The economic consequences of extending the use of fair value accounting in regulatory capital calculations: A discussion

Christian Laux

Journal of Accounting and Economics, 2016, vol. 62, issue 2, 204-208

Abstract: When the Federal Reserve, following Basel III, proposed removing the accumulated other comprehensive income (AOCI) filter that shields regulatory capital from unrealized gains and losses on available-for-sale (AFS) debt securities, it triggered fierce opposition. The topic is at the heart of the debate about the role of fair value accounting for financial stability. Chircop and Novotny-Farkas (2016) investigate banks' stock price reaction and investment behavior around news events up to the announcement of the final decision. I focus on the question of whether their evidence is sufficiently strong to convince either side in the debate.

Keywords: Banks; Fair value accounting; Prudential regulation; AOCI filter; Regulatory capital (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:62:y:2016:i:2:p:204-208

DOI: 10.1016/j.jacceco.2016.10.005

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