Accounting Discretion Of Banks During A Financial Crisis
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Accounting Discretion Of Banks During A Financial Crisis
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Author : Mr.Luc Laeven
language : en
Publisher: International Monetary Fund
Release Date : 2009-09-01
Accounting Discretion Of Banks During A Financial Crisis written by Mr.Luc Laeven and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-09-01 with Business & Economics categories.
This paper shows that banks use accounting discretion to overstate the value of distressed assets. Banks' balance sheets overvalue real estate-related assets compared to the market value of these assets, especially during the U.S. mortgage crisis. Share prices of banks with large exposure to mortgage-backed securities also react favorably to recent changes in accounting rules that relax fair-value accounting, and these banks provision less for bad loans. Furthermore, distressed banks use discretion in the classification of mortgage-backed securities to inflate their books. Our results indicate that banks' balance sheets offer a distorted view of the financial health of the banks.
New Challenges For Future Sustainability And Wellbeing
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Author : Ercan Özen
language : en
Publisher: Emerald Group Publishing
Release Date : 2021-05-21
New Challenges For Future Sustainability And Wellbeing written by Ercan Özen and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-05-21 with Business & Economics categories.
New Challenges for Future Sustainability and Wellbeing is a collection of studies about sustainability and related challenges, such as income, wealth, the environment, education and regional equality that influence the pace of economic development and affects the well-being of people and organisations all over the world.
Bank Performance Risk And Firm Financing
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Author : P. Molyneux
language : en
Publisher: Springer
Release Date : 2011-07-26
Bank Performance Risk And Firm Financing written by P. Molyneux and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-07-26 with Business & Economics categories.
This text comprises a selection of papers that provide state of the art insights into bank performance, risk and firm financing post crisis that were presented at the European Association of University Teachers of Banking and Finance Conference (otherwise known as the Wolpertinger Conference) held at Bangor University, Wales, 2010.
Fair Value Accounting
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Author : E. Menicucci
language : en
Publisher: Springer
Release Date : 2014-12-22
Fair Value Accounting written by E. Menicucci and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-12-22 with Business & Economics categories.
The 2008 financial crisis has turned a spotlight on the role of financial reporting in periods of economic downturn. In analysing the financial crisis, many commentators have attributed blame to fair value accounting (FVA) because of the pro-cyclical effect it potentially introduces in banks' financial statements. This book discusses how FVA affects financial reporting during a financial crisis. It provides an in-depth analysis of the key benefits and negatives of FVA, and discusses the controversial practice of trade-offs with historical cost accounting (HCA). It provides an overview of the principles and applications of FVA, and explains its impact on banks' financial statements. Investigating the effect of FVA on the volatility of earnings and regulatory capital in European banks, the book asks whether incremental volatility is indeed reflected in bank share prices. It examines empirical evidence to quantify the role that FVA may have played in times of stress in the banking sector, both in Europe and elsewhere. Fair Value Accounting explores the criticism FVA has received despite its perceived merits, and summarizes the various opposing views of parties in this major policy debate, which has involved banking and accounting regulators from across the globe.
A Flow Of Funds Perspective On The Financial Crisis Volume I
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Author : B. Winkler
language : en
Publisher: Springer
Release Date : 2013-11-29
A Flow Of Funds Perspective On The Financial Crisis Volume I written by B. Winkler and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-11-29 with Business & Economics categories.
Provides a comprehensive overview of a broad range of uses of the flow of funds within the central bank community as well as in the academic field, prepared by international experts in the field. Based on the crisis experience, it offers an overview of lessons for macrofinancial analysis and financial stability.
Did Basel Iii Miss The Point The Role Of Ifrs S Other Comprehensive Income During The Financial Crisis
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Author : Kenneth Born
language : en
Publisher: Anchor Academic Publishing
Release Date : 2017-01-09
Did Basel Iii Miss The Point The Role Of Ifrs S Other Comprehensive Income During The Financial Crisis written by Kenneth Born and has been published by Anchor Academic Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-09 with Business & Economics categories.
