Refine
Year of publication
Document Type
- Working Paper (16)
- Part of Periodical (2)
- Article (1)
Has Fulltext
- yes (19)
Is part of the Bibliography
- no (19)
Keywords
- Banks (5)
- Fair value accounting (3)
- Financial crisis (3)
- Deductible Insurance (2)
- Disclosure (2)
- Financial Crisis (2)
- Financial Institutions (2)
- Financial stability (2)
- Generaldirektor (2)
- Geschäftsführer (2)
The recent financial crisis has led to a major debate about fair-value accounting. Many critics have argued that fair-value accounting, often also called mark-to-market accounting, has significantly contributed to the financial crisis or, at least, exacerbated its severity. In this paper, we assess these arguments and examine the role of fair-value accounting in the financial crisis using descriptive data and empirical evidence. Based on our analysis, it is unlikely that fair-value accounting added to the severity of the current financial crisis in a major way. While there may have been downward spirals or asset-fire sales in certain markets, we find little evidence that these effects are the result of fair-value accounting. We also find little support for claims that fair-value accounting leads to excessive write-downs of banks’ assets. If anything, empirical evidence to date points in the opposite direction, that is, towards overvaluation of bank assets.