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Bank cash flows – a source of new insight?




The financial crisis has exposed deep-rooted problems with banks' financial reporting. Long neglected in analyses of bank performance, this article recommends a new focus on bank cash flows. We identify weaknesses and deficiencies in the existing literature on banking performance. Short case studies of Northern Rock and HBOS show that analysis of the cash flow statement can provide fresh insight into a bank's financial health. However, the article also argues that the international accounting standard governing cash flow reporting is poorly suited to the needs of banks. A survey of U.K. and Eurozone banks reveals inconsistencies between banks, a lack of detail, key flows netted off, and poor reconciliation with other financial statements. The article concludes by proposing various changes to improve the quality and utility of bank cash flow reporting.

Suggested Citation

  • Klumpes, Paul & Welch, Peter & Reibel, Andres, 2009. "Bank cash flows – a source of new insight?," Journal of Financial Transformation, Capco Institute, vol. 26, pages 69-78.
  • Handle: RePEc:ris:jofitr:1396

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    More about this item


    Financial crisis; bank financial reporting; cash flow reporting;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation


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