Do accounting measurement regimes matter? A discussion of mark-to-market accounting and liquidity pricing

Haresh Sapra

Journal of Accounting and Economics, 2008, vol. 45, issue 2-3, pages 379-387

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.

Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jaecon:v:45:y:2008:i:2-3:p:379-387

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