The broad consensus before the recent financial crisis was that the so called fair value accounting (FVA) improves transparency contrary to the historical cost model. Since 2008, the discussion has been on the root cause of the crisis, which lessons can be gleaned from it and how making the same mistakes again can be avoided. Basel III was implemented in order to improve the regulatory environment and was the response of regulators and politicians to public pressure and suspicions raised by the bail out programmes for banks. Consequently, an until then inconceivable number of new regulations and regulatory bodies were introduced. FVA was also blamed as part of the cause of the recent financial crisis. Available-for Sales (AfS) securities represent a major component of bank balance sheet asset. Gains and losses of AfS-positions are recorded within the Other Comprehensive Income (OCI). The OCI includes items which are not recognized (IAS 1.7) in income statements but increase or decrease a bank’s equity. The items also include income and expenses from Available-for-Sale positions (AfS) in accordance with IAS 39. On October 13th, 2008, an amendment to IAS 39 was published by IASB. This amendment did authorize the reclassification of assets. This amendment clearly demonstrates the influence of FVA on the value of assets of banks that apply IFRS. The main objective of this book is to verify the influence of OCI and whether the new regulations sufficiently capture this critical factor. Regulators should ensure that unrealized profits do not result in a capital drain. One way to assure this is to make OCI subject to a prudential filter and to deduct it from regulatory capital, which was the case until CRR became effective on January 1st, 2014 (CEBS guideline 2004). Basel III is even less strict than Basel II in that regard. Article 26(1) CRR clearly states that CET1 items must be recognized only in case they are really available to the financial institution for “unrestricted and immediate use to cover risks or losses as soon as these occur”. Nevertheless, with the introduction of the CRR, the prudential filter for positions that caused the financial crisis and led to poor capitalization of banks was not strengthened but actually removed. At present, CRR does not envisage any filter for unrealized gains parked in OCI.
Restoring Financial Stability
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Author : New York University Stern School of Business
language : en
Publisher: John Wiley & Sons
Release Date : 2009-03-23
Restoring Financial Stability written by New York University Stern School of Business and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-03-23 with Business & Economics categories.
An insightful look at how to reform our broken financial system The financial crisis that unfolded in September 2008 transformed the United States and world economies. As each day's headlines brought stories of bank failures and rescues, government policies drawn and redrawn against the backdrop of an historic Presidential election, and solutions that seemed to be discarded almost as soon as they were proposed, a group of thirty-three academics at New York University Stern School of Business began tackling the hard questions behind the headlines. Representing fields of finance, economics, and accounting, these professors-led by Dean Thomas Cooley and Vice Dean Ingo Walter-shaped eighteen independent policy papers that proposed market-focused solutions to the problems within a common framework. In December, with great urgency, they sent hand-bound copies to Washington. Restoring Financial Stability is the culmination of their work. Proposes bold, yet principled approaches-including financial policy alternatives and specific courses of action-to deal with this unprecedented, systemic financial crisis Created by the contributions of various academics from New York University's Stern School of Business Provides important perspectives on both the causes of the global financial crisis as well as proposed solutions to ensure it doesn't happen again Contains detailed evaluations and analyses covering many spectrums of the marketplace Edited by Matthew Richardson and Viral Acharya, this reliable resource brings together the best thinking of finance and economics from the faculty of one of the top universities in world.
Dynamic Loan Loss Provisioning
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Author : Torsten Wezel
language : en
Publisher: International Monetary Fund
Release Date : 2012-05-01
Dynamic Loan Loss Provisioning written by Torsten Wezel and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-05-01 with Business & Economics categories.
This simulation-based paper investigates the impact of different methods of dynamic provisioning on bank soundness and shows that this increasingly popular macroprudential tool can smooth provisioning costs over the credit cycle and lower banks’ probability of default. In addition, the paper offers an in-depth guide to implementation that addresses pertinent issues related to data requirements, calibration and safeguards as well as accounting, disclosure and tax treatment. It also discusses the interaction of dynamic provisioning with other macroprudential instruments such as countercyclical capital.
Finding The Bad Apples In The Barrel Using The Market Value Of Equity To Signal Banking Sector Vulnerabilities
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Author : Will Kerry
language : en
Publisher: International Monetary Fund
Release Date : 2019-08-16
Finding The Bad Apples In The Barrel Using The Market Value Of Equity To Signal Banking Sector Vulnerabilities written by Will Kerry and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-08-16 with Business & Economics categories.
This paper measures the performance of different metrics in assessing banking system vulnerabilities. It finds that metrics based on equity market valuations of bank capital are better than regulatory capital ratios, and other metrics, in spotting banks that failed (bad apples). This paper proposes that these market-based ratios could be used as a surveillance tool to assess vulnerabilities in the banking sector. While the measures may provide a somewhat fuzzy signal, it is better to have a strategy for identifying bad apples, even if sometimes the apples turn out to be fine, than not being able to spot any bad apples before the barrel has been spoiled.
Bank Failures During The Financial Crisis
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Author : Lawrence C. Armstrong
language : en
Publisher: Nova Science Publishers
Release Date : 2013
Bank Failures During The Financial Crisis written by Lawrence C. Armstrong and has been published by Nova Science Publishers this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with Bank failures categories.
Between January 2008 and December 2011, a period of economic downturn in the United States, 414 insured U.S. banks failed. Of these, 85 percent or 353 had less than $1 billion in assets. These small banks often specialise in small business lending and are associated with local community development and philanthropy. These small bank failures have raised questions about the contributing factors in the states with the most failures, including the possible role of local market conditions and the application of fair value accounting under U.S accounting standards. This book discusses the factors that contributed to the bank failures in states with the most failed institutions between 2008 and 2011 and what role, if any, fair value accounting played in these failures; the use of shared loss agreements in resolving troubled banks; and the effect of recent bank failures on local communities.