Franklin Allen (University of Pennsylvania) Elena Carletti (European University Institute) Finn Poschmann (C.D. Howe Institute)
Abstract
Debate has intensified in recent years on the advantages and disadvantages of moving towards a full mark-to-market accounting system for banks and insurance companies. The debate has been heated by moves by the International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board to harmonize accounting standards across countries. Proponents contend that mark-to-market accounting has the advantage of reflecting the relevant value of financial institution balance sheets, allowing regulators, investors and other users of accounting information to better assess their risk profile. Opponents counter that mark-to-market accounting leads to excessive and artificial volatility, especially when regulatory standards such as bank capital ratios are tied to reported accounting numbers.
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Publisher Info
Paper provided by C.D. Howe Institute in its series e-briefs with number
73.
Length: 5 pages Date of creation: Feb 2009 Date of revision: Publication status: Published on the C.D. Howe Institute website, February 2009 Handle: RePEc:cdh:ebrief:73
Find related papers by JEL classification: E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
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