TY  - UNPD
A1  - Bischof, Jannis
A1  - Laux, Christian
A1  - Leuz, Christian
T1  - Accounting for financial stability: Bank disclosure and loss recognition in the financial crisis
T2  - SAFE working paper series ; No. 283
N2  - This paper examines banks’ disclosures and loss recognition in the financial crisis and identifies several core issues for the link between accounting and financial stability. Our analysis suggests that, going into the financial crisis, banks’ disclosures about relevant risk exposures were relatively sparse. Such disclosures came later after major concerns about banks’ exposures had arisen in markets. Similarly, the recognition of loan losses was relatively slow and delayed relative to prevailing market expectations. Among the possible explanations for this evidence, our analysis suggests that banks’ reporting incentives played a key role, which has important implications for bank supervision and the new expected loss model for loan accounting. We also provide evidence that shielding regulatory capital from accounting losses through prudential filters can dampen banks’ incentives for corrective actions. Overall, our analysis reveals several important challenges if accounting and financial reporting are to contribute to financial stability.
T3  - SAFE working paper - 283 
KW  - Banks
KW  - Financial crisis
KW  - Financial stability
KW  - Disclosure
KW  - Loan loss accounting
KW  - Expected credit losses
KW  - Incurred loss model
KW  - Prudential filter
KW  - Fair value accounting
Y1  - 2020
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/54610
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-546100
UR  - https://ssrn.com/abstract=3644284
IS  - July 2020
PB  - SAFE
CY  - Frankfurt am Main
ER  -