They offer a wealth of information that can guide policy decisions, inform investment strategies, and provide insights into the health and behavior of different sectors within an economy. It can be useful for:
Allow economists to analyze the economic behavior of each sector, understand their financial interrelationships, and determine their contributions to the overall economy. For instance, the household sector's saving rate, consumption patterns, and indebtedness can provide insights into the financial health and spending habits of consumers, which drive a significant part of economic activity.
Central banks use this information to inform their monetary policy. For instance, if the household sector is highly indebted, it may indicate a greater sensitivity to interest rate changes, which the central bank might take into account when setting rates.
For investors, understanding the financial health of different sectors can guide investment strategy. For example, if the non-financial corporate sector's balance sheet indicates strong profits and low debt levels, this might make equity investments in this sector more attractive.
Sector balance sheet accounts can reveal potential financial risks and vulnerabilities within specific sectors. For example, if the non-financial corporate sector is heavily leveraged, it might signal a higher risk of defaults, which could pose a threat to financial stability.
For the government sector, these balance sheets can show the level of public debt and assets, which can be used to inform fiscal policy decisions and to assess the sustainability of public finances.
Regulators use sectoral accounts to design and implement macroprudential policies. If a particular sector shows signs of excesses (like overheated property market or excessive lending in a sector), policies can be implemented to mitigate systemic risks.