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Procyclicality and Fair Value Accounting [electronic resource] Scarlata, Jodi G..

Author/Creator:
Scarlata, Jodi G.
Publication:
Washington, D.C. : International Monetary Fund, 2009.
Series:
IMF eLibrary
IMF Working Papers; Working Paper No. 09/39.
IMF Working Papers; Working Paper No. 09/39
Format/Description:
Government document
Book
1 online resource (42 p.)
Local subjects:
Accounting framework.
Accounting principle.
Accounting standard.
Accounting treatment.
Adequate disclosure.
Asset valuation.
Bank accounting.
Bank balance sheets.
Bank behavior.
Bank capital.
Bank equity.
Bank for international settlements.
Bank losses.
Bank of spain.
Bank supervision.
Bank supervisors.
Banking.
Banking industry.
Banking supervision.
Banks balance sheet.
Banks balance sheets.
Bonds.
Capital adequacy.
Capital adequacy ratio.
Capital base.
Cash flow.
Cash flow statements.
Cash flows.
Credit derivative.
Credit derivatives.
Credit policy.
Derivative.
Discount rate.
Discounted cash flows.
Economic models.
Equity capital.
Equity shares.
Financial assets.
Financial economics.
Financial instability.
Financial institutions.
Financial instruments.
Financial market.
Financial markets.
Financial stability.
Financial statements.
Financial system.
Hedge.
Hedge accounting.
Hedging.
Income statement.
Investment bank.
Liquid markets.
Net present value.
Off balance sheet.
Present value.
Probability of default.
Retail bank.
Return on equity.
Stock market.
Stock market cycle.
Stock market index.
Valuation of assets.
Valuation of debt securities.
Valuation of liabilities.
Spain.
Summary:
In light of the uncertainties about valuation highlighted by the 2007-2008 market turbulence, this paper provides an empirical examination of the potential procyclicality that fair value accounting (FVA) could introduce in bank balance sheets. The paper finds that, while weaknesses in the FVA methodology may introduce unintended procyclicality, it is still the preferred framework for financial institutions. It concludes that capital buffers, forward-looking provisioning, and more refined disclosures can mitigate the procyclicality of FVA. Going forward, the valuation approaches for accounting, prudential measures, and risk management need to be reconciled and will require adjustments on the part of all parties.
Notes:
Description based on print version record.
Contributor:
Novoa, Alicia.
Scarlata, Jodi G.
Sole, Juan.
Other format:
Print Version:
ISBN:
1451871872:
9781451871876
ISSN:
1018-5941
Publisher Number:
10.5089/9781451871876.001
Access Restriction:
Restricted for use by site license.
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