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An institutional unit is an economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities. Institutional units are assigned to an institutional sector by reference to their attributes of economic objectives, function, behaviour, control and ownership. For example, Producer Enterprises operate to produce a physical output in order to generate a profit. Financial Intermediaries provide financial services in order to generate a profit and Households consume goods and services and they also supply labour. Sometimes an intermediate classification of business type, based mainly on legal character, is used as an aid in the process of classifying by institutional sector. At the most aggregated level, the 'New Zealand Standard Institutional S e ctor Classification 1996’ (NZSIC 96) categories are:
• Producer Enterprises
• Financial Intermediaries
• General Government
• Private Non-Profit Organizations Serving Households
• Households
• Rest of the World
In the BoP statistical framework, it is recommended that financial account and IIP statistics be presented on an institutional sector basis, in other words, providing an institutional approach to sectorisation. Therefore, the sector of the domestic creditor for assets and the sector of the domestic debtor for liabilities are identified. The four sectors that are distinguished in the BoP and IIP standard components are: Banks, General Government, Monetary Authorities, Other Sectors. The sectorisation of the portfolio investment, financial derivatives and other investment in the BoP and the IIP serves to strengthen the links between the international accounts, the SNA93 and IMF statistical systems such as money and banking, government finance and international banking. Within the current and capital accounts, sectorisation is also applied to current and capital transfers, where a split between general government and other is used.
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