Do Accounting Measurement Regimes Matter? A Discussion of Mark-to-Market Accounting and Liquidity Pricing

Sapra, Haresh

doi:10.2139/ssrn.1186255

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Do Accounting Measurement Regimes Matter? A Discussion of Mark-to-Market Accounting and Liquidity Pricing

Journal of Accounting & Economics (JAE), Vol. 45, No. 2 & 3, pp. 379-387, 2008

17 Pages Posted: 30 Jul 2008 Last revised: 5 Aug 2008

See all articles by Haresh Sapra

Haresh Sapra

Booth School of Business, University of Chicago

Date Written: September 16, 2007

Abstract

Using a model with banking and insurance sectors, Allen and Carletti show that marking-to-market interacts with liquidity pricing to exacerbate the likelihood of financial contagion between the two sectors. In this discussion, I lay out the main ingredients of their model and explain how they interact with liquidity pricing to generate financial contagion. I then discuss some limitations of their model and propose an interesting extension.

Keywords: Mark-to-Market, Historical Cost, Liquidity Pricing, Accounting Measurement

JEL Classification: D52, G12, G21, G22, M41, M44

Suggested Citation: Suggested Citation

Sapra, Haresh, Do Accounting Measurement Regimes Matter? A Discussion of Mark-to-Market Accounting and Liquidity Pricing (September 16, 2007). Journal of Accounting & Economics (JAE), Vol. 45, No. 2 & 3, pp. 379-387, 2008, Available at SSRN: https://ssrn.com/abstract=1186255 or http://dx.doi.org/10.2139/ssrn.1186255