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Liquidity Issues in the Banking Sector from an Accounting Perspective

Author

Listed:
  • Rosa Vinciguerra
  • Nadia Cipullo

Abstract

The recent financial crisis highlighted the inability of financial markets of being always able to cope with the liquidity needs of banks. This gave rise to a great attention to the issues related to the liquidity in the banking sector. Stakeholders interested in assessing the liquidity profile of a financial institution can rely on data provided through its financial statements. This demonstrates the strong influence that the accounting discipline can have on it. Accounting standards can play an important role in depicting the liquidity profile (and the associated risk) of an entity, as they contribute to produce information useful to predict timing, uncertainties and amounts of its future cash flows. The objective of this theoretical study has been to investigate the contents of the IASB Conceptual Framework and of some of its standards, i.e. IAS 7, IFRS 7, IFRS 9. In particular, the aim of the analysis has been to verify if the financial information requested by the regulation is adequately useful and relevant in order to assess the liquidity profile of a financial institution. In our opinion, the IASB discipline still presents some deficiencies on this aspect, in particular for entities operating in the banking sector.

Suggested Citation

  • Rosa Vinciguerra & Nadia Cipullo, 2018. "Liquidity Issues in the Banking Sector from an Accounting Perspective," International Business Research, Canadian Center of Science and Education, vol. 11(5), pages 80-91, May.
    • Handle: RePEc:ibn:ibrjnl:v:11:y:2018:i:5:p:80-91
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    More about this item

    Keywords

    bank; business model; cash flows; disclosure; liquidity; financial instruments; measurement;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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