the public,
overdrafts in current accounts of
the
public,
acquisition
transactions
at
recurring
sale
conditions, lending of securities
to cover short sale of securities,
SECURITIES
The market value of a security on a
given day is the nominal value of the
security multiplied by its quotation
on the stock exchange on that day.
Tables 17.7-17.8 present the sum of
the market values of the securities
registered and traded at the stock
exchange, at the end of each year.
The annual average market value in
Table 17.9 is the average of the
market values at a number of periods
during the year.
Volume
of
trading
includes
all
transactions on the stock exchange
itself, and does not include clearing
and transactions outside the stock
exchange. Trade on the stock exchange
is only part of total trade in
securities, due to clearing of buying
(96)
EXCHANGE RATES
and selling orders by the banks and
the brokers.
The rate of velocity is obtained by
dividing the volume of trading by the
average market value. As data on
market value and volume of trading
are at current prices, part of the
change in them is a result of changes
in rates, and not of changes in the
volume of trade.
Until
1977,
there
was
a
fixed
official exchange rate for Israeli
currency (then IL) in relation to the
US
dollar
with
occasional
devaluations.
From mid- 1975 to
October 1977, a creeping devaluation
policy
was
introduced
in
which
devaluation rates were minimal but
frequent.
On October 28, 1977 control over the
exchange
rate
was
removed,
and
foreign currency has been traded
freely ever since, with a floating
rate of exchange that fluctuates
daily. Table 17.12 presents the dates
of devaluation up to 1974, as well as
official exchange rates, for the end
of each quarter year from 1975 to
September 1977. Since December 1977,
representative
exchange
rates
are
presented for the end of each quarter
year.
Representative
exchange
rates
of
foreign
currencies:
The
representative rate of the US Dollar
on a particular day is an average
rate of buying and selling the Dollar
in local currency (transfers and
checks), which took place in the
inter-bank, bilateral trade, (usually
around 15:00 O’clock) as determined by
the bank supervisor at the Bank of
Israel. The representative rates of
other currencies for a particular day
are
based
on
the
Dollar’s
representative rate for that day
relative to the exchange rates for
those currencies compared to the US
Dollar (cross rates) at that hour, in
the European currency markets.
Source: Bank of Israel.
Average
exchange
rates:
Monthly
average rate is calculated as an
average of the representative rates
of the trading days in the surveyed
month (without Saturdays, Sundays and
holidays, when representative rates
are not publicized). Annual average
rate is computed from the average
monthly rates.
Source: Processings of the Central
Bureau of Statistics.
INDICES OF SECURITIES
Since January 1977, the Bureau has
computed an index of the overall rate
of return relating to all the traded
shares and bonds registered on the
stock exchange. This index measures
changes in the total return of shares
and bonds, i.e., in addition to rate
changes
and
receipts
from
bonus
shares and rights, cash receipts were
also
measured
dividends
and
interest
(including
linkage
differentials on interest) - this
considering the timing of receiving
the receipts.
The index of the rate of return which
includes all groups (such as shares'
branches, types of debentures) is
obtained as a weighted index of
indices of individual securities, the
weight of each security being its
market value.
The changes occurring in the index
from period to period, reflect the
changes which occurred between two
dates in the overall return rate of
the securities to which the index
relates. In Tables 17.11 and 17.12
the rate of return index is presented
for the end of the year.
As of 1982, indices are calculated by
the Stock Exchange, Ltd. in Tel-Aviv,
with the cooperation of the Central
Bureau
of
Statistics,
at
a
methodological
level
and
under
current
control
of
the
indices’
system.
For
detailed
explanations,
see
Indices of Securities in the Tel Aviv
Stock Exchange, published by the Tel
Aviv Stock Exchange Ltd. and the
Israel Central Bureau of Statistics,
October 2002.
Source: Tel Aviv Stock Exchange, Ltd.
(97)
SELECTED PUBLICATIONS
OTHER PUBLICATIONS
Indices of Securities of Convertible Bonds
in the Tel Aviv Stock Exchange and in the
Central Bureau of Statistics, October 2002
(Hebrew only)
(98)