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Fair value accounting and financial stability

Author

Listed:
  • Enria, Andrea
  • Cappiello, Lorenzo
  • Dierick, Frank
  • Sergio, Grittini
  • Haralambous, Andrew
  • Maddaloni, Angela
  • Molitor, Philippe
  • Pires, Fatima
  • Poloni, Paolo

Abstract

Accounting standard setters are considering the wider use of fair value accounting. This paper focuses on the financial stability implications of a move in the banking sector from the current accounting framework to full fair value accounting. A simulation exercise is performed on how various external shocks affect the balance sheet of an average European bank under the two frameworks. The paper further investigates the impact of the alternative framework on the main balance sheet items, and the interaction with banks JEL Classification: G14, G21, G28, M41

Suggested Citation

  • Enria, Andrea & Cappiello, Lorenzo & Dierick, Frank & Sergio, Grittini & Haralambous, Andrew & Maddaloni, Angela & Molitor, Philippe & Pires, Fatima & Poloni, Paolo, 2004. "Fair value accounting and financial stability," Occasional Paper Series 13, European Central Bank.
    • Handle: RePEc:ecb:ecbops:200413
    Note: 234084
    as

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    File URL: https://www.ecb.europa.eu//pub/pdf/scpops/ecbocp13.pdf
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    More about this item

    Keywords

    accounting; banks; fair value; financial regulation; financial reporting; Financial Stability; risk management;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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