Fair Value Accounting in Distressed Markets
33 Pages Posted: 8 Jan 2018
Date Written: April 2017
In this paper, we review the existing evidence on the role of fair value accounting in transforming what started as a liquidity shock at the beginning of the Financial Crisis of 2007-08 into a solvency crisis and ultimately systemic bank failures. The paper discusses the academic evidence on the conflict in the interaction of accounting measurements - intended to increase transparency - and bank solvency regulation, whose aim is to ensure financial stability. It focuses on fair value accounting in distressed markets with the purpose to stimulate further research in this area.
Keywords: Fair Value Accounting, Market Distress, Liquidity Crisis, Financial Crises, Bank Regulation
JEL Classification: G01, G21, G28, M41, M48
Suggested Citation: Suggested Citation