Accounting Discretion of Banks During a Financial Crisis.
This paper shows that banks use accounting discretion to overstate the value of distressed assets. Banks' balance sheets overvalue real estate-related assets compared to the market value of these assets, especially during the U.S. mortgage crisis. Share prices of banks with large exposure to mo...
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| Language: | English |
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Washington :
International Monetary Fund,
2009.
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| Series: | IMF working paper (Online)
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MARC
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| 100 | 1 | |a Laeven, Luc. | |
| 245 | 1 | 0 | |a Accounting Discretion of Banks During a Financial Crisis. |
| 260 | |a Washington : |b International Monetary Fund, |c 2009. | ||
| 300 | |a 1 online resource (72 pages) | ||
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| 490 | 1 | |a IMF Working Papers ; |v v. Working Paper No. 09/207. | |
| 505 | 0 | |a Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Tobin's q Value and Market Discounts; III. The Data; 1. Tobin's q and Share of Zombie Banks; 2. Real Estate Loans and Mortgage-backed Securities; 3. Share of Mortgage-backed Securities that is Held-to-Maturity; 4. Fair Value of Mortgage-backed Securities Relative to Amortized Cost; 5. Tier 1 Capital Ratio and Share of Tier 1 Capital in Total Capital; 1. Summary Statistics for 2008, Quarterly Data; IV. Market Discounts and Valuation Effects of Real Estate Related Assets; A. Empirical Evidence on Market Discounts. | |
| 505 | 8 | |a 2. Tobin's q and Real Estate Related Assets in 20083. Tobin's q and Real Estate Related Assets in 2001-2007; 4. Tobin's q Real Estate Related Assets and Asset Size; 5. Tobin's q and Additional Balance Sheet and Off-balance Sheet Items; B. Banks' Stock Price Reaction to Amendments of Fair Value Accounting Rules; 6. Event Study of New FASB Rules on Fair Value Accounting for Illiquid Assets (FAS 157), Announced on October 10, 2008; 7. Event Study of FASB Amendments to Fair Value Accounting of Hard-to-Value Assets, Announced on April 9, 2009. | |
| 505 | 8 | |a V. Accounting Discretion on Impaired Assets and Asset ClassificationA. Accounting Discretion on Accounting for Bad Loans; 8. Loan Loss Provisions and Net Loan Charge-offs in 2008; B. Classification of Mortgage-Backed Securities; 9. Share of Mortgage-backed Securities that is Held-to-Maturity in 2008; 10. Share of Non-Guaranteed Mortgage-backed Securities that is Held-to-Maturity in 2001-2007; VI. Conclusions; Variable Definitions and Data Sources; References; Footnotes. | |
| 520 | |a This paper shows that banks use accounting discretion to overstate the value of distressed assets. Banks' balance sheets overvalue real estate-related assets compared to the market value of these assets, especially during the U.S. mortgage crisis. Share prices of banks with large exposure to mortgage-backed securities also react favorably to recent changes in accounting rules that relax fair-value accounting, and these banks provision less for bad loans. Furthermore, distressed banks use discretion in the classification of mortgage-backed securities to inflate their books. Our results indicate. | ||
| 588 | 0 | |a Print version record. | |
| 700 | 1 | |a Huizinga, Harry. | |
| 776 | 0 | 8 | |i Print version: |a Laeven, Luc. |t Accounting Discretion of Banks During a Financial Crisis. |d Washington : International Monetary Fund, ©2009 |z 9781451873542. |
| 830 | 0 | |a IMF working paper (Online) | |
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