The relevance of valuation principles in a financial crisis: senior bank managers' evaluations of other banks on the interbank market

Roy Liff and Gunnar Wahlström

International Journal of Critical Accounting, 2018, vol. 10, issue 5, 363-379

Abstract: This article examines senior bank managers' evaluations of other banks in the interbank market during times of financial crisis. We conclude that the fair value principle demands greater awareness of the need for reputational monitoring, evaluation by thick trust and scepticism towards numbers. Monitoring during crisis includes neither historical cost nor fair value numbers, because numbers are distrusted. Consequently, valuation principles may not explain contagion effects during crisis.

Keywords: bank; financial crisis; contagion effects; interbank market; senior bank managers; trust; financial accounting; fair value; historical cost; evaluation; valuation principles. (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcrac:v:10:y:2018:i:5:p:363-379

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